Long-Term Care Planning

FW By the FinanciallyWise team · Reviewed for accuracy · Updated Sep 2026 · 5 min read

More than half of people turning 65 today will need some form of long-term care in their lifetime — and Medicare barely covers it. This is the retirement cost most plans forget to include.

Why This Gets Overlooked

Long-term care means help with everyday activities — bathing, dressing, eating — whether from a home health aide, assisted living, or a nursing home. People assume Medicare covers this. It mostly doesn't: Medicare covers short-term skilled nursing after a hospital stay, not the ongoing custodial care that long-term care usually means.

What It Actually Costs

Home Health Aide ~$75k/yr Assisted Living ~$65k/yr Nursing Home (Private) ~$115k/yr
Approximate national averages — actual costs vary enormously by region and can be significantly higher in expensive metro areas.

Care often isn't needed for just a year — a multi-year stay is common, meaning total costs can reach several hundred thousand dollars for a single person.

How People Pay For It

Self-Funding

Paying from savings and investments — requires substantial assets set aside specifically for this risk.

LTC Insurance

A dedicated policy, best purchased in your 50s–60s while healthy — premiums rise sharply with age and health issues.

Medicaid

Covers long-term care, but only after "spending down" most personal assets to qualify — a last-resort safety net, not a plan.

Tip Some newer "hybrid" life insurance/long-term-care policies return value to your beneficiaries if you never need care, addressing the classic objection to standalone LTC insurance ("what if I pay in for decades and never use it?"). Worth comparing alongside traditional standalone policies.
Official U.S. Resources

How to Start Planning for Long-Term Care

Long-term care is the retirement cost most plans forget — here's how to start preparing for it.

  1. Look up long-term care costs specific to your region. National averages can be misleading in either direction.
  2. Get quotes for standalone or hybrid LTC insurance in your 50s or early 60s. Premiums rise sharply with age and health issues, so earlier is cheaper.
  3. Talk with family about care preferences. Before a crisis forces a rushed, high-pressure decision.
  4. Review whether self-funding, insurance, or Medicaid fits your situation. Medicaid requires spending down most assets first, so it's a last resort, not a plan.
  5. Revisit the plan every few years. As health, family situation, and finances change.
Example At 55, after comparing quotes, Angela chooses a hybrid life/long-term-care policy — if she never needs care, her beneficiaries still receive a payout instead of losing the premiums paid in.

Key Takeaways

  • Medicare mostly doesn't cover long-term custodial care — a common and costly misconception.
  • Annual costs commonly run $65,000–$115,000+, often needed for multiple years.
  • The three main funding paths are self-funding, dedicated LTC insurance (best bought while younger and healthy), or Medicaid after spending down assets.

Retirement Readiness Planner

Check Your Understanding

Six quick questions — no grades, just a gut check before you move on.

1. Does Medicare cover ongoing long-term custodial care?

2. When is the best time to buy long-term care insurance?

3. What's required to qualify for Medicaid long-term care coverage?

4. Roughly what share of people turning 65 today will need some form of long-term care?

5. Why can long-term care costs add up to several hundred thousand dollars total?

6. What problem do newer "hybrid" life insurance/LTC policies try to solve?

Do This This Week

Reading is step one. Here's what actually moves the needle: