Long-term care does not just mean a nursing home. It often starts with help at home, moves to assisted living, and in some cases, includes skilled nursing care.
For many Feds, this becomes one of the largest unplanned expenses in retirement. Even a solid pension and Thrift Savings Plan (TSP) balance can feel the strain when care stretches across several years.
What Care Can Cost
Most people underestimate the cost. According to the Federal Long Term Care Insurance Program (FLTCIP) 2024 Cost of Care Survey:
- Home care averages about $51,480 annually, based on roughly $33 per hour for 6 hours per day, 5 days per week
- Assisted living averages approximately $66,132 per year, or about $5,511 per month
- Nursing home care averages around $112,420 annually, based on about $308 per day for a semiprivate room
These figures provide a useful baseline, but actual costs can vary significantly by location and level of care. For many Feds, long-term care costs for federal retirees require planning with a buffer for both inflation and longevity.
Where FLTCIP Stands Now
Many Feds expected the Federal Long Term Care Insurance Program (FLTCIP) to cover this risk. That assumption no longer holds for everyone.
FLTCIP remains under an extended suspension for new enrollments and coverage increases for many participants. You can confirm the current status through the Office of Personnel Management.
Here is the reality. If you do not already have coverage in place, or if your coverage falls short, you likely need a Plan B. This creates a growing long-term care planning gap for many federal households.
Three Ways People Fund Long-Term Care
Most people end up using some combination of three approaches.
Some choose to self-insure. That means setting aside assets and accepting that those dollars may need to cover care. This tends to work better for households with strong savings and enough flexibility in their monthly income.
Some Feds look at insurance. Traditional long-term care insurance policies and hybrid options both come up, but not everyone qualifies, and the cost can be a sticking point.
Medicaid ends up in the conversation more often than people expect. It can help, but only after you meet strict eligibility rules, which usually means spending down assets first.
Most people do not rely on just one approach. They piece together a plan based on what they have, what they can afford, and how much risk they are willing to take.
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How to Estimate Your Personal LTC Funding Gap
Run the numbers in a way that reflects real life, not a perfect scenario.
Think about how care would likely play out. For many Feds, it starts with help at home and may shift to assisted living or skilled care if things progress.
Then put a rough timeframe around it, such as two to four years. This doesn't need to be exact, just a range that feels reasonable for your situation.
From there, look at what that actually costs where you live and what that adds up to over time.
Then look at what you actually have available to cover it, including designated savings, insurance, and any reliable family support.
The difference between those numbers is your long-term care planning gap. Once you identify it, you can make clearer decisions about how to address it.
Practical Moves That Reduce LTC Risk
Make a few decisions now that give you options later.
Start with your fixed expenses. If housing or debt eats up too much of your monthly income, long-term care becomes harder to absorb without disrupting everything else.
Set aside a separate bucket for care. Keep it distinct from your emergency fund so you know what is truly available if this becomes part of your plan.
Have the conversation with your family before you need it. Someone will end up coordinating care and handling finances. It is better to decide who that is now, while you still have the space to think it through clearly.
Common Mistakes to Avoid
Several mistakes show up consistently.
Many people assume Medicare will cover long-term custodial care. It generally does not.
Others wait too long to explore insurance, only to find that changes in their health limit their options.
Some continue to rely solely on FLTCIP, even when enrollment or coverage adjustments remain limited.
Avoiding these missteps can give you more control over your financial plan.
Build A Plan Before You Need It
At some point, this comes down to a simple question. If care is needed, where does the money come from?
Run the numbers. See what you are actually working with and what you are not.
From there, make a call. That might mean setting aside more, looking at insurance, or adjusting how you plan to spend in retirement.
None of this needs to be perfect. It does need to be intentional.
If you want to walk through how this fits into your broader plan, reach out to the team at Serving Those Who Serve at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
