This Overlooked Retirement Expense Balloons to $247K by Age 80 (Very Few Plan for It)
If you’re saving for retirement, you’ve likely got a number in mind that you’d like to reach. Perhaps it’s the fabled “$1 million” that has long been the standard goal to shoot for, or perhaps it’s even more thanks to inflation and rising costs.
But many retirement planners overlook the potential cost of long-term care, and that’s something that could take a huge chunk of your nest egg.
Learn More: 3 Comforts I'm Sacrificing Now So I Can Retire Early
Try This: Start Growing Your Net Worth With Smarter Tracking
The Bill Few People Budget for
Long-term care is not always the first item that people put in their retirement budgets, and sometimes it’s not even the last. While most people remember to budget for common items like food, rent and entertainment, long-term care often gets overlooked.
Part of the problem is that most people don’t want to think of a time when they might need help with things like bathing, eating and mobility. But the unfortunate truth is that almost 70% of people turning 65 today will need some kind of long-term care before they die, according to the Administration for Community Living. Women need it for close to four years on average, while men need it for a little over two. So, overlooking this expense isn’t entirely realistic.
The True Cost
If needed, long-term care isn’t an inconsequential expense. Unfortunately, it can actually prove quite costly.
A private room in a nursing home runs a median of $129,575 a year nationally, and a semi-private room isn't far behind at $114,975, according to the CareScout 2025 Cost of Care Survey.
What that means is for an average two-year stay, you’re likely to spend close to $250,000. Since costs keep rising, by the time you actually need care, the bill could be significantly higher.
Something else to keep in mind is that this tab for long-term care is before medications, mobility equipment or home modifications.
Medicare Won't Help
One of the reasons many people don’t plan for long-term care is that they think Medicare will take care of everything starting at age 65. This couldn’t be further from the truth.
Medicare covers hospital stays and doctor visits, but it doesn't include things like help with dressing, eating or using the bathroom. In fact, Medicare.gov states plainly that Medicare and most health insurance, including Medigap, don't pay for this kind of long-term, non-medical care, whether it's delivered in a nursing home or at home. And those are some of the most expensive components of long-term care. As soon as you need this type of day-to-day care, Medicare doesn't really help much.
Medicaid can be an option to help cover long-term care, but according to Medicaid.gov, it only kicks in after you've spent down most of your income and assets to meet your state's financial limits.
Skipping the Nursing Home Doesn’t Save You Much
Even if you don’t need nursing home care, you won’t be saving much by going the assisted living or in-home care paths. The CareScout data shows that assisted living runs a median of $74,400 a year, while non-medical in-home caregiving, at a typical 44 hours a week, costs around $80,080 annually.
Costs can vary significantly by state, but these are simply median prices. This means half of patients will actually pay more. Costs also skew highest in northern New England, Appalachia, parts of the Mountain West, and Alaska and Hawaii, while they run lowest in the middle of the country, according to a Federal Reserve Bank of Chicago analysis of the CareScout data.
What To Do With This Information
You don’t need to have all the answers if you’re in your 20s and 30s. But it’s a good time to start planning ahead. If you’re closer to retirement, then it’s a good idea to have a real conversation with a fiduciary financial advisor and insurance specialist about long-term care insurance or other coverages that can protect you as you age.
Not everyone will end up needing long-term care. But without planning, selling your house or raiding your 401(k) might be the only way to cover your medical costs in later life. That’s a position no one should have to be in.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: