Money, markets, and what matters today.

Tuesday, October 27

Millions Saved, and Long-Term Care Could Still Wipe It Out

An older nursing home resident walking on a city sidewalk with help

Suze Orman says even people with $5 million should think hard about care costs. For middle-income families, the math is even tighter.

Photo: Paul Sequeira for the EPA’s DOCUMERICA project, Chicago, June 1973. U.S. National Archives, public domain.

Picture the day someone you love can’t get dressed, take a bath, or get out of bed without help. It rarely comes with a warning, and it rarely ends in a week. For a lot of families, that’s when the retirement plan meets a bill nobody budgeted for.

This month, Suze Orman took up a question she says she hears from people with big savings: “If I have $5 million or more, do I really need long-term care insurance?” Her answer, in an Oct. 15 post on her own site, was that savings and coverage “are not competing goals. One builds your future, and the other helps protect it.”

Most of us aren’t sitting on $5 million. That’s why her point matters more for middle-income families, not less. Here’s what care costs, who pays, and what your options are.

What care costs today

The CareScout Cost of Care Survey is the usual yardstick. Its latest edition, covering 2025 and released March 2, 2026, puts the national medians at:

  • Private nursing home room: $355 a day, or $129,575 a year
  • Semi-private nursing home room: $315 a day, or $114,975 a year
  • Assisted living: $6,200 a month, or $74,400 a year
  • In-home caregiver: $35 an hour, or $80,080 a year at 44 hours a week

Where you live matters a lot. A private nursing home room runs a median $200,750 a year in New York and $91,250 in Texas.

How likely you are to need it

The federal Administration for Community Living says someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years. Women need care longer on average (3.7 years) than men (2.2 years). About one-third of today’s 65-year-olds may never need it, but 20% will need it for more than five years.

Five years in a median private nursing home room comes to nearly $650,000 at today’s prices. A modest 401(k) doesn’t survive that.

Medicare won’t cover it

This catches families off guard. Medicare.gov says it plainly: “Medicare doesn’t pay for long-term care.” Most long-term care is help with everyday tasks like dressing, bathing, and using the bathroom, and Medicare and Medigap don’t cover it, in a nursing home or in the community.

Medicaid does pay, but only if you qualify under your state’s rules. The Administration for Community Living says the asset limit in most states is $2,000 for a single person. For many families, that means spending down nearly everything first.

What coverage costs, and the fine print

Orman’s own example: buy a policy at 50 for $4,000 a year, and by 75 you’ve paid $100,000 in premiums. She compares that with care that costs $100,000 today and, rising 5% a year, could cost “well over $250,000 annually in 25 years.” The math holds. At 5% a year, a $100,000 annual care bill grows to about $339,000 over 25 years.

Premiums depend on age, health, and how much coverage you buy. The American Association for Long-Term Care Insurance, an industry group that also refers shoppers to agents, publishes a yearly price index. For $165,000 in starting benefits, its 2026 averages are about $5,010 a year combined for a couple both 55, $4,450 for a single woman of 60, and $7,030 combined for a couple both 65.

Shop around. In the same index, five insurers quoted one Illinois couple, both 60, anywhere from $4,591 to $7,173 a year for virtually identical coverage.

Premium increases are the other worry. The National Association of Insurance Commissioners says many older policies were underpriced, which forced big rate hikes. It also says newer policies are priced more accurately, which makes increases “far less likely and of a lesser magnitude.” Less likely isn’t impossible, so ask about rate history.

You’ll also hear about “linked-benefit” or hybrid policies that pay a death benefit if you never need care. Orman mentions plans like these. DFN doesn’t recommend them. They bundle care coverage with life insurance, and the bundle costs more. In the association’s own comparison, a 55-year-old man pays about $1,050 a year for a traditional policy with a $180,000 care pool, versus $3,540 for a linked-benefit policy with the same pool. If you need life insurance, buy term and invest the difference. Keep the two jobs separate.

Smart moves for middle-income families

  • Start looking in your 40s or 50s. Orman suggests exploring coverage between 45 and 60, while you’re healthy enough to qualify.
  • Protect the emergency fund. Orman’s rule: “Do not use your emergency fund to pay for coverage.”
  • Ask about your state’s Partnership program. Where one exists, a Partnership-qualified policy lets you keep extra assets, dollar for dollar with the benefits it paid, if you later need Medicaid. Your state insurance department can tell you more.
  • Consider partial coverage. Orman notes that even a policy covering only part of the cost can reduce how much you pull from your savings.

The Bottom Line

Long-term care is one of the biggest financial risks retirees face, and Medicare won’t cover it. You don’t need millions to take it seriously. Learn what care costs in your area, price a traditional policy while you’re healthy, keep your emergency fund intact, and don’t let anyone sell you life insurance as the answer to a care problem. In Orman’s words: “The plan is protection first… then growth.”

Sources and Further Reading

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