Let’s talk about the number nobody puts in their retirement plan. Not the 401(k) balance. Not the Social Security claiming strategy. Not the tax-efficient withdrawal sequence. The number I’m talking about is $11,294.
That’s the median monthly cost of a private room in a nursing home in the United States as of February 2026. If you’d prefer a semiprivate room — sharing a space with a stranger can get weird and uncomfortable at times — that’ll run you $9,842 a month. Assisted living, which provides less intensive care, averages $5,900 per month.
These aren’t luxury facilities with ocean views and chef-prepared meals. These are median costs. The middle of the pack. The national average. And Medicare, the program that most retirees assume will take care of them, covers almost none of it.
The Medicare Gap Nobody Understands
Here’s what Medicare actually covers for long-term care: very little, and only under very specific conditions. If you’re hospitalized for at least three consecutive days and then transferred to a skilled nursing facility, Medicare will cover the first 20 days in full. Days 21 through 100 require a daily copayment of $217 in 2026. After day 100, Medicare pays nothing.
That’s it. One hundred days maximum, and only after a qualifying hospital stay, and only in a skilled nursing facility (not assisted living, not home care, not memory care). After day 100, you’re on your own.
For context, the average nursing home stay for someone who needs one is roughly two and a half to three years. Medicare covers — at most — the first three months and change. The remaining two-plus years? That’s your problem. At $11,294 per month, a two-year stay runs about $271,000. A three-year stay is over $406,000.
Nearly 70% of people turning 65 today will need some form of long-term care during their remaining years. This isn’t a fringe risk. It’s a probability. And the cost is high enough to gut even a substantial retirement portfolio.
Why Costs Keep Climbing
Long-term care costs have been rising faster than general inflation for years, and 2026 is no exception. The primary driver is labor. Nursing homes, assisted living facilities, and home health agencies all depend on direct-care workers — nurses, aides, and attendants — who are in chronically short supply.
The pandemic accelerated a staffing crisis that has never fully resolved. Caregiving jobs are physically demanding, emotionally draining, and historically underpaid. Facilities have been forced to raise wages to attract and retain staff, and those higher labor costs get passed directly to residents.
Tariff-driven inflation is adding another layer. Medical supplies, equipment, food, and building materials all cost more when import prices rise. Facilities that were already operating on thin margins are passing these increases through to residents as fast as they can.
The Four Ways People Pay for Long-Term Care
If Medicare won’t cover it, what does? There are essentially four options, and none of them is painless.
The first is Medicaid. This is the government program that pays for the majority of nursing home stays in America. But there’s a catch: you have to be essentially broke to qualify. Medicaid is means-tested, and the asset limits are strict. In most states, an individual can have no more than $2,000 in countable assets (the rules are somewhat more generous for a spouse who remains at home). People with significant savings must spend down their assets — paying out of pocket — until they’ve depleted their wealth to the Medicaid threshold.
This is not a dignified plan. It means burning through a lifetime of savings, selling your home in some cases, and ending up dependent on a program that offers limited choice in facilities and providers. Yet it’s the path that a shocking number of Americans end up on, often by default because they didn’t plan for any alternative.
The second option is long-term care insurance. These policies pay a daily or monthly benefit toward care costs, typically with some waiting period (30, 60, or 90 days) before benefits kick in. Premiums in 2026 range from $79 to $533 per month, depending on your age, gender, health, and the benefit level you choose. Women pay more because they tend to live longer and use more long-term care.
Long-term care insurance has gotten a bad reputation over the past decade, and some of it is deserved. Premiums have risen dramatically as insurers discovered that claims were higher than their original actuarial models predicted. Several major carriers exited the market entirely. The policies that remain tend to be expensive, and the application process involves medical underwriting that disqualifies many people with pre-existing conditions.
That said, for people who are healthy enough to qualify and can afford the premiums, long-term care insurance remains one of the most effective ways to manage this risk. A policy that pays $200 per day in benefits — roughly $6,000 per month — can cover a significant portion of assisted living costs or offset the cost of a nursing home stay.
The third option is self-insuring. This means setting aside a dedicated pool of assets specifically for potential long-term care needs. For affluent retirees, this is sometimes the most practical approach. Rather than paying insurance premiums for a benefit you might never use, you earmark a portion of your portfolio — $300,000 to $500,000, depending on your risk tolerance and local care costs — as your long-term care fund.
The downside of self-insuring is that you’re tying up a significant chunk of wealth for a risk that may or may not materialize. If you never need long-term care, those assets could have been spent or gifted. If you need more care than your reserve covers, you’re back to spending down general assets or relying on Medicaid.
The fourth option is hybrid life insurance/long-term care policies. These products combine a life insurance death benefit with a long-term care rider that allows you to access the death benefit early if you need care. If you never need care, your beneficiaries receive the death benefit when you die. If you do need care, you can draw against the policy to pay for it.
Hybrids have become increasingly popular because they address the “use it or lose it” concern of traditional long-term care insurance. You’re getting something regardless of whether you need care. The trade-off is that hybrid policies tend to be more expensive upfront and may provide less generous care benefits than a standalone long-term care policy.
The Home Care Alternative
Not all long-term care happens in a nursing home. In fact, most people would prefer to receive care at home, and for many types of needs, home care is both feasible and less expensive than institutional care.
Home health aides cost a median of about $33 per hour in 2026, and the amount of care needed varies enormously. Someone who needs help with bathing, dressing, and meal preparation for a few hours a day might spend $3,500 to $5,000 per month — significantly less than a nursing home. Someone who needs round-the-clock care at home could spend more than a nursing home, since you’re paying for individual attention rather than shared staffing.
The SECURE 2.0 Act included a provision that allows savers under 59½ to withdraw up to $2,500 per year from retirement accounts without penalty to pay for qualified long-term care insurance premiums. It’s a small benefit, but it signals Congressional awareness that long-term care is a growing problem that retirement policy needs to address.
What to Do If You’re 55 to 70
If you’re in the decade or two before this risk typically materializes, you have time to plan — but not unlimited time. Long-term care insurance gets more expensive every year you wait, and health problems can make you uninsurable. Here’s a realistic action plan.
Get quotes for long-term care insurance while you’re still healthy. Even if you don’t buy a policy immediately, knowing the cost helps you make an informed decision. If you’re a couple, look at shared-care policies that allow either spouse to draw from a combined benefit pool.
Run the numbers on self-insuring. Can your portfolio sustain a $300,000 to $400,000 hit for long-term care without derailing your overall retirement plan? If yes, self-insuring might make sense. If that amount would represent half your portfolio, insurance or a hybrid product deserves serious consideration.
Talk to your family. This is uncomfortable, but it matters. Who would coordinate your care? Where would you want to receive it? What level of care is acceptable to you? These conversations are easier to have now than during a crisis.
And build this into your retirement number. Whatever you think you need for retirement, add a long-term care reserve on top of it. The $1.46 million “magic number” needed for retirement that people keep citing? It doesn’t include long-term care. It should.
The cost of pretending this risk doesn’t exist is far higher than the cost of planning for it. At $11,294 a month and climbing, that’s not a number you want to encounter for the first time when you actually need care.
