Why long-term care costs can be a ‘huge problem’

Long-term care can be costly, extending well beyond $100,000. Yet, financial advisors say many households aren’t prepared to manage the expense.

“People don’t plan for it in advance,” said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida. “It’s a huge problem.”

Over half, 57%, of Americans who turn 65 today will develop a disability serious enough to require long-term care, according to a 2022 report published by the U.S. Department of Health and Human Services and the Urban Institute. Such disabilities might include cognitive or nervous system disorders like dementia, Alzheimer’s or Parkinson’s disease, or complications from a stroke, for example.

The average future cost of long-term care for someone turning 65 today is about $122,400, the HHS-Urban report said.

But some people need care for many years, pushing lifetime costs well into the hundreds of thousands of dollars — a sum “out of reach for many Americans,” report authors Richard Johnson and Judith Dey wrote.

The number of people who need care is expected to swell as the U.S. population ages amid increasing longevity.

“It’s pretty clear [workers] don’t have that amount of savings in retirement, that amount of savings in their checking or savings accounts, and the majority don’t have long-term care insurance,” said Bridget Bearden, a research and development strategist at the Employee Benefit Research Institute.

“So where is the money going to come from?” she added.

While most people who need long-term care “spend relatively little,” 15% will spend at least $100,000 out of pocket for future care, according to the HHS-Urban report.

Expense can differ greatly from state to state, and depending on the type of service.

Nationally, it costs about $6,300 a month for a home health aide and $9,700 for a private room in a nursing home for the typical person, according to 2023 data from Genworth, an insurer.

It seems many households are unaware of the potential costs, either for themselves or their loved ones.

For example, 73% of workers say there’s at least one adult for whom they may need to provide long-term care in the future, according to a new poll by the Employee Benefit Research Institute.

However, just 29% of these future caregivers — who may wind up footing at least part of the future bill —had estimated the future cost of care, EBRI found. Of those who did, 37% thought the price tag would fall below $25,000 a year, the group said.

The EBRI survey polled 2,445 employees from ages 20 to 74 years old in late 2024.

There’s a good chance much of the funding for long-term care will come out-of-pocket, experts said.

Health insurance generally doesn’t cover long-term care services, and Medicare doesn’t cover most…