How Long-Term Care Can Affect Your Retirement Plan

John Stanton |

While some expenses go down once you retire, others can increase, such as healthcare costs. On average, a couple both aged 65 can expect to spend between $157,000 and $392,000 on healthcare costs alone throughout their retirement years — a 29% increase over the past 10 years. This estimate assumes enrollment in Medicare health coverage but doesn’t include the potential added expenses of a nursing home or long-term care that a retiree may require.

As this estimate assumes a 20-year retirement, this means the average retiree will spend $12,250 per year on healthcare expenses. But what if you were to retire earlier or live longer than expected? Should you spend 30 years in retirement, you could potentially spend $367,500 on your healthcare. This could take a considerable chunk out of your retirement savings should you experience an unexpected illness or injury.

Potential Healthcare Costs

If you had employer healthcare coverage while working, retirement could mean paying more for medical insurance (Medicare Parts B and D and Medicare Supplement policies). And even with insurance, some expenses will be paid out-of-pocket, with long-term care being one of the most significant.

Nothing drains a nest egg faster than living in a nursing home and paying out of pocket. Someone turning 65 today has almost a 70% chance of needing some type of long-term care services and 20% of 65-year-olds will need long-term care for longer than five years, so it is important to consider how long-term care will affect your overall retirement plan.

The Costs of Long-Term Care and Assisted Living

If you don’t have long-term care insurance, how much will you need for long-term care? On average, it costs $229 per day or $6,965 per month for a private room in a nursing home. For women, who require long-term care for an average of 3.7 years (or around 44 months), that adds up to $306,460. For men, who need long-term care for an average of 2.2 years (or around 26 months), that adds up to $181,090.

For assisted living, the average monthly cost is $3,628, but it can range upwards of $5,000 per month. And by 2026, the average cost is expected to increase to $4,876 per month. These costs can increase based on the level of care and amenities needed, as well as the size of the room and the location. Along with monthly costs, there’s usually a one-time administrative fee for moving in, which can range anywhere from $1,000 to $5,000.

Whether you’re worried about potential health concerns or want to protect your hard-earned wealth, it’s important to understand the long-term care insurance options available to you and whether or not a policy makes sense for your lifestyle and needs. While some policies can be expensive, requiring long-term care without insurance in place can be devastating.

Long-Term Care Insurance Options

Long-term care insurance covers the cost of services that include a variety of tasks you may need help with as you age. For the past 20 years that long-term care insurance has been offered, the cost was the biggest hurdle for most people. Today’s long-term care policies offer more flexibility and benefits than ever before, and there are more options and affordable choices that are designed to fit almost any budget.

The most well-known option is a standard long-term care insurance policy, where you pay a premium in exchange for the ability to receive benefits if you need them. This is a “use it or lose it” policy, so won’t receive any benefits or receive any money back if you don’t end up needing long-term care.

If you don’t like the idea of a “use it or lose it” policy, you may consider a hybrid product, such as buying a life insurance policy with a long-term care rider. With this type of policy, you invest in a standard cash value life insurance policy and select your long-term care coverage terms in the rider. If you end up requiring long-term care, there are available funds. If you don’t need long-term care or if you don’t spend the total benefits available, your beneficiaries receive the balance upon your death.

And lastly, a third option is a fixed annuity with a long-term care rider. Similar to life insurance, when you purchase an annuity, you can select the amount of long-term care coverage you want (often two or three times the face value of the annuity), your desired length of time for coverage, and whether or not you want inflation protection.

Planning for the Future

Like life insurance or estate planning, thinking about a potential healthcare demise is a topic most people want to avoid. However, it’s critical that you plan for the worst case scenario to help protect your hard-earned nest egg.

I know this from personal experience. Both of my parents are currently in an assisted living facility. My mom’s been in for seven years and my dad for three years. When my mom’s health suddenly declined, we discovered pretty quickly that she would need help. We had to do some last-minute planning to determine how to fund the costs. When they evaluated their long-term care insurance options, they were in their 70s and didn’t qualify. However, if they had planned for this contingency when they were in their early 60s, the impact on their finances and stress levels likely would have been less severe.

Whether you’re in your 40s or 60s, start considering your potential long-term care or assisted living needs. You may consider saving more to build up a contingency that could cover several months or years of long-term care. Having additional funds saved can also provide for the premiums of long-term care insurance if you decide to add it when you are older. You may find that by planning ahead, you can come up with a solution that blends insurance with savings to protect your nest egg.

About John

John Stanton is the Wealth Advisor at The Stanton Group WP | Seacrest Wealth Management, LLC.  With more than three decades of experience in the financial services industry, he serves as an advisor for clients, focusing on financial planning and the investment strategies to support their financial plan. Based in Naperville, Illinois, John serves clients in Naperville, Plainfield, Darien, and throughout the state. Learn more about John’s services by visiting or connecting with him on LinkedIn.  You may reach John Stanton at l 630-445-2380 or email

This post should not be construed as investment advice, an offer to sell, or the solicitation of an offer to purchase an interest in any security. Advice rendered by SeaCrest Wealth Management to a client is done on an individual basis. The contents of this post may not necessarily be the opinions of SeaCrest Wealth Management. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

The Stanton Group WP provides investment advisory services through SeaCrest Wealth Management LLC, (the “SWM”) a registered investment advisor. SWM is a registered investment advisor (“RIA”), with the U.S. Securities and Exchange Commission located in the State of New York. SeaCrest Wealth Management, LLC can be reached at (914) 502-1900.