Long-term care is an important retirement planning topic, but it is also one of the most frequently delayed. Many people assume they will never need extended care, or they believe Medicare will cover most of the cost. Unfortunately, long-term care can potentially create financial, emotional, and logistical stress for families if there is no plan in place. The question is not simply, “Do I need long-term care insurance?” A better question is, “If I needed care later in life, how would I want that care paid for, where would I want to receive it, and how would it affect my family and retirement plan?”
TL;DR
You may need long-term care coverage if you want to help manage the financial risk of needing extended care at home, in an assisted living facility, or in a nursing home. Medicare generally does not cover most long-term custodial care, and care costs can significantly affect retirement assets. Long-term care coverage is not right for everyone, but every retirement plan should include a strategy for how care would be funded if it becomes necessary.
What Is Long-Term Care?
Long-term care refers to help with daily living needs that may arise because of aging, illness, disability, cognitive decline, or chronic health conditions. This type of care is different from traditional medical care. Long-term care may include help with activities such as bathing, dressing, eating, using the bathroom, transferring from a bed to a chair, medication reminders, meal preparation, transportation, and supervision for memory-related conditions.
Care can happen in several settings, including:
- Your home
- An adult day care center
- An assisted living facility
- A memory care facility
- A skilled nursing or nursing home facility
For many retirees, the preference is to remain at home as long as possible. But even in-home care can become expensive if help is needed for multiple hours per day or over multiple years.
Why Long-Term Care Planning Matters
Long-term care costs have also continued to rise. According to Genworth and CareScout’s 2024 Cost of Care Survey, costs increased across all care types, with homemaker and assisted living community costs increasing the most at 10%. Source: Genworth / CareScout, 2025. https://investor.genworth.com/news-events/press-releases/detail/982/genworth-and-carescout-release-cost-of-care-survey-results
That does not mean everyone needs to buy long-term care insurance. Some people may self-fund care, some may use insurance, some may rely on a hybrid policy, and others may qualify for government assistance depending on their financial situation. The key is having a plan before care is needed.
Medicare Does Not Cover Most Long-Term Custodial Care
Medicare generally does not cover most non-medical long-term care, including help with everyday activities such as bathing, dressing, and using the bathroom. Source: Medicare.gov, Medicare & You 2026 Handbook. https://www.medicare.gov/publications/10050-medicare-and-you.pdf
This is why long-term care planning is so important. If care is needed for months or years, families may need to rely on personal savings, retirement assets, Medicaid qualification, family caregivers, or insurance coverage.
What Are the Main Ways to Pay for Long-Term Care?
There are several ways to plan for potential long-term care costs. The right approach depends on your age, health, assets, income, family situation, and personal preferences.
1. Self-Funding
Some retirees choose to self-fund long-term care. This means using savings, investments, retirement accounts, home equity, or other assets to pay for care if needed. Self-funding may make sense for households with significant assets and strong income sources. However, it can create risk if care lasts longer than expected or if both spouses eventually need care.
2. Traditional Long-Term Care Insurance
Traditional long-term care insurance is designed to help pay for qualifying care expenses. Policies may cover care at home, assisted living, adult day care, memory care, or nursing home care, depending on the policy. These policies often include a daily or monthly benefit, a benefit period, an elimination period, and optional inflation protection. Premiums can vary based on age, health, gender, benefit amount, and policy design. Traditional coverage may be helpful for people who want dedicated long-term care benefits, but premiums can increase, and underwriting approval is not guaranteed.
3. Hybrid Life Insurance With Long-Term Care Benefits
Hybrid policies combine life insurance with long-term care benefits. If care is needed, the policy may provide funds for qualifying long-term care expenses. If care is not needed, beneficiaries may receive a death benefit. This approach may appeal to people who do not like the idea of paying premiums for coverage they may never use. However, hybrid policies can require larger upfront premiums or ongoing premium commitments, so they should be reviewed carefully.
4. Annuities With Long-Term Care Features
Some annuities offer long-term care riders or enhanced benefits if the owner needs qualifying care. These can be an option for certain retirees, but benefits, costs, liquidity, and limitations vary by contract.
5. Medicaid
Medicaid may help pay for long-term care for people who meet financial and medical eligibility requirements. However, Medicaid is generally needs-based, and qualifying may require spending down assets or meeting strict state-specific rules. Because Medicaid planning can be complex, it should be reviewed with qualified legal and financial professionals.
Who Should Consider Long-Term Care Coverage?
Long-term care coverage may be worth considering if you:
- Want to help reduce the risk of care costs disrupting your retirement income plan
- Have assets you want to preserve for a spouse or family
- Do not want to rely heavily on children or relatives for care
- Want more flexibility in choosing where care is received
- Have a family history of longevity, dementia, Alzheimer’s, Parkinson’s, stroke, or chronic illness
- Are healthy enough to qualify for coverage
- Are in your 50s or early-to-mid 60s and still have planning options available
Long-term care coverage is often considered before retirement or in the early retirement years because underwriting can become more difficult as health changes.
Who May Not Need Long-Term Care Insurance?
Long-term care insurance may not be necessary or appropriate for everyone. You may not need traditional long-term care coverage if you have enough assets to comfortably self-fund care, if premiums would place too much strain on your budget, if you would likely qualify for Medicaid, or if health issues make coverage unavailable or unaffordable. The decision is ideally based on your financial picture, rather than fear. Long-term care planning is about evaluating risk and choosing how you want to address it.
Key Questions to Ask Before Buying Coverage
Before purchasing long-term care coverage, consider these questions:
How much care could I reasonably afford to pay for out of pocket?
Would paying for care affect my spouse’s retirement income?
Would I want care at home, in assisted living, or in a nursing facility?
Do I have assets I would like to help manage or potentially leave for a spouse, family, or charity?
Would my children or family be able and willing to provide care?
Can I afford premiums today and in the future?
Does the policy include inflation protection?
What triggers benefits under the policy?
How long is the elimination period?
What types of care are covered?
These questions can help determine whether coverage fits into your broader retirement plan.
Bottom Line
Long-term care coverage is not automatically right for everyone, but long-term care planning should be part of every retirement conversation. The real issue is not whether you will definitely need care. The issue is whether your retirement plan has a strategy if care becomes necessary. A thoughtful plan can help you evaluate how care would be funded, how it may affect your spouse or family, and whether insurance, self-funding, or another strategy makes the most sense for your situation.
Frequently Asked Questions
1. Do I need long-term care insurance?
Not everyone needs long-term care insurance, but we believe everyone should have a long-term care plan. The right solution may be insurance, self-funding, hybrid coverage, Medicaid planning, or a combination of strategies.
2. Does Medicare pay for long-term care?
Medicare generally does not cover long-term custodial care when that is the only care needed. It may cover certain short-term skilled care if specific requirements are met.
3. What is the best age to consider long-term care coverage?
Many people begin reviewing options in their 50s or early 60s. Waiting too long may make coverage more expensive or harder to qualify for due to health changes.
4. What does long-term care insurance usually cover?
Coverage varies by policy, but it may help pay for care at home, assisted living, adult day care, memory care, or nursing home care if benefit requirements are met.
5. Is long-term care insurance expensive?
Premiums can vary based on age, health, gender, benefit amount, policy type, inflation protection, and insurer. The cost should be compared against the potential financial impact of paying for care out of pocket.
6. What happens if I buy long-term care insurance and never use it?
With traditional long-term care insurance, you may not receive benefits if you never need qualifying care. Hybrid policies may provide a death benefit or other value if care is not needed, but they can have different costs and limitations.
7. Can I use retirement assets to pay for long-term care?
Yes, many people use retirement accounts, brokerage assets, savings, home equity, or other resources to pay for care. However, withdrawals may have tax consequences and could affect long-term retirement income.
8. How do I decide between self-funding and insurance?
The decision depends on your assets, income, health, family situation, risk tolerance, and legacy goals. A financial professional can help compare the potential impact of both approaches.