The 5-Year Retirement Killer: What One Long-Term Care Event Actually Costs Your Nest Egg
What would happen to your retirement if one family member needed care for three years, and what if that care lasted five or more? The monthly bill may look manageable at first, but long-term care costs can steadily drain IRAs, force asset sales, and reduce the surviving spouse’s financial choices.
This follow-up to our “Long-Term Care Now Costs $128K a Year” article looks at the total cost of one care event, how those costs vary across California, Arizona, Nevada, Texas, and Washington, and the options families use to prepare.
Why Long-Term Care Costs Become a Retirement Problem
Most people do not experience long-term care as one large bill. Instead, the expense arrives month after month while normal retirement expenses continue.
Guidance summarized by Life Happens and NAIFA suggests that the average long-term care need lasts about three years overall, with women often needing care longer than men. Most people will not need a decade of care, but a meaningful minority will need assistance for five years or more.
Dementia and other cognitive conditions can create especially long care periods. That is why a three-year plan may cover an average experience but leave a family exposed to the most damaging scenario.
The risk is not only the monthly cost. It is the number of months your retirement assets must keep paying.
Medicare is also not a general solution for custodial long-term care. Medicare.gov explains that Medicare generally does not pay for ongoing help with bathing, dressing, eating, toileting, or other daily activities when custodial care is the primary need.
What Long-Term Care Costs in 2025 and 2026
The 2025 CareScout Cost of Care Survey reports these national median costs:
| Care setting | National median annual cost |
|---|---|
| Non-medical in-home caregiver, based on 44 hours per week | $80,080 |
| Assisted living | $74,400 |
| Nursing home, semi-private room | $114,975 |
| Nursing home, private room | $129,575 |
These are median figures, not guarantees. Actual costs depend on location, care intensity, facility type, staffing, room choice, and how many hours of help are needed.
Memory care is particularly important to understand. CareScout’s 2025 survey does not list memory care as a separate national category. Memory care may be offered within assisted living or a specialized facility, and the actual cost can be higher than the standard assisted living median. Families should request a current, local quote rather than assume assisted living numbers will cover dementia-related care.
The Three-Year Bill Versus the Five-Year Bill
Here is the math using the national CareScout medians:
| Care setting | Three-year total | Five-year total |
|---|---|---|
| In-home care | $240,240 | $400,400 |
| Assisted living | $223,200 | $372,000 |
| Semi-private nursing home | $344,925 | $574,875 |
| Private nursing home | $388,725 | $647,875 |
A five-year private nursing home stay at today’s median cost could approach $650,000 before inflation, taxes, medical expenses, or other household costs.
Consider a hypothetical couple with $1 million in retirement assets. A five-year care event costing $647,875 could consume nearly two-thirds of that nest egg. The surviving spouse may then have to live on the remaining assets while still paying for housing, food, insurance, transportation, and normal healthcare.
The impact can be even greater when the money comes from an IRA or 401(k). Withdrawals may create taxable income depending on the account, the individual’s tax situation, and the amount withdrawn. Selling investments during a market decline can also lock in losses and reduce the assets available for future growth.
A care event can change the retirement plan for two people, not just the person receiving care.
State Variations Across CA, AZ, NV, TX, and WA
Where you receive care can make a major difference. The following 2025 median figures come from CareScout state releases and CareScout-based data summaries. They are useful for planning, but they should not replace a local cost estimate.
| State | In-home care | Assisted living | Semi-private nursing home | Private nursing home |
|---|---|---|---|---|
| California | $91,520 | $82,800 | $146,000 | $182,135 |
| Arizona | $86,944 | $74,220 | About $100,375 | About $137,240 |
| Nevada | $84,656 | $73,320 | $134,503 | Not reported in the state release used |
| Texas | $68,640 | $67,200 | $67,525 | $91,250 |
| Washington | $102,960 | $90,550 | $157,859 | $191,625 |
Sources include the CareScout releases for California, Arizona, Nevada, Texas, and Washington.
For example, five years of private nursing home care at the reported median would equal approximately:
- California: $910,675
- Arizona: about $686,200
- Texas: $456,250
- Washington: $958,125
These totals help explain why national averages alone are not enough. Your state, preferred care setting, family support, and available income all matter.
How Families Actually Pay for Long-Term Care
Families usually combine several resources rather than rely on one source.
Traditional long-term care insurance
A traditional long-term care plan is designed specifically to help pay for qualifying care at home, in assisted living, or in a nursing facility. Important features may include:
- Daily or monthly benefit amount
- Three-, five-, or longer benefit periods
- Inflation protection
- Elimination period before benefits begin
- Coverage for cognitive impairment and qualifying activities of daily living
Traditional coverage may provide more dedicated long-term care benefits, but premiums and underwriting vary. You also need to understand whether premiums can change under the contract.
Hybrid life insurance and long-term care coverage
Hybrid coverage combines life insurance with long-term care benefits. If you need care, the policy may allow you to access part of the death benefit for qualifying expenses. If you never need care, the policy may provide a benefit to your beneficiaries, subject to the contract.
This can appeal to people who want protection for care but also want a potential legacy benefit. However, the structure, premium, benefit pool, and access rules must be reviewed carefully.
Short-term care coverage
Short-term care plans may provide benefits for a limited period, often shorter than a traditional long-term care plan. They may be worth considering for someone who wants help with a shorter care event or who does not qualify for traditional coverage.
Short-term coverage is not a substitute for every long-term care strategy. The benefit period, triggers, exclusions, and renewal terms are especially important.
Family caregiving
Family members often provide unpaid care at home. That may reduce facility expenses, but it does not make care free.
Family caregiving can involve:
- Reduced work hours or leaving a job
- Missed retirement contributions
- Transportation and home modification expenses
- Lost Social Security earnings history
- Physical and emotional strain
- Delayed retirement for the caregiver
The NAIFA and Life Happens guidance emphasizes looking beyond the facility invoice. The hidden cost may be the retirement security of the person providing care.
How Much Long-Term Care Coverage Do You Actually Need?
There is no universal dollar amount. A practical starting point is to estimate the gap between the cost of care and the resources you would realistically use.
Use this framework:
Choose the care setting you want to protect.
Would you prefer home care, assisted living, skilled nursing, or a combination?Estimate the local monthly cost.
Use a current CareScout estimate and request local facility pricing. Do not rely only on a national median.Subtract income available for care.
This could include Social Security, a pension, rental income, or another reliable source.Decide how much of your assets you are willing to spend.
Some families are comfortable self-funding the first year or two. Others want to preserve assets for a spouse or heirs.Choose a planning period.
Three years may reflect an average need. Five years may provide more protection against a longer event. Cognitive conditions may justify exploring longer benefits.Review inflation protection.
A benefit that looks adequate today may be less useful years from now if care costs continue rising.
A simple example: If care costs $10,000 per month and you can dedicate $3,000 per month of income toward it, the initial gap is $7,000 per month. Over five years, that gap would total $420,000 before inflation and changes in care needs.
As a licensed broker in California, Arizona, Nevada, Texas, and Washington, we can help you compare the role of traditional long-term care insurance, hybrid life and long-term care coverage, short-term care options, and self-funding.
As a local independent agency, our job is to help you understand the trade-offs, not push you into a one-size-fits-all solution. Your specific situation matters.
Protect the Retirement Plan You Have Built
Long-term care planning is not about assuming the worst. It is about deciding in advance how much risk you want your retirement assets and family to carry.
The good news is that you do not have to solve every detail in one meeting. Start by reviewing your age, health, income, assets, family support, preferred care setting, and the amount you would want to preserve for a spouse or heirs.
Contact SR Insurance Services Inc. at 619-519-4217 or email soledadinsagent@gmail.com to review your options. No cost, no obligation, just a practical conversation about how long-term care costs could affect your retirement plan.
SR Insurance Services Inc is an independent licensed insurance agency. This content is for informational purposes only and does not constitute insurance advice. Coverage availability and rates vary by individual circumstances. Long-term care insurance, life insurance, and hybrid coverage are subject to underwriting, policy terms, exclusions, limitations, and benefit triggers. Consult a licensed tax professional or attorney before making decisions involving retirement account withdrawals, asset transfers, or tax planning.
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LinkedIn Post
One long-term care event can affect two retirements: the person receiving care and the spouse managing the remaining assets.
CareScout’s 2025 data shows national median annual costs of:
- $80,080 for non-medical in-home care
- $74,400 for assisted living
- $114,975 for a semi-private nursing home room
- $129,575 for a private nursing home room
Over five years, a private nursing home stay could approach $650,000 before inflation, taxes, and other household expenses. Costs also vary widely across California, Arizona, Nevada, Texas, and Washington.
The right question is not only, “Can we pay this month’s bill?” It is also, “How much of our retirement would remain after three or five years?”
Traditional long-term care insurance, hybrid life and long-term care coverage, short-term care plans, and self-funding each have trade-offs.
Read the full article through the SR Insurance Services Inc. blog, then contact us at 619-519-4217 for a no-cost, no-obligation conversation.
Instagram Caption
Most people think about long-term care one month at a time.
But the bigger retirement risk is the total event.
At 2025 national median costs, five years of care could total approximately:
• $400,400 for in-home care
• $372,000 for assisted living
• $574,875 for a semi-private nursing home room
• $647,875 for a private nursing home room
Costs vary by state and care setting, and memory care can require a separate local estimate.
The good news is that you can plan around the gap between your income, your assets, and the coverage you want.
Read the full article at the SR Insurance Services Inc. blog or call 619-519-4217 to review your options.
#LongTermCare #RetirementPlanning #LongTermCareInsurance #FinancialProtection #RetirementSecurity #MedicarePlanning #FamilyCaregiving
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What would happen to your retirement savings if a parent or spouse needed care for five years?
CareScout’s 2025 national median costs show that a private nursing home room costs about $129,575 per year. Over five years, that could approach $650,000 before inflation, taxes, and other household expenses.
The cost can be different in California, Arizona, Nevada, Texas, and Washington. Home care, assisted living, skilled nursing, and memory care also have different price points.
Long-term care insurance, hybrid life insurance, short-term care coverage, and family caregiving are all possible parts of a plan. The right approach depends on your health, income, assets, and family goals.
What part of long-term care planning feels most confusing to you?
Read more at the SR Insurance Services Inc. blog or call 619-519-4217.
Pull Quotes
“The risk is not only the monthly cost. It is the number of months your retirement assets must keep paying.”
“A care event can change the retirement plan for two people, not just the person receiving care.”
“Your specific situation matters when deciding how much long-term care risk to insure.”
Email Newsletter Blurb
One long-term care event can drain retirement assets over several years. Our latest article breaks down current national and state costs for in-home care, assisted living, nursing homes, and memory care across CA, AZ, NV, TX, and WA. It also explains traditional, hybrid, short-term, and family-caregiving options. Read more on the SR Insurance Services Inc. blog.