Long-Term Care Costs in 2026: What Retirees Underestimate

Picture two neighbors who retire in the same year with similar savings. One stays healthy and active into her late eighties. The other spends three years in a memory-care community before passing away. From a purely financial standpoint, their retirements look nothing alike, even though their plans started in the same place.

That gap is what long-term care risk is all about. It is not a niche concern for the very old or the very sick. According to the U.S. Department of Health and Human Services, approximately 70% of people who reach age 65 will need some form of long-term care at some point, whether a few months of home-based help after surgery or several years in a skilled nursing facility. Yet surveys consistently show that a large share of pre-retirees either assume Medicare will cover this care or simply have not factored it into their planning at all.

This article walks through what long-term care actually costs in 2026, why the expense is so frequently underestimated, and how families can begin incorporating it into a realistic retirement plan. The goal is not to alarm you, but to give you a clearer picture so that your numbers actually reflect the life you might live.

Costs vary considerably by care setting, location, and level of need. The following ranges are drawn from widely referenced industry surveys, including the annual Genworth Cost of Care Survey, and reflect national median figures. Actual costs in high-cost-of-living states such as California, New York, or Massachusetts can run substantially higher.

Home Care
Many people prefer to remain at home for as long as possible, relying on a home health aide or homemaker services for support. As of the most recent available data, the national median cost for a home health aide runs approximately $30 per hour. A part-time schedule of four hours per day, five days a week would amount to roughly $2,500 to $3,000 per month. Full-time, around-the-clock care at home can easily exceed $15,000 per month, often surpassing the cost of a facility.

Assisted Living
Assisted living communities offer a middle ground, providing housing, meals, and help with daily activities in a residential setting. National median monthly costs for assisted living have been running in the range of $4,500 to $6,000 per month, translating to roughly $54,000 to $72,000 per year. Memory care units, which serve individuals with Alzheimer's or other forms of dementia, typically carry a significant premium above standard assisted living rates.

Nursing Home Care
A semi-private room in a nursing home has a national median cost approaching $8,000 per month, while a private room can exceed $9,000 to $10,000 per month. On an annual basis, that represents $96,000 to $120,000 or more. The average length of a nursing home stay varies by individual, but multi-year stays are not uncommon, particularly for those with dementia or other progressive conditions.

These figures illustrate why long-term care can reshape a retirement plan so quickly. Even a 24-month stay in an assisted living community at median rates represents a six-figure expense that most retirement calculators never include by default.

One of the most persistent misconceptions about retirement healthcare is that Medicare will cover long-term care costs. It will not, in most circumstances that matter.

Medicare does cover short-term skilled nursing facility care following a qualifying hospital stay of at least three days, but coverage is limited. Medicare pays in full for days one through twenty of a skilled nursing facility stay, then requires a significant daily copayment from day twenty-one through day one hundred, and pays nothing beyond day one hundred. After that point, costs fall entirely to the individual or their family.

Crucially, Medicare does not cover custodial care, which is the most common form of long-term care. Custodial care means assistance with activities of daily living such as bathing, dressing, eating, toileting, and mobility. If a person simply needs help with these daily tasks but does not require skilled nursing or therapy, Medicare generally will not pay. This distinction trips up many families who discover the limitation only after a loved one is already in care.

Medicaid, the joint federal-state program for low-income individuals, does cover long-term care, including nursing home costs, for those who qualify. However, Medicaid eligibility requires meeting strict income and asset limits, which typically means spending down most personal savings first. The rules vary by state, and Medicaid planning is a specialized area of elder law. Relying on Medicaid as a primary strategy involves trade-offs around asset preservation, care quality, and facility choice that are worth understanding well in advance. For a fuller picture of how healthcare costs layer into retirement, the estimating total healthcare costs in retirement guide on fidser. walks through Medicare premiums, out-of-pocket caps, and other expenses alongside long-term care considerations.

Incorporating long-term care into a retirement projection does not have to be complicated. A practical starting point is simply treating it as a line item, a potential future expense with an estimated cost and probability attached to it, much like you would model healthcare premiums or home maintenance.

Step 1: Estimate a likely scenario
Consider a hypothetical 62-year-old who is beginning to think through retirement finances. Rather than planning for the worst-case scenario (a decade of nursing home care) or ignoring care costs entirely, this person might model a middle scenario: three years of assisted living at $6,000 per month beginning at age 82. That represents roughly $216,000 in today's dollars. Adjusted for even modest healthcare inflation of 4% per year over 20 years, the real cost could approach $470,000.

Running that number through a retirement inflation calculator helps make the future cost feel concrete rather than abstract.

Step 2: Identify how you might fund it
Families generally have several broad paths to consider when it comes to funding potential care costs:

• Self-funding: Setting aside a dedicated pool of assets, often in a taxable brokerage account or a portion of investment savings, earmarked for care. This approach offers flexibility but requires enough savings to cover potentially large costs.
• Traditional long-term care insurance: Standalone policies that pay a daily or monthly benefit if the policyholder meets criteria related to inability to perform activities of daily living. Premiums have risen significantly in recent years as insurers recalibrated their pricing models, and fewer carriers now offer standalone policies. Policies purchased at younger ages (mid-50s to early 60s) generally carry lower premiums than those purchased later.
• Hybrid life insurance or annuity products: These products combine a death benefit or annuity with a long-term care rider. If care is never needed, the policy's value passes to heirs. Premiums are typically paid as a lump sum or over a limited period. The tax treatment of benefits from these products can be complex, so reviewing the specifics with a tax professional is worth the time.
• Health Savings Accounts (HSAs): For those currently enrolled in a high-deductible health plan, HSAs offer a triple tax advantage, and qualified long-term care insurance premiums (subject to age-based IRS limits) can be paid from an HSA. Accumulated HSA funds can grow tax-free and be withdrawn tax-free for qualified medical expenses in retirement, including some long-term care costs.

Step 3: Factor care costs into your retirement projections
A retirement calculator that allows you to model one-time or multi-year future expenses is a practical tool here. Plugging in a care-cost estimate, even a rough one, alongside regular living expenses often reveals whether current savings trajectories need adjustment. Many people find that the exercise itself is more useful than any single number it produces, because it shifts long-term care from an abstract worry to a planning variable.

Planning for a cost you may never incur can feel uncomfortable. It is worth understanding the probability landscape a little more clearly.

The U.S. Department of Health and Human Services, through its LongTermCare.gov resources, has published estimates suggesting that someone turning 65 today has roughly a 70% chance of needing some form of long-term care services during their remaining years. However, that broad category includes everything from a few weeks of home-based rehabilitation after a hip replacement to years of skilled nursing care. The distribution matters.

According to HHS data, roughly one in five people who reach 65 will need care for more than five years, while a similar proportion will need no paid care at all. The largest group falls somewhere in between, with care needs lasting one to three years on average. Women, on average, face longer care durations than men, partly because women tend to live longer and are more likely to be widowed and living alone when care needs arise.

This probability framing is useful because it argues against two extremes: dismissing long-term care planning entirely ("it probably won't happen to me") and catastrophizing it ("I need to plan for ten years of nursing home care"). For many families, a moderate, middle-range estimate is a reasonable planning assumption, with the understanding that actual needs could be shorter or longer.

Long-term care costs also interact with other late-retirement financial considerations. For couples, the death of a spouse often triggers significant tax changes at the same time care costs may be climbing, which is a compounding financial pressure worth factoring into joint retirement planning.

Long-term care is one of those retirement planning topics that can feel easier to defer than to address. The costs are significant, the timing is uncertain, and the subject carries an emotional weight that makes it easy to push to the back of the to-do list. But the families who navigate it most successfully tend to be those who treated it as a planning problem rather than a crisis to manage in the moment.

A complete retirement plan, one that models not just your investment growth and Social Security timing but also your potential care costs, gives you a far more honest picture of what you are actually preparing for. Tools like fidser.'s retirement calculator make it easier to add line items like long-term care to your projections so you can see the full landscape, not just the optimistic version of it.

This article is for general informational and educational purposes only. It does not constitute personalised financial, tax, legal, or insurance advice. Long-term care planning involves individual circumstances that vary widely. Readers are encouraged to consult a qualified financial adviser, a licensed insurance professional, and, where appropriate, an elder law attorney before making any decisions related to long-term care funding or insurance.