The Looming Question of Long Term Care

When financial planners assess the sustainability of an individual’s retirement assets, one significant uncertainty looms large: the cost of long-term care. These expenses are not covered by Medicare and should not be underestimated. According to, the median monthly cost of a private room exceeds $9,500, with an annual cost of over $50,000 for a home health aide. Costs vary significantly across states, ranging from more than $33,000 per month in Alaska to just over $6,000 per month in Louisiana.

The challenge lies in the fact that while most retirees may not face dementia or other disabilities, approximately seven out of ten will require some form of care facility at some point. There’s no way to predict who among us may incur unexpected expenses of half a million dollars or more.
Government and state programs can provide partial coverage for long-term care expenses, but Medicaid assistance only becomes available once retirees have substantially depleted their other financial resources. Anecdotal evidence suggests that facilities accepting government payments may not always offer the most appealing options.

Retirees have the option to protect themselves against future long-term care expenses with long-term care insurance, but early planning can be advantageous. The average annual premium for a 55-year-old is roughly $3,000, whereas it exceeds $50,000 for an 82-year-old. You can use a calculator to explore different premium and benefit options in various states at:

While some individuals may hesitate to pay long-term care premiums, fearing that their investment will go to waste if they never require nursing facility care or skilled in-home assistance, it’s worth noting that these same individuals invest in home and auto insurance policies to protect against catastrophic losses. Fortunately, in most years, these insurance premiums do not result in payouts. Insurance provides peace of mind, and the critical question people should ask themselves is whether it makes sense to safeguard against the largest unknown expense in their retirement plan’s later years.