Over 80% of retirees face this 1 big expense but don’t plan for it. How to save thousands of dollars a year by including it in your strategy

But too many Americans (one in five, according to Fidelity) overlook one major expense in their retirement planning: the cost of health care — and the cost of long-term care in particular.

That’s a problem, as four in five (80%) of 65-year-olds will need some form of long-term care at some point, according to a study by the Center for Retirement Research at Boston College (1).

Of these, about 40% will require “high-intensity care” lasting for more than a year.

Yet only 3% of Americans (or 15% of those ages 65 and older) have long-term care insurance, according to the study.

That may be because over half of Americans assume that Medicare will pay for assisted living and nursing home costs (2). In reality, Medicare coverage is limited, typically short-term, and restricted to skilled care.

Medicaid offers some long-term care coverage, but only for eligible low-income individuals.

So if you’re developing a comprehensive retirement strategy, it’s wise to account for the cost of long-term care — which also depends on where you live.

A new Caring.com report reveals which states offer the best value for long-term care — and which are pricing retirees out of care (3).

Long-term care costs vary greatly by state

States with a higher cost of living, higher labor costs, and higher real estate prices — like California and New York — tend to have higher long-term care costs.

According to the Caring.com report and CareScout, senior care in states like Mississippi and Texas costs roughly half as much as care in California and New York.

Overall, Mississippi is the most affordable state for senior care, with a low cost of living, reputable home care services, and one of the lowest annual assisted living costs.

The cost of care also depends on what type of care you receive.

Assisted Living: Median price $5,900/month (4)

This type of accommodation offers personal care and health-related services to people who need assistance with activities of daily living.

The most expensive states for assisted living are Hawaii, Alaska, and Washington, D.C.

South Dakota offers the most affordable assisted living ($52,200 per year), well below the national annual median of $70,800.

Nursing Home: Median prices $9,277/month semi-private; $10,648/month private

A nursing home provides a higher level of medical care and supervision than an assisted living community, including room and board, therapies and rehabilitation, and 24/7 nursing care.

For a semi-private room in a nursing home, the most expensive states are Alaska, Oregon, and Hawaii.

A private room in a nursing home is most expensive in Alaska, Oregon, and Washington, D.C. (5)

The most affordable state for a private nursing home room is Texas, with a median annual cost of $85,045, compared with a national annual median of $127,750. Neighboring Oklahoma and Louisiana have median annual costs of $91,250.

Memory care, which provides specialized care for patients with dementia, typically falls between assisted living and nursing home care in terms of cost — it’s more expensive than assisted living, but typically less than a nursing home with around-the-clock care.

How to plan for long-term care costs in retirement

A 65-year-old who retires today needs an average of $172,500 to cover their health-care needs in retirement, according to Fidelity Investment’s 2025 Retiree Health Care Cost Estimate (6).

That’s 4% more than in 2024 (when it was $165,000) — and 115% higher than 20 years ago.

One way to manage these expenses is to explicitly account for them in your retirement plan. Here are some options:

Long-term care insurance

There are two options for coverage: