In the course of your retirement planning, there are certain costs you'll probably know to account for. Specifically, you'll need a roof over your head, a means of getting around town, food, and medication. But what about long-term care?

It's easy to assume you won't need to worry about long-term care, but actually, a whopping 70% of seniors 65 and over wind up needing some care of this nature. And if you don't figure out how to pay for it, you'll be in for a major shock.

serious older man against black background

Image source: Getty Images.

Unfortunately, only 31% of Americans have a plan in place for how to pay for long-term care, according to a recent survey by The American College of Financial Services. If you're not part of that statistic, you'll need to start crunching some numbers -- and figuring out how you'll tackle what could be an astronomical expense.

Are you prepared to pay for long-term care?

Many people assume that Medicare will pick up the tab for long-term care, but that couldn't be further from the truth. While Medicare will pay for certain types of rehabilitative care, care that's custodial in nature won't be eligible for coverage, which means you'll need to pay for it on your own. Custodial care refers to aid with everyday living, as opposed to care related to a specific injury, illness, or medical condition. And if you wind up needing it, here are the costs you may be in for:

Long-Term Care Service

Average Yearly Cost

Assisted living facility


Home health aide


Shared nursing home room


Private nursing home room


Data source: Genworth.

If these numbers seem shocking to you, you should know that in some parts of the country, they're a lot higher. And that's why you need a specific plan in place that allows you to pay for long-term care.

Protect yourself -- and your loved ones

If you wind up needing long-term care and don't have funds set aside for it or the right insurance to pick up its tab, then it's not just your personal finances that stand to take a beating; your children, or even grandchildren, could wind up suffering financially as well. That's why it's crucial that you put a plan in place, and that plan could involve a number of things:

  • Long-term care insurance. You're most likely to get approved for a policy if you apply in your mid-50s to early 60s, and the earlier you do, the more affordable your premiums are likely to be. Long-term care insurance isn't cheap, but if you wind up needing an extended amount of care, your benefits under it could more than make up for your premium costs through the years.
  • Put money into a health savings account. HSA funds never expire and they get to enjoy tax-advantaged treatment. The money you put into an HSA can be used to pay not only for long-term care, but for long-term care insurance.
  • Pad your retirement plan. Whether you're saving for your senior years in a 401(k) or an IRA, the more money you put into your long-term savings, the more you'll have available to cover your medical needs. In fact, you may want to favor a Roth 401(k) or IRA over a traditional retirement savings plan, because that way, you'll get to enjoy tax-free withdrawals during your senior years.

Don't just wing it

Long-term care isn't an expense you can ignore or hope you won't encounter. Rather than leave things to chance, put a plan in place for dealing with it. Doing so could bring both you and your loved ones a world of peace of mind.