Most retirement budgets include housing, groceries, and medical premiums. Far fewer include years of paid help with bathing, dressing, meals, or moving safely around the house.
That omission can be expensive. The latest national survey places a year of assisted living at $74,400 and a private nursing home room at $129,575. Medicare generally does not pay for ongoing help with everyday activities.
Long-term care costs deserve their own plan before a crisis forces quick decisions. The useful question is not whether everyone needs a huge savings account, but what different care needs could cost and how much you would actually have to cover.
Why Long-Term Care Deserves a Separate Retirement Budget
Long-term care is not necessarily medical treatment. It often means having another person help with everyday activities that have become difficult to manage independently.
That might involve preparing meals, getting dressed, bathing, taking medications, or moving safely between a bed and a chair. Some people need occasional assistance, while others eventually require supervision throughout the day and night.
According to the U.S. Administration for Community Living, someone turning 65 has almost a 70% chance of needing some form of long-term care during their remaining years. However, this does not mean seven out of ten people will spend years in a nursing home.
Many receive help at home, sometimes from family members without pay. Others need professional services for a relatively short period, while a smaller group requires years of substantial assistance.
The financial problem is that nobody knows in advance which situation they will face.
Consider a person who needs 20 hours of paid help each week. At the 2025 national median rate of $35 per hour, that assistance costs $36,400 a year before additional expenses.
That is a major new bill for someone living primarily on Social Security and retirement savings. It can also arrive at an age when returning to work is no longer a realistic way to replace the money.
What Long-Term Care Costs in 2026: The Numbers That Matter
The latest available national figures come from the CareScout 2025 Cost of Care Survey, released in 2026. These are 2025 median prices used as current planning benchmarks, not a separate survey of 2026 prices.
A median is the middle of the surveyed prices, rather than the average. Actual bills depend heavily on location, the amount of help needed, and the services included.
| Type of care | National median cost | Annual cost |
|---|---|---|
| Adult day health care | $95 per day | $24,700 |
| In-home nonmedical caregiver | $35 per hour | $80,080 |
| Assisted living | $6,200 per month | $74,400 |
| Nursing home, shared room | About $9,581 per month | $114,975 |
| Nursing home, private room | About $10,798 per month | $129,575 |
Source: CareScout 2025 Cost of Care Survey, published in 2026. In-home care assumes 44 hours weekly for 52 weeks. Adult day care assumes five days weekly. Nursing home costs assume 365 days.
One surprising finding is that substantial in-home assistance can cost more than the national median assisted living fee. Keeping someone at home may also mean continuing to pay property taxes, insurance, utilities, maintenance, and other household expenses.
The national figures are useful starting points, but they are not individual quotes. A retirement budget should eventually use prices from providers in the person’s actual community.
Staying at Home Can Cost More Than People Expect
Most older adults would prefer to remain in familiar surroundings if their health and safety allow it. That preference can make excellent sense, particularly when someone needs only a few hours of assistance.
The calculation changes as care needs increase. Paying someone for a few visits each week is very different from needing daily help with meals, bathing, mobility, and medications.
Using CareScout’s 2025 national median of $35 per hour, different home-care schedules create very different budgets. The following figures assume the same hourly rate throughout the year, with no additional agency fees or premium rates.
| Hours of paid care weekly | Monthly cost, approximately | Annual cost |
|---|---|---|
| 10 hours | $1,517 | $18,200 |
| 20 hours | $3,033 | $36,400 |
| 40 hours | $6,067 | $72,800 |
| 44 hours | $6,673 | $80,080 |
Illustrative calculations using $35 per hour, 52 weeks annually, and 12 months per year.
At 10 hours weekly, someone might be able to pay for care using a combination of retirement income and savings. At 40 hours, the annual expense approaches the national median cost of assisted living.
However, the home-care calculation does not include the household’s existing bills. It also does not necessarily reflect the actual cost of overnight coverage, multiple caregivers, or care on holidays.
Home modifications can add another layer of expenses. Grab bars, safer showers, ramps, stair lifts, better lighting, and accessibility changes may become necessary over time.
These improvements can help someone remain independent longer, but their costs should be estimated separately. Local aging agencies may know about assistance programs for eligible households.
Could Adult Day Care Lower the Bill?
Adult day programs offer structured daytime supervision and activities while allowing someone to continue living at home. Depending on the program, they may provide meals, social activities, and certain health services.
The 2025 national median of $95 per day works out to about $14,820 annually for three days weekly over 52 weeks. That can be an alternative to paying for private assistance during every daytime hour, although transportation and help outside program hours may still be necessary.
Adult day care is not suitable for every medical or supervision need. Still, comparing it with individual home-care hours can reveal options families might otherwise miss.
The $6,200 Assisted Living Price May Not Be the Final Bill
Assisted living generally combines housing, meals, activities, and some personal assistance. It is designed for people who need support with everyday tasks but do not necessarily require the level of medical care provided in a nursing facility.
The challenge is understanding what the advertised monthly rate actually includes. A community might charge a base fee and then add separate amounts as a resident needs more assistance.
Potential additional charges can include medication management, bathing assistance, incontinence supplies, personal laundry, transportation, and help moving between a bed and wheelchair. Some communities also charge admission or community fees.
AARP’s 2025 reporting on assisted living costs highlighted how medication management and additional care levels can raise monthly bills. These charges vary by facility, making a written fee schedule essential.
Consider an illustrative community advertising $6,200 monthly. If the resident later needs an additional $900 in monthly services, the total rises to $7,100.
That extra $900 adds $10,800 annually. Over three years, it represents another $32,400, assuming the charges remain unchanged.
Before signing an agreement, request a sample bill for someone who needs more assistance than the prospective resident currently requires. Ask how care levels are assessed, what triggers additional charges, and how often rates can increase.
Memory Care, Nursing Homes, and Retirement Communities Have Different Costs
The phrase long-term care facility can describe very different living arrangements. Choosing the correct setting is important because the cheapest option may not provide the assistance someone actually needs.
Memory care is designed for people with Alzheimer’s disease or other forms of dementia who require specialized support. It may operate within an assisted living community or another licensed residential setting.
Memory care may include additional supervision, structured activities, and staff trained to support people with cognitive impairment. Costs vary substantially, and there is no single nationwide memory care price in the CareScout figures used here.
Nursing homes provide a higher level of ongoing care for people with significant medical or functional needs. The 2025 national median was $114,975 annually for a shared room and $129,575 for a private room.
That distinction matters financially. Choosing a private room represents a national median difference of $14,600 annually, although availability, clinical needs, personal preferences, and local pricing also matter.
Independent living communities primarily offer housing, amenities, and a more convenient lifestyle. They should not automatically be treated as substitutes for assisted living when someone needs regular personal care.
Continuing care retirement communities, sometimes called life plan communities, may provide independent living, assisted living, and nursing care on one campus. Their financial arrangements can include substantial entrance fees and ongoing monthly charges.
Some entrance fees are partly refundable under specified conditions, while others are not. Families should understand the contract, financial obligations, and rules governing transitions between care levels before committing.
The purpose of comparing these settings is not simply to select the lowest monthly price. It is to determine what level of support is required now and what a change in care needs could mean later.
Will Medicare or Medicaid Pay for Long-Term Care?
This is one of the most important distinctions in retirement planning. Medicare covers many medically necessary services, but it generally does not pay for long-term help with daily activities when that is the only care required.
Medicare may cover qualifying short-term skilled nursing facility care or certain skilled home health services. That is different from paying indefinitely for help with dressing, eating, bathing, or supervision.
Medicaid can cover some long-term services for eligible individuals, including nursing facility care. Its financial and medical eligibility requirements, available community services, and payment arrangements vary by state.
| Expense | Medicare | Medicaid | Other payment options |
|---|---|---|---|
| Ongoing personal help at home | Generally not covered | May cover eligible services | Savings, income, LTC insurance |
| Qualifying short-term skilled nursing | Limited coverage | May cover eligible care | Other insurance or private pay |
| Long-term nursing home care | Generally no custodial coverage | Covered when eligible and requirements are met | Savings, income, LTC insurance |
| Assisted living room and board | Not covered | Generally not covered | Private funds |
| Adult day care and community support | Generally not covered as custodial care | Some state programs cover eligible services | Private pay or LTC insurance |
Coverage depends on eligibility, medical necessity, state rules, and individual policy terms.
For example, traditional Medicare can cover up to 100 days of qualifying skilled nursing facility care per benefit period. That does not mean everyone receives 100 days or that Medicare will pay for a permanent nursing home stay.
For covered skilled nursing facility care in 2026, the daily coinsurance under Original Medicare is $217 for days 21 through 100. Coverage requirements and other Part A costs still apply, and Medicare Advantage plans may have different cost-sharing arrangements.
The main budgeting lesson is straightforward. Do not treat Medicare as a funding source for years of ordinary custodial long-term care.
Medicaid Is Important, but Eligibility Is Not Automatic
Medicaid is a major source of payment for long-term nursing home care in the United States. However, an applicant must meet the relevant financial and care-related eligibility requirements.
Income, countable assets, medical needs, marital status, and state rules can affect eligibility. Some assets may be excluded under certain circumstances, but exclusions should never be assumed without checking the applicable rules.
Medicaid generally reviews certain asset transfers made within the preceding five years when determining eligibility for long-term services. Giving money or property to relatives shortly before applying can create a period when Medicaid will not pay for care.
Federal Medicaid rules also include protections intended to prevent a spouse who remains in the community from becoming impoverished. The details are complicated, and household circumstances matter.
States may provide home and community-based services through Medicaid programs or waivers. Availability and eligibility differ, and some programs limit enrollment, potentially creating waiting lists.
A family should explore Medicaid eligibility before a financial emergency develops. An elder law attorney familiar with the relevant state can explain asset rules, spousal protections, and lawful planning options.
Future Care Bills Could Be Much Higher Than Today’s Prices
Someone who is 60 may not require substantial care for another 15 or 20 years. That makes today’s prices useful, but incomplete.
Even a modest annual increase can significantly change the amount someone eventually pays. The table below shows two hypothetical annual price-growth assumptions applied to CareScout’s 2025 national medians.
| Type of care | 2025 monthly median | After 10 years at 3% | After 10 years at 5% |
|---|---|---|---|
| Assisted living | $6,200 | About $8,333 | About $10,099 |
| Nursing home, private room | $10,798 | About $14,511 | About $17,590 |
Hypothetical monthly costs after 10 years of compound increases. The 3% and 5% rates are planning assumptions, not forecasts.
Under the 5% scenario, assisted living costing $6,200 monthly would exceed $10,000 monthly after ten years. The increase would matter even more if someone required several additional years of care.
Care prices do not rise uniformly every year. Location, staffing expenses, housing markets, and changes in care needs can all affect the final bill.
Rather than relying on one future estimate, calculate a lower-cost and higher-cost scenario. A plan that only works if care prices remain nearly unchanged is especially vulnerable.
How Much Should You Actually Set Aside for Long-Term Care?
There is no universal savings target that works for every household. Someone with a substantial pension, long-term care insurance, and relatively low living expenses faces a different financial problem from someone relying only on Social Security.
The most useful calculation begins with the monthly care funding gap. This is the amount of care expenses left after accounting for income available to pay those expenses and any applicable insurance benefits.
Consider a hypothetical single retiree receiving $3,600 monthly from Social Security and a pension. Assume the person has $150,000 available for care, with no insurance benefits.
If the retiree stays home, suppose ordinary household expenses consume $2,700 monthly, leaving $900 for additional care. If the retiree moves into a residential community, assume other continuing personal expenses fall to $900, leaving $2,700 for the care facility.
The results look very different depending on the care setting.
| Care scenario | Income available for care monthly | Monthly savings needed | How long $150,000 lasts |
|---|---|---|---|
| Home care, 20 hours weekly | $900 | About $2,133 | About 5.9 years |
| Assisted living | $2,700 | $3,500 | About 3.6 years |
| Nursing home, shared room | $2,700 | About $6,881 | About 1.8 years |
Hypothetical example using 2025 national median prices, unchanged monthly income and expenses, and no inflation, investment returns, taxes, extra charges, or insurance payments. Figures are rounded.
The example reveals why simply dividing savings by a facility’s full price can give a misleading answer. Retirement income may continue paying part of the bill, reducing the amount that must come from investments or cash reserves.
However, the same $150,000 provides very different protection against different levels of care. It could cover several years of part-time assistance but much less time in a nursing home.
The assumptions also become more complicated for married couples because the spouse remaining at home still needs money to live. Any funding calculation must protect both people’s essential expenses.
Build a Target Around the Gap, Not the Sticker Price
Suppose another retiree expects a $3,000 monthly gap between available income and a future assisted living bill. Three years of that gap would require $108,000 at unchanged prices.
A $5,000 monthly gap over three years would require $180,000. Those amounts are illustrations rather than recommended savings targets, but they show how much the income gap matters.
A practical long-term care budget should consider a shorter period of modest assistance and a more expensive period of intensive care. It should also account for the possibility that two spouses could need care at different times.
Money reserved for long-term care should not automatically be counted again as emergency savings or as money needed for normal retirement expenses. Counting the same assets twice can make a retirement plan appear stronger than it is.
Where Can the Money Come From?
Most households do not have a separate account large enough to pay for years of nursing home care. That does not mean planning is pointless, but it makes the choice of funding sources important.
Retirement Income and Savings
Social Security, pensions, annuity payments, and withdrawals from savings may help fund care. The first step is determining which income sources continue and what other expenses must still be paid.
Traditional retirement account withdrawals may create income taxes and could affect income-related Medicare premiums. A large withdrawal to cover care should therefore be evaluated for its after-tax impact rather than treated as a simple transfer.
Long-Term Care Insurance
Long-term care insurance can help cover eligible services at home, in assisted living, or in nursing facilities. Policies differ in their daily or monthly benefit limits, total benefits, covered settings, and requirements for receiving payments.
Many policies include an elimination period, which is similar to a waiting period before benefits begin. Some offer inflation protection so the available benefit can increase over time.
Premiums depend on factors such as age, health, coverage amounts, and policy design. A policy can also become more expensive if the insurer receives approval for future premium increases.
Some products combine life insurance or annuity features with long-term care benefits. These hybrid policies have different costs, guarantees, surrender provisions, and benefit tradeoffs, so comparisons should focus on the actual contracts.
Insurance is not automatically the best choice for everyone. Someone considering a policy should compare several insurers and examine what happens if premiums rise, benefits run out, or care is needed in a setting the policy does not fully cover.
Home Equity
For homeowners, a residence may represent a substantial portion of retirement wealth. Selling or downsizing can potentially release money for care, but the proceeds should be calculated after mortgage debt, selling expenses, moving costs, and any taxes that apply.
Some homeowners consider reverse mortgages to access equity while remaining in their homes. These loans involve fees and accumulating interest, and borrowers must continue meeting property tax, insurance, and maintenance obligations.
A reverse mortgage can also become due when the borrower permanently moves out, including certain extended stays in a care facility. Special protections may apply to qualifying spouses, making individual contract review essential.
Home equity should therefore be treated as a possible funding resource, not as money that can always be accessed immediately or without consequences.
Veterans Benefits and Community Programs
Some eligible veterans and surviving spouses may receive additional support through VA pension benefits, including Aid and Attendance. Eligibility depends on specific service, pension, medical, and financial requirements.
Local Area Agencies on Aging may also help families locate meal programs, transportation, respite services, home modifications, and other assistance. These resources may reduce paid care needs or help a family find appropriate support.
Such programs will not necessarily cover every expense. Still, identifying available assistance before paying privately for everything can make an important difference.
Do Not Forget the Financial Impact on a Spouse or Adult Child
Long-term care planning is often discussed as though only one person’s finances matter. In reality, care decisions can change the finances of an entire household.
If one spouse moves into assisted living or a nursing home, the other may still have mortgage payments, property taxes, utilities, insurance, transportation, and ordinary living costs. The household may also face changes in income if a pension or other payment changes after a spouse dies.
Using every available dollar to pay for one spouse’s care could leave the other financially exposed. Couples should test their plan against the possibility of one person requiring intensive care while the other remains at home for many years.
Adult children also face financial risks. Providing unpaid care may mean reducing work hours, missing career opportunities, paying transportation costs, or using personal savings to cover expenses.
Families should discuss these responsibilities early rather than assuming someone will be available at all times. A workable caregiving plan must consider the caregiver’s health, employment, and financial stability.
The legal paperwork matters as much as the savings calculation.
A durable financial power of attorney can allow a trusted person to handle specified financial matters if the account owner becomes unable to do so. Healthcare directives and appropriate healthcare decision-making documents address different responsibilities.
These documents should be established while the person has the legal capacity to make the decisions. The individual should remain involved in care and financial choices for as long as they are able.