Caregiving has become so crazy expensive that it's financially devastating to most families

By Jessica Hall

Only the wealthiest Americans can bear the costs of long-term care, new research found

Middle-class households see their wealth drop on average to 42% of the original level after long-term-care needs begin, according to the Roosevelt Institute.

While the so-called great wealth transfer in the U.S. promises to shift an estimated $72.6 trillion to younger heirs, the realities of long-term-care needs for older adults could disrupt this windfall for all but the wealthiest families.

The demand for long-term care among an aging population will amplify the difference between the haves and have-nots in society and further deepen wealth inequality in the country, according to new research from the Roosevelt Institute, a left-leaning think tank.

Read: 'A million bucks isn't what it used to be': What if the great wealth transfer we've been waiting for isn't so great?

"By maintaining a system that depends on unpaid family caregiving, provides public support only after families have nearly exhausted their savings, and allows private, profit-driven companies to capture rising care costs, the U.S. effectively penalizes aging," said Jessica Forden, a researcher with the Roosevelt Institute. "Long-term care is not just an individual health issue, but a structural driver of wealth inequality."

Long-term care includes a variety of types of medical care and general personal assistance for people who can no longer fully take care of themselves. People who need long-term care often need help with activities of daily living such as bathing or showering, getting dressed, using the toilet or walking across a room.

Among Americans who turned 65 between 2022 and 2025, 56% will develop a need for long-term-care services and supports, with one in five needing care for more than five years, according to the U.S. Department of Health and Human Services. Currently, more than 8.3 million adults over the age of 50 have difficulty with one or more activities of daily living, according to researchers at the New School.

Help is expensive: A nonmedical caregiver in the home costs more than $80,000 a year, assuming 44 hours of care a week, while the median cost of assisted living is $74,400 a year, according to CareScout. The national median rate for a private room at a nursing home tops $129,000 a year.

An invisible and costly burden

The financial burden of providing long-term care typically comes out of the pockets of Americans. Medicare, the government insurance program for those 65 and older, does not cover such costs. But few Americans have enough saved to cover such expenses, especially if the need for care is long term. The median annual household income for Americans 65 and older is $57,000.

The median amount American workers have saved for retirement is just $955, a number that includes workers who have saved nothing for retirement. Including workers who have at least a positive retirement-savings balance, the median savings total $40,000, according to the National Institute on Retirement Security.

The burdensome cost of long-term care means middle-class households see their wealth drop to 42% of its original level after long-term-care needs begin, while the top 25% of families recover 94% of their original income, according to Forden.

"Long-term care is both a symptom and a cause of the nation's deepening wealth divide," Forden said. "Those at the top of the wealth distribution can absorb long-term-care costs without substantial losses, but for most Americans, the burden of paying for care wipes out decades of savings and home equity."

While Medicaid - the joint federal and state program that provides health coverage to low-income people - is the biggest payer of long-term-care services and supports in the country, it only provides care to the poorest individuals - those with assets of $2,000 or less. More than four out of five middle-class adults over 65 who need long-term care for five years or more will eventually enroll in Medicaid, Forden said.

The bulk of the care is done by family and friends, which affects those unpaid caregivers' ability to maintain their jobs, build their own retirement wealth and prepare for their own needs down the road.

Unpaid family caregivers spend an average of $7,200 a year out of pocket on things like housing, healthcare and transportation for their family members, and even more for family members with memory issues such as Alzheimer's, according to TIAA.

A total of 59 million Americans provide care for older parents, spouses, neighbors and other loved ones, and contribute 49.5 billion hours of care annually, AARP said. That work in 2024 would be valued at $1.01 trillion a year if paid in the marketplace, based on a value of $20.41 per hour, AARP found. In 2001, the total value of such care was $600 billion.

Unpaid family and friends perform 75% to 80% of all hours of eldercare work in the U.S., according to research from the Urban Institute. The burden placed on these family members and friends means they can't build their own wealth and are more likely to be in poverty in their own later retirements, Forden said.

"This 'free' care is far from costless. It shifts the bill from aging parents to their adult children by impacting these caregivers' own capacity for wealth building," Forden said. "While relying on unpaid family care may help to avoid long-term care costs in the short run, caregivers often face other financial costs and intergenerational wealth impacts from stymied career growth, reduced income, and reduced financial savings for their own retirements as a result of care responsibilities."

Without adequate financial means or the support of public programs, some older adults go without any care at all. In 2020, over half of adults 55 and older who had trouble with basic tasks like grocery shopping or paying bills or activities of daily living like showering or dressing did not get any help, according to research from the New School. Single older adults without adult children are particularly at risk.

"There will be older adults who go without care," Forden said. "What does that say about the country as a whole?"

-Jessica Hall

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04-18-26 1629ET