Long-Term Care Cost Projection

The risk most retirement plans skip

The US Department of Health and Human Services estimates roughly 70% of people turning 65 today will need some form of long-term care during their lifetime. The average duration is around 3 years, but 1 in 5 will need care for 5+ years, and 1 in 7 for 10+ years. Long-term care costs frequently exceed the total retirement nest egg of those who need them.

This is the single biggest blind spot in most retirement planning. People plan for the years they’ll be golfing and traveling. They under-plan for the years they may need help with daily activities like bathing, dressing, or medication management.

How the calculator works

Enter what the care costs today, per year, where it would actually happen. The calculator grows that at the medical inflation rate you choose until care begins, multiplies by the years of care, and works out what to set aside now to meet it. Leave the cost blank and you get the same answer in multiples of today’s price, which is often the more honest way to hold a number this far out.

It will not supply the price itself. Care costs move every year and swing widely from one town to the next, so a figure frozen into the page would be wrong for most readers. The tip on the cost box lists the US national median for each kind of care as a starting point, and the result prints the one you picked beside your answer.

National medians (CareScout Cost of Care Survey 2025, published March 2026)

The spread around those medians is wide. A private nursing home room cost $364,452 a year in Alaska in 2024 and $85,045 in Texas, against a national median of $127,750. The Northeast and the West Coast generally run 30-60% above the median. Much of the South runs 20-30% below it for home care and assisted living, though not always for nursing homes: Mississippi’s private rooms were only 7% under the national figure.

Cost by state, nursing home private room (CareScout 2024)

Medical inflation runs hotter than general inflation

Healthcare and long-term care costs have historically inflated at 4-5% a year over the past 30 years, well above the general Consumer Price Index (CPI) rate of 2-3%. Research from the Society of Actuaries suggests 4.0% is a reasonable working assumption for long-term care specifically.

This compounds dramatically. A 55-year-old planning for care at 80 (25 years away), starting from the 2025 semi-private nursing home median of $114,975:

A 3-year stay at the 4% scenario costs $919,514 in future dollars. That alone exceeds most retirement nest eggs. Put those same numbers into the calculator above and it will return the same figures.

Who actually pays for long-term care in the US

The popular misconception: “Medicare pays for it.” Almost entirely wrong.

The brutal pathway most middle-class families end up on: pay out of pocket until savings are gone, then qualify for Medicaid, which covers a no-frills nursing home (often a different facility than where they started in assisted living).

Long-term care insurance, a fading product

Traditional standalone long-term care (LTC) insurance was popular in the 1980s-2000s but has largely collapsed as a market. Most major insurers (MetLife, John Hancock, Prudential) stopped selling new policies between 2010-2018. The few remaining (Mutual of Omaha, Northwestern Mutual, MassMutual) are expensive and have ongoing premium increases:

• Policies bought in the 1990s have seen 50-150% premium increases on existing policies
• Current new policies: $2,500-$5,000/year for a 55-year-old buying $200/day benefit
• Premiums rise by 4-8%/year typically
• Many policies cap lifetime benefits (e.g., $250,000 lifetime max)

The insurance industry significantly underestimated how long people would live and how much care they would need. Standalone LTC is now a fundamentally riskier purchase than people often realize.

Hybrid life and long-term care policies, the alternative

Newer “hybrid” or “combo” policies attach LTC coverage to a permanent life insurance policy. Pay a single premium (typically $50,000-$200,000) or annual premiums for a fixed term, and get:

• Tax-free LTC benefits if needed
• Death benefit to heirs if not needed
• Return of premium guarantees in many cases

Major issuers: Nationwide, OneAmerica, Lincoln, Pacific Life. Quotes for a healthy 55-year-old: single premium of $100,000 might buy $300-$400/day in LTC benefits plus a $200,000 death benefit. The premium does not go to zero if unused, which is the main advantage over a standalone policy.

Medicaid spend-down, what middle-class families actually do

When LTC costs deplete savings to roughly $2,000 in countable assets, Medicaid begins to cover nursing home care. Pre-planning for this transition includes:

• 5-year look-back period: Medicaid reviews 5 years of asset transfers; gifts during this window can disqualify
• Spouse asset preservation: a community spouse can keep up to $162,660 in protected assets in 2026. That is the federal maximum; each state sets its own figure somewhere between $32,532 and it
• Annuitization strategies: certain immediate annuities can convert assets into income that doesn’t count toward asset limits
• Irrevocable trusts: 5+ year planning horizon required; assets must be put beyond reach completely

Medicaid planning is highly state-specific and legally complex. An elder law attorney (not a financial advisor) is typically needed for serious planning. Plan-as-you-go improvisation 6 months before needing care almost always fails the 5-year look-back.

Self-funding the risk

For high-net-worth households ($2M+ in non-housing investments), self-funding LTC out of investments is generally cheaper than insurance. Do the math in future money, though. $200,000 invested at 6% for 25 years grows to about $858,000, which sounds like years of care until you set it against the 4% example above: it pays for a little under three years of a semi-private room at 80.

For middle-class households ($300k-$1M nest eggs), self-funding is dangerous because a single extended LTC episode can deplete the entire retirement portfolio. This is the bracket where some form of LTC insurance, hybrid policy, or careful Medicaid pre-planning matters most.

Geographic arbitrage

Some families plan to relocate to lower-cost LTC states in their retirement years. Moving from Massachusetts ($186,515 a year for a private nursing home room in 2024) to North Carolina ($118,625) cuts the cost by about a third. The catch: most state Medicaid programs have residency requirements, and moving to a new state to qualify can fail if not done well in advance.

Informal caregiving, the hidden cost

About 63 million Americans provide unpaid care to a family member or friend (AARP, 2025), typically losing income, missing retirement contributions, and damaging their own long-term health. AARP put the economic value of that care at more than $1 trillion in 2024, money that shows up on no insurance ledger anywhere.

For families considering “Mom can just move in with us,” the real costs include:

• Lost wages of the family caregiver ($30,000-$80,000/year typically)
• Home modifications ($10,000-$50,000)
• Caregiver burnout, divorce risk, depression, and health decline
• Eventual transition to professional care anyway

A frank conversation with siblings about who can realistically provide care is part of any LTC plan.

Bottom line

Plan for it. If you’re under 55 and healthy, look at hybrid life/LTC policies. If you’re 55-65, get LTC insurance quotes from the remaining viable insurers and compare to self-funding capacity. If you’re 65+ and don’t have a plan, talk to an elder law attorney about Medicaid spend-down planning. Ignoring this risk is the most common single failure point in middle-class retirement plans.