Long-term care slipping out of reach for middle-income Americans, report finds

Long-term care is becoming increasingly unaffordable for middle-income older Americans, with rising costs and limited financing options leaving many retirees exposed to significant financial strain, according to a new report.

The study concludes that a growing share of older households cannot cover the cost of needed services and supports without exhausting savings or relying heavily on unpaid family care. Researchers found that inflation has accelerated cost pressures in recent years, further weakening the ability of middle-income retirees to pay for assistance with daily living.

AARP Public Policy Institute warns that long-term care affordability is sharply worsening for middle-income Americans.

“Home care and other long-term care services have quickly become increasingly unaffordable in recent years,” said Alan Weil, Senior Vice President for Public Policy at AARP. “The result is a widening gap between what care costs and what older adults and their families can afford -- and we've got to fix this, because the consequences can be life-threatening.”

The analysis shows that many retirees fall into a coverage gap — earning too much to qualify for Medicaid but lacking the income or assets needed to fund private care over extended periods. This dynamic forces difficult trade-offs, including spending down retirement savings or delaying needed care.

According to the report, out-of-pocket spending remains the dominant funding source for long-term services and supports. Medicare generally does not cover ongoing assistance with activities such as bathing, dressing or meal preparation, leaving households to bear most costs themselves.

Rising service prices have intensified the challenge. The report highlights how home-based care — often viewed as a lower-cost alternative to institutional settings — has also become significantly more expensive, reducing affordability even for those hoping to age in place.

Researchers also point to demographic trends that will likely compound the issue. As the population ages, demand for long-term care services is expected to increase, potentially putting further upward pressure on prices and straining both public programs and family caregiving networks.

The report warns that middle-income retirees are especially vulnerable to financial shocks tied to care needs, since many lack long-term care insurance and may underestimate the likelihood or duration of needing support.

AARP is urging policymakers to consider reforms that could expand financing options and improve access to services. Without intervention, the organization said, affordability challenges could deepen and limit care choices for millions of Americans in the coming years.

The findings point to the growing importance of integrating long-term care planning into broader wealth strategies. As costs rise and coverage gaps persist, preparing for potential care needs is becoming a central component of retirement security.