Long-Term Care Planning: Why You Cannot Ignore It

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover why most retirees overlook long-term care planning and why it is a costly mistake. Learn your options before health limits your choices. The Long-Term Care Problem Most Retirees Overlook Long-term care planning rarely tops anyone's retirement checklist — but it may be the single most consequential planning gap in American retirement today. While most retirees focus on investment returns, Social Security timing, and tax efficiency, they often leave one of the largest potential expenses in their retirement completely unaddressed. The numbers make the urgency clear. The average cost of a private room in a nursing home now exceeds $95,000 per year nationally, with costs running substantially higher in major metropolitan areas and coastal states. A multi-year care event — and the average duration of long-term care need is approximately 3 years, with 20% of people needing care for 5 years or more — can consume $250,000 to $500,000 or more of retirement savings. For a retiree who has saved $800,000 over a lifetime, a long-term care event of that magnitude does not just change retirement plans. It can effectively end them. Why Most People Assume They Are Covered — And Why They Are Wrong "I Have Medicare" Medicare is the most common source of misplaced confidence about long-term care. Many Americans assume that Medicare — the federal health insurance program they have paid into their entire working lives — will cover long-term care costs. It will not, at least not in the way people expect. Medicare covers short-term skilled nursing care following a qualifying hospital stay of at least three days, and only for skilled rehabilitation services — physical therapy, wound care, IV medications. After 20 days, Medicare requires a daily copay; after 100 days, coverage ends entirely. Medicare does not cover custodial care — the ongoing help with bathing, dressing, eating, and daily activities that most long-term care actually involves. "Medicaid Will Take Care of It" Medicaid does cover long-term care, but only for people who have exhausted most of their personal assets. In most states, an individual must spend assets down to $2,000 in countable resources to qualify for Medicaid nursing home coverage. A married couple has somewhat more protection for the healthy spouse's assets