Long-term care refers to a range of services and supports that help people with chronic illnesses, disabilities, or other conditions meet their personal care needs over an extended period of time.
Long-term care (LTC) is one of the most consequential financial risks retirees can face. Even those who save diligently for retirement may find their nest egg eaten away by the costs of long-term care, if they or a partner develop chronic illness, disability, or need help with daily living tasks. Because these care needs are unpredictable, expensive, and often poorly insured, they can significantly undermine retirement readiness.
Long-term care, often referred to as long-term services and supports (LTSS), encompasses a wide range of non-medical and medical assistance needed when someone can no longer perform routine activities such as bathing, dressing, eating, toileting, or managing medications. Care may be delivered in a nursing home, assisted living facility, or at home or in the community.
National Institute on Retirement Security research finds that 69% of older Americans will require some form of LTSS during their later years. The costs vary widely depending on the type and duration of care. Because LTC is typically needed late in life (when individuals live longer), one extended stay or worsening condition can quickly consume what was thought to be sufficient retirement resources.
Even careful retirement savings strategies rarely factor in large, unpredictable care expenses often at later ages. The NIRS Growing Burden of Retirement report places LTC as the “thorniest problem for retirees to solve,” because many cannot realistically accumulate enough to cover long stays in institutions.
Medicaid has become the default safety net for many who cannot afford LTC. NIRS found in Accessing Long-Term Care Coverage Through Medicaid that because private insurance is largely unavailable or unaffordable, many middle-class seniors must reduce their savings and assets (a process called “spend down”) just to become eligible. However, Medicaid’s rules for eligibility are complex and vary by state. Even for those who eventually qualify, coverage tends to favor institutional care over home and community-based services, and benefits often lag behind actual needs. Thus, the very act of protecting one’s remaining retirement assets can become a balancing act between eligibility constraints and care needs.
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