Most older Americans lack the savings needed to pay for long-term services and support (LTSS), according to new research from AARP. In 2022, households aged 75 and older held median financial assets of just $50,000, while those aged 65 to 74 had about $120,000. Paying for 30 hours per week of home care would exhaust median savings in about a year, and assisted living or nursing home care could drain those resources in just months.
Costs of LTSS have surged in recent years, particularly for home- and community-based services that many older adults prefer. Between 2019 and 2024, median costs for home care and assisted living rose nearly 50%, while adult day services increased 33% and nursing home care climbed roughly 23% to 25%. Over the same period, median income for households headed by someone age 65 or older rose just 22%. Inflation and growing demand have continued to push care costs higher into 2025.
One way to gauge the strain on households is affordability, measured by how many months of care a median household could purchase using its income. Affordability improved during much of the 2010s but dropped sharply after 2019 for home care and assisted living. Adult day services became less affordable after 2021, while nursing home care affordability remained relatively stable, according to AARP.
In 2024, median annual LTSS costs ranged from about $26,000 for five days per week of adult day services to $128,000 for a private nursing home room. Typical home care costs $33 to $34 per hour, bringing annual expenses close to the roughly $60,000 median income of households headed by someone age 65 or older. As a result, many households must rely on both income and savings to cover care, rapidly depleting their financial resources, particularly for single-person households or those supporting multiple family members.
Most LTSS is financed privately because relatively few Americans qualify for Medicaid, and most health insurance does not cover these services. Among people turning 65 between 2021 and 2025, AARP estimates that 56% will need LTSS, 45% will receive paid care and 35% will incur out-of-pocket costs. About 14%, or roughly one in seven, will pay more than $100,000 in lifetime care costs (in 2020 dollars). Fewer than 1 in 25 adults over age 40 have private long-term care insurance.
Costs and affordability vary widely across states. Higher-income states generally have higher care costs, but affordability often provides a clearer picture than cost alone. Home health and homemaker services tend to be more affordable in higher-income states, while nursing home and assisted living affordability shows little relationship to state income levels. The gap between what families can afford and what care costs remains substantial in many parts of the country, underscoring the growing financial challenge of long-term care.
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