Long-Term Care Insurance

Long-term care insurance, which helps pay for nursing home, assisted living or in-home care you may need in the future, is very expensive — because there’s a good chance that you’ll need and use it. A year of home health aides averages around $52,624 per year, according to 2019 data from Genworth, while a year in a shared nursing home room averages $90,155. A 2019 government report found that 70% of those who reach age 65 will need significant longterm services and supports.

Without long-term care insurance, if you end up with Alzheimer’s disease or simply need help with daily activities such as eating, bathing and dressing, you might have to rely heavily on family members to care for you. Or you might deplete your savings paying for care.

So just how expensive is it? Costs vary, but it’s not uncommon to be charged somewhere between $2,000 and $4,000 annually if you buy the policy between ages 50 and 65, and you may have to pay $6,000 or more if you buy at age 70 or later.

Common guidance suggests that you skip long-term care insurance if you’re rich or poor, because wealthy folks can just pay for care out of pocket, while lower-income people can’t afford it at all. But those in the middle class should look into whether they want to buy it — and when. (You’ll pay less if you buy while young, but you’ll make more annual payments, too. If you delay until you have one or more health conditions, though, you’ll end up paying more.)

Note that you have some other ways to pay for needed care, such as by saving extra money in your retirement accounts, and making use of a health savings account (HSA).

Read up on long-term care insurance before buying it, as there’s a lot to know and plenty of choices you’ll need to make. There are some cost-cutting strategies to consider, too, such as getting coverage that lasts only three to five years, which is sufficient for most (but not all) folks.