Prepare for Your Retirement Now

Older Americans Face Nearly $140,000 in Long-Term Care Costs

paying for long term care
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Americans turning 65 in 2015 will pay $138,000 in future long-term care services and supports (LTSS) costs, according to a new report by the U.S Office of the Assistant Secretary for Planning and Evaluation (ASPE).

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The report estimates that about half (52%) of Americans turning 65 today will develop a disability serious enough to require long-term care.

  It is estimated that families will pay about half of the costs themselves out-of-pocket, with the rest covered by public programs and private insurance.

Many Americans mistakenly assume their health insurance covers these costs. It does not. Read our primer here.

The typical person who is alive at age 65 can expected to live another 20.9 years. Fifty-two percent can anticipate having at least some needs for LTSS; 19 percent are expected to have needs that last less than a year, and about 14 percent are expected to have needs that extend beyond five years. Of the average two years that an older adult will have a disability, they will receive paid care for about one year, and informal caregivers only, such as family and friends, will make up the difference.

Expected LTSS costs are higher for women than for men. Women's costs average $180,000 compared to $90,000 for men.

Lower-income individuals are more likely to have more of their costs covered by Medicaid and pay less on average out-of-pocket.

The study notes that a number of people can expect to need LTSS for many years and to have care costs that total hundreds of thousands of dollars.

What to Do

So how do retirees intend to pay for future care? They can’t rely on government programs like Medicare because it doesn’t pay for long-term care, and most retirees don’t qualify for Medicaid because they have too much in assets.

Paying for aging care is a growing concern of industry experts and professionals. What steps can people do now to save for long-term care?  

The Associated Press-NORC Center for Public Affairs Research considered the attitudes of the 40+ population concerning long-term care. They dug into perceptions regarding the need, the cost, and the behaviors when planning for it. One significant insight found; 41% of this group have discussed their long-term care preferences with family members. Having the talk a simple step but a tremendous victory for planning. If you work in the industry, what are some ways you can motivate the other 51% to have the talk?

Most people underestimate the costs of nursing home care and overestimate the role of Medicare in paying for it. Professional in health insurance have an opportunity to teach the younger consumer what Medicare is and what it is not. Educating the younger people about long-term care options is important and a good start for their future aging needs.


According to the AgeWave/Harris Interactive study, the most significant concern for retirees is paying for the medical expenses not picked up by Medicare. They found the following as top of mind goals for retirement: 

  • 79% to have financial peace of mind—save money,
  • 60% want to continue working,
  • 56% will cut expenses to save,
  • 53% choose to reduce their cost of living expenses,

Consumers need help learning how to turn big challenges into small action steps. Long-term care is a huge issue, and people need help converting it to simple pieces.   

Plan Now

The time to plan for long-term care insurance is now—before you need it! According to a study conducted by AARP, almost 30% of “baby boomer” women said they were assuming that Medicare would take care of their long-term care needs. 

Medicare pays for care only after a 3-day hospitalization, only for 100 days, of which 80 are on you. If you don't have long-term care insurance, then essentially paying for care comes out of your pocket until you literally go broke and then maybe qualify for Medicaid. Scary?  YES. That is why aging is not just about old people. Millenials need to start saving for care now as well.

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