Actual costs of long-term health care


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Editor’s note: This story originally appeared on NewRetirement.

They say what you don’t know won’t kill you. However, if you are misled about long-term health care costs in retirement, you may not be able to afford the kind of care you would like to have when you want to survive.

When saving for retirement, it’s essential to consider the cost of long-term health care as you age. Unfortunately, these costs are drastically underestimated and are increasing every year, according to Genworth’s 2020 study of the cost of care.

The 2020 study marks the 17th year of the report. The median national annual cost for this care now ranges from $105,850 for a private room in a nursing home to $1,9240 for adult daycare services (based on five days a week per year).

The average annual national cost for an assisted living facility is $51,600 ($4,300 per month).

Year after year, the cost of receiving care continues to rise. The subsidized cost of living has seen a massive increase of 6.15% in the last year alone and a massive increase of 80% over the past 17 years.

Home services, where the vast majority of Americans receive long-term care for a longer period of time, have “only” seen a 2% increase last year and a 30% to 40% (depending on the type of home care) increase over the last 17 years.

Do you know how much long-term healthcare costs in retirement?

Old woman worried about money
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Four out of five adults underestimate the cost of home health care, according to a Genworth survey.

“Data from our complementary study dramatically demonstrated the huge discrepancy between what consumers think costs are and what they really are, which is why it is important to educate families about costs and plan ahead for how to pay those costs,” said Tom McInerney, President and CEO of Genworth.

Costs keep rising

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While we don’t seem to realize health care costs now, the bad news is that these expenses are increasing every year. In fact, Genworth expects a further 66% increase in subsidized cost of living over the next 10 years.

“Although the high cost of long-term care in America is considered the ‘new normal’, it does not change the reality of what is certainly one of the biggest societal problems of our time: that at least 70% of Americans over the age of 65 will need some form of care service. long term and support during their lifetime,” McInerney said.

On the bright side, according to the Employment Benefits Research Institute’s 2021 Retirement Confidence Survey, 70% of workers are fairly confident they have enough money for a comfortable retirement. Additionally, 30% of those surveyed said they were very confident. In 2018, only 17% of those surveyed said they felt very confident.

The survey suggests that this may be because more people have retirement plans than in years past.

What do you do if you can’t afford long-term health care?

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Are you worried about financing long-term care? There is cause for concern. Data show that a person aged 65 years has an approximately 70% chance of needing some type of long-term care and support services in their remaining years.

However, your actual costs will depend on the type of care you need and over the period of time. They may be much greater or less than the above averages.

And you won’t be turned off the street if you can’t afford care. After you have used your existing assets, you can choose to receive Medicaid. Unlike Medicare, Medicaid will cover the costs of long-term care.

Other families rely on family members to provide needed care, but this decision should not be taken lightly. Providing care can take a huge toll on the health and wealth of the caregiver.

Long-term future care financing options

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Saving for enough retirement expenses seems daunting to most of us. But when you add in long-term health care costs, savings goals can seem insurmountable.

Coverage care options include:

  • Purchase a long-term care policy
  • Purchasing a deferred annual income for life to cover the cost of long-term health care
  • Using equity to fund care costs
  • Reliance on family members to provide care

When planning, you may want to start by setting a goal: Do you want to be able to fund the type of care you want? Do you want to protect your assets so they don’t get misused to fund long-term healthcare? Are you okay with Medicaid or any help your family can provide?

I’m not sure? Discover innovative ways to fund long-term care.

Or, better yet, the new retirement planner actually lets you design all of these scenarios so you can see the impact on your retirement resources. This powerful tool will tell you if you can afford long-term care and enable you to compare different ways of financing these costs.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click on links in our Stories.


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