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Question: We’re retiring at 63 with $5.7 million. My wife wants to buy long-term care insurance, but it’s very expensive. I think we can just self-insure. Who’s right?
Answer: If you’re retiring with a large sum of money, you may be aware that there’s one expense that could eat away at your nest egg over time — health care. Even if you’re relatively healthy at the start of retirement, there’s no guarantee you won’t end up with medical issues later on.
Furthermore, as you age, you might eventually need more than just medical care. You might also need custodial care, or non-medical assistance with everyday living.
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Unfortunately, that type of long-term care is not covered by Medicare. And if you’re footing the bill yourself, you should know it could be a big one.
On a national scale, the annual median cost of a non-medical in-home caregiver was $80,080 in 2025, according to CareScout. Assisted living, meanwhile, cost the typical resident $74,400.
If you need a nursing home, you might really pay a bundle. The annual median cost for a shared nursing home room was $114,975 in 2025. For a private room, it was $129,575.
These are just averages and can be considerably higher in some parts of the country. For this reason, pre-retirees are often advised to look into long-term care insurance.
The problem with long-term care insurance, though, is that it isn’t cheap. According to the American Association for Long-Term Care Insurance, as of 2024, the average annual premium for a $165,000 policy with no inflation adjustment was $950 for a single male and $1,500 for a single female when purchased at age 55. That same policy for a 55-year-old couple averaged $2,080 a year.
If you and your spouse are retiring at 63 with $5.7 million, you might assume that you have enough money to cover long-term care expenses as they arise. But your wife might prefer the protection of long-term care insurance. Here’s how to figure out the best way to pay for this potentially large expense.
You probably have enough money to skip the insurance
As of 2022, the average household made up of people your age had about $538,000 in retirement savings, according to the Federal Reserve. For a nest egg that size, a single year of long-term care could be catastrophic. For a $5.7 million nest egg, even a few years of long-term care might only make a dent.
“With $5.7 million in liquid assets, this couple doesn’t need long‑term care insurance from a purely financial standpoint,” says Michael Murray, AIF, CPFA, and President at Peabody Wealth Advisors. “If they’re comfortable absorbing the risk, self‑insuring is entirely reasonable. At this wealth level, long‑term care coverage isn’t about preventing financial ruin. It’s about reducing uncertainty.”
That said, the benefit of having long-term care insurance, says Murray, is predictability. With insurance in place, you may not have to take a six-figure withdrawal to cover long-term care.
Even if you have a large nest egg, an expense that large can be uncomfortable. It might also get in the way of inheritance plans. So there’s a value in having that protection, even if you technically have enough money saved that you don’t need it.
As Dan Peterson, President and Managing Partner at E4 Insurance Services, explains, “Insurance is a transfer of risk. When you buy long-term care coverage, you pay a known cost so that an insurance company will absorb an unknown future cost.”
He suggests that high-net-worth people determine exactly which assets would fund their care. Then, he says, it’s important to see how that impacts overall financial plans.
If you come to the conclusion that you can absorb a few years of long-term care costs without impacting your goals, you may be able to skip the insurance. Otherwise, buying a policy could make sense.
Your wife’s feelings are valid
If your wife seems more worried than you are about long-term care, there may be a reason for that.
“Statistically, men die earlier,” Murray explains, “which means wives often shoulder caregiving responsibilities — an emotionally and physically draining role that can shorten a caregiver’s lifespan.”
Furthermore, Murray says, if the husband passes first, the surviving spouse may need to rely on children or paid care. Insurance can help ease that burden.
“Many high‑net‑worth households gravitate toward hybrid life/long-term care policies funded with a lump sum.” — Michael Murray, AIF, CPFA
You may want to consider a different type of coverage
For some people, a reason not to buy long-term care insurance is that if you don’t end up using it, you’re potentially giving up a lot of money that could otherwise become part of your estate plan. That’s why Murray suggests a different approach to buying coverage.
“Many high‑net‑worth households gravitate toward hybrid life/long-term care policies funded with a lump sum,” he explains. “If they never use the benefits, the remaining value passes to heirs or charitable causes, which feels more like repositioning assets than spending money on something they may never use.”
Peterson agrees. A hybrid policy, he says, can still return value to your family if care is never needed.
“Instead of writing a blank check from your portfolio, you dedicate specific dollars to protect both your income plan and the people you care about,” he says.
