A new analysis suggests many Americans may worry about long-term care costs unnecessarily — but for those who do need care, the price can be significant.
According to the 2025 Long-Term Care Index from Milliman, the average 65-year-old should plan to set aside about $135,000 to cover future high-intensity long-term care.
But that “average” hides a wide range of outcomes. Harry S. Margolis, an elder-law attorney who contributes to the Center for Retirement Research at Boston College, explains:
“While an average figure can be a helpful anchor point, costs vary substantially,” wrote Margolis.
Myth #1: Most Seniors Will Need Long-Term Care
Not necessarily. Research cited by Harry S. Margolis of the Center for Retirement Research at Boston College shows that a surprisingly large number of Americans never require paid long-term care.
According to the Milliman Long-Term Care Index:
- Nearly half of men will never need paid care
- About four out of ten women will avoid it as well
Many seniors receive help from spouses or family members instead of paid caregivers.
Many People Never Need Paid Care
One of the more surprising findings: a large share of Americans never need paid long-term care at all.
According to Milliman’s analysis:
- Nearly half of men will never need paid long-term care.
- About four out of ten women will also avoid paid care entirely.
- Another 25% of men will need less than one year of paid care.
Women face greater financial risk because they tend to live longer and are more likely to spend extended periods needing assistance.
Milliman estimates the average long-term care cost for women is about $171,000, compared with $98,000 for men.
About 41% of women will need more than one year of paid care, and 14% may require five years or more. In those cases, costs can average around $665,000.
Smart Senior Daily Staff
Families Provide Much of the Care
The Milliman estimates assume that all care is paid.
In reality, family members often provide a large portion of assistance. Research from the Center for Retirement Research at Boston College suggests families provide at least half of caregiving hours, even when someone has significant care needs.
The report also does not specify how much care is paid out of pocket versus covered through Medicaid.
Myth #2: Medicare Will Pay for Long-Term Care
This is one of the biggest misunderstandings in retirement planning.
Medicare generally does not cover long-term custodial care, such as help with bathing, dressing, or other daily living needs.
It may pay for short-term rehabilitation or skilled nursing after a hospital stay, but ongoing care is usually paid through:
- Personal savings
- Long-term care insurance
- Medicaid for those who qualify
That’s why many financial planners say preparing for possible long-term care costs is an important part of retirement planning.
Where You Live Makes a Big Difference
Long-term care costs vary dramatically depending on location and the type of care needed, such as home health services, assisted living, or nursing home care.
The most expensive states tend to be on the West Coast and in the Northeast, where care costs can be roughly twice the national average. Lower costs are more common in parts of the South-Central United States.
Gary P Guthrie
Investment Returns Change the Picture
The $135,000 estimate assumes savings earn an average 4.35% annual return.
If returns were higher — around 7% — the average 65-year-old would need about $74,000 set aside. If returns fall to 3%, the amount rises to roughly $187,000.
Myth #3: Long-Term Care Always Costs Hundreds of Thousands
While some people do face very high costs, many do not.
The Milliman study estimates the average 65-year-old should plan for about $135,000 in potential care expenses.
But outcomes vary widely:
- Some seniors never need paid care
- Others may only need a few months of assistance
- A smaller group may require several years of care
Women are more likely to face higher costs because they tend to live longer and may spend more years needing assistance.
The Bigger Concern: Most Retirees Don’t Have Much Saved
Even the lower estimates could be difficult for many retirees to cover.
Data from the Federal Reserve shows the median retirement savings for Americans ages 65–74 is about $200,000, while those age 75 and older have about $130,000 saved.
That means a significant long-term care need could quickly consume much of a retiree’s savings.
For that reason, some experts say the U.S. may eventually need broader long-term care insurance programs to help spread the risk across the population.
Disclaimer: This article is for informational purposes only and is not financial, legal, or medical advice. Long-term care needs and costs vary widely depending on personal health, location, and family circumstances. Readers should consult a qualified financial planner, elder-law attorney, or healthcare professional when making decisions about long-term care planning.
