Nebraska woman spends $240K/year on care for husband with Alzheimer’s — twice the cost of a private room in a nursing home facility. How aging at home is crushing Americans' finances

The cost of home care can be crushing

Many of us would like to live out the last years of our life like Jimmy — in the comfort and familiarity of our own home. In fact, when surveyed, about three-quarters of adults 50 and older said they want to age in place for as long as possible.

But if you become sick, disabled or otherwise unable to fully care for yourself, the cost of care at home can be extraordinarily expensive — and put a strain on your family. During their lifetime, 70% of people will need help performing daily activities, such as bathing, eating and using the bathroom. So having a plan for long-term care should be an essential part of your retirement planning.

The cost of home care varies greatly depending on where you live, how much care a person needs and what type of caregiver is employed. In 2023, the national median hourly cost for a home health aide was $33, according to Genworth Financial. That means the median cost for year-round, 24-hour care would be about $290,000. This is substantially more than the $117,000 annual median cost of a private room at a nursing home or $64,000 annual median cost at an assisted living facility.

Given that the average retirement savings for people 60 and older is only $185,000, and that the average monthly Social Security benefit retired workers receive is $1,920, long-term care costs can be a stretch for many retirees. It may be a good idea to talk to a financial planner about your retirement plans — whether you plan to age in place or move into a long-term care facility — so you can plan appropriately.

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Other options: Government programs and insurance

When planning for long-term care expenses, it’s worth exploring government programs that may be available to help. For example, Medicare may pay for some short-term care costs and certain medical supplies, while many states and the Department of Veterans Affairs also have programs that may provide some assistance.

The eligibility criteria and assistance available from Medicaid vary from state to state. For instance, some states may provide assistance to individuals who are medically needy, even if their income is too high to otherwise qualify. Medicaid may also provide stipends for friends or family acting as caregivers.

Many states offer Programs of All-Inclusive Care for the Elderly (PACE), which helps people get care at home — including adult day primary care, nursing home care and meals — rather than in a nursing home or care facility. You can join PACE if you are at least 55, live in a PACE service area, need nursing home-level care and are capable of living safely at home.

Long-term care insurance is another option to consider. It covers nursing home or home-health care if you’re over 65 and have a chronic or disabling condition requiring constant care. But it can be expensive and deciding whether to buy it is not a straightforward decision, so it’s best to talk to an adviser — ideally before you’re 45.

Critical illness insurance is another type of coverage that’s worth consideration. It will typically pay you a lump sum payment to help cover any costs incurred because of a heart attack, stroke, cancer, organ transplant or coronary bypass surgery. (And some policies may cover many more critical illnesses.)

For all its benefits, aging in place can be financially prohibitive. But with some planning and preparation, it’s possible — after all, there’s no place like home.