If you’re turning 65 this year, I have a number for you: $135,000.
That isn’t the price of a luxury sports car or a down payment on a beach condo. According to the latest Milliman Long-Term Care Index, that’s the average amount a 65-year-old needs to set aside right now to cover their future high-intensity long-term care costs.
And let’s be honest, that number is terrifying.
To put it in perspective, data from the Federal Reserve’s Survey of Consumer Finances shows the median retirement savings for Americans aged 65 to 74 is exactly $200,000. If you hit the “average” for long-term care, you’re wiping out nearly 70% of your total life savings just to pay for assistance with daily living.
Why averages are deceiving
Here’s the frustrating thing about averages: you probably aren’t average. Your actual costs could be zero, or they could be catastrophic.
Researchers at Boston College’s Center for Retirement Research recently broke down the Milliman numbers, and the variability is huge.
1. The gender gap: Because women generally live longer than men—and are less likely to have a surviving spouse to provide free care—they pay a lot more. The benchmark cost for women is $171,000, compared to $98,000 for men.
2. The duration lottery: Almost half of men and four in 10 women will never need paid care. Another large group will need less than a year of care, keeping costs relatively low. But if you fall into the 14% of women who need care for five years or more, the average cost explodes to $665,000.
3. The geography penalty: Where you live matters just as much as how long you live. The most expensive states for care are concentrated on the West Coast and in the Northeast, where costs can run twice the national average. If you live in the South-Central U.S., your dollar stretches a lot further.
How to protect yourself
The worst thing you can do is stick your head in the sand. Medicare doesn’t cover extended custodial long-term care, and state Medicaid programs will only step in after you’ve exhausted nearly all of your personal assets.
Here is how you can start preparing today.
1. Buy insurance at the right time: If you’re in your 50s or early 60s, it’s time to price out long-term care insurance. Wait too long, and the premiums become unaffordable—or worse, a sudden health issue could disqualify you from coverage entirely. You can read more in our guide on who actually needs long-term care insurance.
2. Talk to your family: The Milliman report assumes all care is paid care, but Boston College points out that families typically provide at least half of the care hours. You need to have an honest, slightly uncomfortable conversation with your kids or relatives about what they can and can’t handle.
3. Supercharge your savings: If you’re going to self-fund your care, you need a realistic target. If you live in a high-cost state or have a family history of dementia, you need to save considerably more than that $135,000 baseline. Look into maxing out health savings accounts if you’re eligible, as these funds grow tax-free and can be used for qualified medical expenses down the road.
Nobody wants to think about losing their independence. But hoping for the best isn’t a financial strategy. The sooner you look these numbers in the face, the more control you’ll have over your own future.
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