Long-Term Care Needs by Decade: How to Prepare at Every Stage of Life

What is Long-Term Care?

56% of adults aged 65+ will need some form of long-term care. Long-term care (LTC) is a broad range of health and personal care services for people who can no longer manage living independently due to aging, illness, or disability. LTC can come in different forms, from living in a nursing home to hiring home care. While planning for LTC can feel uncomfortable, early action can help to protect both finances and family relationships. 

Qualifications for LTC are usually tied to activities of daily living (ADLs). There are six ADLs:

1. Eating
2. Dressing
3. Bathing
4. Mobility/Transferring
5. Continence
6. Toileting

Cognitive impairments, such as dementia and Alzheimer’s, are a separate qualifying trigger.

How Many ADLs Trigger Long-Term Care?

Most LTC insurance policies require a policyholder to be unable to perform two of six ADLs. State Medicaid programs may use different assessment thresholds, so check to see what your plan requires. There is a difference between needing help with ADLs (LTC territory) and short-term rehabilitation after surgery or illness (Medicare territory). LTC is only triggered if care is needed until the end of life. 

Types of Long-Term Care Settings

There are several types of long-term care facilities to consider, depending on the level of care required:

• Home care: Typically involves hiring professional caregivers and/or receiving assistance from family members. 
• Assisted living facilities: Offers a middle ground for those who need some help with daily activities but do not require 24/7 medical attention. Residents usually live in a private or semi-private apartment while receiving meals, assistance with ADLs, and access to recreational and social activities. 
• Nursing homes: For those needing a higher level of care, nursing homes provide round-the-clock medical care. This option is often necessary for people with serious health conditions such as dementia or Alzheimer’s disease. 
• Community-based care: A more affordable option for those who need regular care and prefer social engagement. 

It is very common for adults to utilize multiple types of long-term care settings throughout their lives. 

Care Settings Comparison Table

What is Aging in Place?

Aging in place is the ability to live in your own home safely and comfortably as you age, often with support services. It usually involves home modifications (walk-in shower, ramps, grab bars), technology aids, and in-home care arrangements. This is the preference of 70% of adults but requires careful planning and may not be safe long-term.

Community-Based Long-Term Care Options

Adult day care centers and senior centers are an often-overlooked middle option between home care and residential communities. The Program of All-Inclusive Care for the Elderly (PACE) is a combined Medicare/Medicaid program for those who would otherwise need nursing home care to remain at home. PACE provides nursing-home-level services to the elderly, but they are stationed within the community, allowing elders to stay at home. To learn more about PACE and community services, use the Elderly Locator to find community services by ZIP code. 

How Much Does Long-Term Care Cost?

Long-term care costs anywhere from $20,000 for community-based services to $146,880 for a private nursing home room. However, prices will rise as time goes on. According to a report from AARP, the cost of long-term care is increasing faster than Americans’ incomes. It’s also worth noting that prices vary significantly from one state to the next. For example, a nursing home in Mississippi costs roughly half of one in Massachusetts. 

Who Pays for Long-Term Care?

Medicare does NOT cover long-term care, except for limited short-term skilled nursing facility stays following a qualifying hospital stays. Medicaid does cover LTC for low-income individuals after assets are spent down, but eligibility is complex and varies by state. Apart from government assistance, there are several ways to fund LTC.

Personal Savings and Self-Funding

Self-funding means relying on personal savings, investment income, pension, or proceeds from a home sale. Family caregiving is common for those who are self-funding, but it carries its own financial cost (low wages, out-of-pocket costs, etc.). If you are self-funding and aging in place, know that personal expenses relating to informal home care can still add up. 

Government Programs

Although Medicare does not pay for LTC, other government programs can still assist with healthcare expenses: 

• Medicare: Parts A, B, and D cover some nursing facility care for up to 100 days after a qualified hospital stay. 
• Medicaid: Covers LTC for qualifying individuals, but eligibility varies by state and asset spend-down rules apply. Contact your state Medicaid office for eligibility. 
• PACE: Combined Medicare/Medicaid program enabling qualifying individuals to stay at home with community care instead of going to a nursing home. 
• SHIP: Offers free one-on-one counseling on Medicare, Medicaid, and long-term care insurance. 
• VA: Veterans may qualify for LTC benefits including home care, adult day care, and nursing home care through the VA. 

Reverse Mortgages

Homeowners 62+ can convert home equity to cash without selling, as long as they paid off any existing mortgages. No repayment is required until the borrower sells, moves, or dies. While this strategy is useful for LTC funding, it is also highly complex. If you want to use a reverse mortgage to pay for LTC, speak with a financial advisor first. 

Life Insurance as an LTC Funding Vehicle

Accelerated death benefits means tax-free cash advances can be triggered by LTC need, terminal illness, or permanent nursing home residency. Life settlements for those 70+ can also provide another source of income. Certain hybrid life/LTC policies cover both death benefit and LTC costs.

Annuities

Lump sum or ongoing contributions to an annuity can provide regular income to cover LTC costs. While this may not cover full costs, it can serve as a supplemental income stream. However, annuities can lead to highly complex tax implications. Consult with a tax professional or financial advisor to see how annuities would impact your financial plan. 

Understanding Long-Term Care Insurance

Long-term care insurance is a specific type of policy designed to cover some of your home care, assisted living, or nursing home costs if you suffer from a cognitive impairment such as dementia or if your doctor confirms that you can no longer perform two to three ADLs. 

When you can no longer perform two of the six ADLs, you qualify for LTC. However, there is an elimination period before benefits kick in. 

When considering LTC insurance, make sure you account for inflation, and check to see if your plan has inflation protection. Employer-sponsored group LTC insurance may be a more affordable alternative; it’s worth checking with your human resources department. 

Traditional Long-Term Care Insurance Policies

Traditional policies operate similar to other insurance policies. They pay for long-term care when needed, normally kicking in after an elimination period. While this can be the cheapest option at first, premium rates can rise over time, and there is no cash value accumulation. However, there is potential for a premium tax deductible. Consult a tax professional to see how your plan impacts taxes. 

Hybrid Long-Term Care Insurance Policies

Hybrid LTC policies combine LTC insurance with life insurance or annuities. These policies do include a death benefit and cash value. While they are more expensive up front, premiums are fixed and cannot be raised. These plans are a good option for those who want coverage but fear “paying for nothing” if they never use it. 

Policy Comparison at a Glance

Reimbursement vs Indemnity Policies

There are two ways to receive benefits. In reimbursement policies, you must track your LTC expenses and submit receipts for reimbursement. These policies are cheaper, but require more effort and have a longer waiting period. Indemnity policies will cover your LTC directly, without requiring you to submit receipts. These are more expensive, but may be less of an administrative hassle. Note that you will still need to keep track of LTC costs for tax purposes.

Your Long-Term Care Planning Guide by Decade 

In Your 40s: Build the Foundation

• Begin researching long-term care as part of a broader financial plan.
• Begin saving, but keep in mind that for most people, it is not yet time to buy insurance.
• Review family heath history for genetic risk factors (dementia, Parkinson’s ALS) that could increase your personal LTC likelihood.
• Start discussing LTC expectations with your spouse/partner; agree on preferences before a crisis arises.
• Begin earmarking a portion of investment contributions to future healthcare/LTC reserves.

In Your 50s: Take Action on Insurance

• The ideal window to purchase long-term care insurance: healthy enough to qualify for full coverage; old enough that the need feels real; young enough that premiums are still affordable.
• Request quotes for both traditional and hybrid policies and compare them with self-funding projections.
• Check to see whether your employer offers group LTC insurance.
• Update your will, durable power of attorney, and beneficiary designations.

In Your 60s: Finalize Your Plan

• Update all legal documents: advance directive, living will, health care proxy, and durable power of attorney for both health and finances.
• Have explicit conversations with your family about your care preferences; do not leave them guessing.
• Stress-test your retirement income plan against long-term care scenarios (1 year, 3 years, 5+ years of care costs at project rates).
• Research continuing care retirement communities in your preferred area; wait lists can be 2-5 years.

In Your 70s: Prepare Your Home and Research Your Options

• Complete home safety modifications to extended aging in place: walk-in shower, grab bars, ramps, wider doorways, smart home monitoring.
• Research and visit assisted living facilities and nursing homes in your area before you need them.
• Review your LTC insurance policy: understand your benefit triggers, waiting period, and inflation protection. 
• Revisit your legal documents and ensure nothing has changed (divorce, death of named proxy, major health event).

In Your 80s and Beyond: Activate Your Plan

• This is the highest-probability decade for LTC needs; the majority of long-term care is consumed here.
• Conduct a formal ADL assessment to see if there has been any decline in function. This determines both care needs and insurance eligibility.
• Work with a care coordinator or a geriatric care manager to evaluate all care settings and navigate insurance claims.
• Consider transitioning from home care to assisted living or PACE if in-home care becomes unsafe or unstable.
• Revisit Medicaid eligibility if assets have been spent down significantly.
• Ensure all caregivers (professional and family) have the legal authority to access medical records and financial accounts.

When Should You Update Your Long-Term Care Plan?

LTC planning is not a one-time event. Plans should be reviewed annually and after key life events. LTC plans should be reviewed after:

• Marriage or divorce
• Death of spouse or named proxy
• Major health diagnosis
• Relocation to a new state
• Significant change in financial situation 

Careful planning means reviewing often and making sure your plan is ready before you need it. 

The Bottom Line

Long-term care planning is a financial planning imperative, not an afterthought. Planning for LTC means understanding your likely needs, preparing financially, and preparing legally. The earlier you start, the more options you have, and the less financial and emotional burden you place on your family. To see how LTC may impact your financial plan, speak with an advisor today. 

Frequently Asked Questions About Long-Term Care

What is long-term care?

Long-term care refers to a range of services that help people with chronic illness, disability, or cognitive impairment who can no longer perform everyday activities on their own. It includes home care, assisted living, and nursing home care, and can last months, years, or the rest of a person’s life.

Does Medicare pay for long-term care?

Medicare does not cover custodial long-term care. It may cover a short-term stay in skilled nursing facilities (up to 100 days) following a qualifying hospital stay, but it does not pay for ongoing help with daily activities like bathing, dressing, or eating. Most people need separate long-term care insurance or other funding sources to cover these costs.

What triggers long-term care insurance benefits?

Most long-term care insurance policies pay benefits when a policyholder is certified as unable to perform two or more of the six activities of daily living (eating, dressing, bathing, transferring, continence, toileting) for at least 90 days, or when they have a severe cognitive impairment such as dementia or Alzheimer’s disease. 

When is the best time to buy long-term care insurance?

Most financial advisors recommend purchasing long-term care insurance in your mid-to-late 50s. At this age, most people are still healthy enough to qualify for preferred rates and full coverage, but old enough that the possibility of needing care feels real. Waiting until your 60s or 70s significantly increases premiums and reduces the chance of qualifying for coverage. 

What is the difference between traditional and hybrid long-term care insurance?

Traditional LTC insurance covers long-term care costs when you need them, often with tax-deductible premiums, but accumulates no cash value. Premiums can rise over time. Hybrid policies combine long-term care coverage with life insurance or an annuity. They cost more initially but offer fixed premiums, a death benefit for heirs, and a cash surrender value. 

Can Medicaid pay for long-term care?

Yes, Medicaid can cover long-term care costs, including nursing home care, for individuals who meet income and asset eligibility requirements. In most states, this requires spending down assets to a low threshold before qualifying. Eligibility rules vary significantly by state. Contact your state Medicaid office or a local SHIP counselor for guidance.

What is aging in place?

Aging in place means living in your own home as you get older, even as your care needs increase. It typically involves home modifications (like walk-in showers and grab bars), in-home care services, and community support programs. Most adults prefer to age in place, but it requires advanced planning to remain safe and sustainable.

What legal documents do I need for long-term care planning?

At minimum, you should have a durable power of attorney for finances, a durable power of attorney for healthcare, and an advance directive or living will that specifies your care preferences. A living trust may also be appropriate, depending on your estate. These documents should be prepared before a health crisis, while you are still able to make decisions. 

How much does long-term care cost?

Costs vary by care type and location. According to a report from AARP, the cost of home health care has increased 39% since 2021. Nationwide, the annual cost of long-term care ranges from about $26,000 for adult day services to $128,000 for a private room in a nursing home. Costs vary significantly by state. 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This article was originally published on 11/18/2024 and has been updated.

#2026-14302