The Single Largest Risk to Your Portfolio Isn't a Market Correction

Oct 12

6 min read

A Reliant Special Report: Long-term care, rising costs, and the future of your retirement plan.

Look Beyond the Market

Most retirees are trained to watch the market. But a long-term care event can create a different kind of challenge: recurring expenses that must be funded while a household continues paying its other retirement costs.

Federal guidance says someone turning age 65 has almost a 70% chance of needing some type of long-term care services and supports during the rest of life (Administration for Community Living). A separate 2021 HealthView analysis estimates a 75% chance that at least one spouse in a healthy 65-year-old male/female couple will need care, assuming both live to their actuarial life expectancies (HealthView Services).

CareScout's 2025 national median annual costs range from $74,400 for assisted living to $129,575 for a private nursing-home room (CareScout 2025 Cost of Care Survey). These costs make care funding a planning issue even for households with substantial savings.

A market correction may recover. Money spent on care is no longer available for another purpose.

The goal is not to predict every expense, but to decide how a care event would be funded before it occurs.

Why This Risk Matters

Long-term care is not just a health issue. It can also be a liquidity, retirement-income and legacy-planning issue.

Families commonly pay for care with savings, investments and other assets (NAIC Shopper's Guide to Long-Term Care Insurance). Redirecting those resources may change what remains available for a spouse, heirs or other retirement priorities.

Substantial net worth does not automatically mean a household has enough readily available cash for an extended care event. A funding plan should distinguish between assets that can be spent and assets the family wants to preserve.

The Likelihood of Needing Care

The federal almost-70% estimate applies to an individual turning 65 and includes long-term services and supports, not just paid facility care. The same guidance says about 20% of today's 65-year-olds will need support for longer than five years (Administration for Community Living).

The 75% couple estimate uses a different population and methodology: healthy 65-year-old male/female couples who live to their actuarial life expectancies (HealthView Services). It is not a universal probability for every married couple and should not be derived by combining the individual 70% statistic.

For a household, the useful question is practical: if either spouse needs care, what resources would pay for it?

The Cost of Care Today

The figures below are national medians from CareScout's 2025 survey, not averages or local quotes. Home care means a non-medical caregiver, not skilled nursing in the home.

Care setting	2025 median annual cost	Two years at 2025 rates
Non-medical home care	$80,080	$160,160
Assisted living	$74,400	$148,800
Private nursing-home room	$129,575	$259,150

Home care assumes 44 hours per week for 52 weeks; assisted living uses 12 monthly payments; nursing-home care uses 365 daily payments. The two-year column multiplies each annual amount by two, with no inflation during those two years. Local prices, care needs and hours of service can differ materially. A two-year illustration is a planning scenario, not a prediction of how long a person will need care.

The Inflation Problem

The important question is not only what care costs now. It is what the same type of care could cost if the need arrives later in retirement.

Genworth's 2015 survey reported median rates of $20 per hour for home health aides and homemakers, $3,600 per month for assisted living, and $250 per day for a private nursing-home room (Genworth 2015 Cost of Care Survey). CareScout's corresponding 2025 rates are $35 per hour, $6,200 per month and $355 per day (CareScout).

Care setting	2015 rate	2025 rate	10-year annual growth*
Non-medical home care	$20/hour	$35/hour	5.76%
Assisted living	$43,200/year	$74,400/year	5.59%
Private nursing-home room	$91,250/year	$129,575/year	3.57%

*Calculated annual growth = (2025 cost ÷ 2015 cost) raised to 1/10, minus 1. CareScout combined homemaker and home health aide services into "non-medical caregiver" for 2025, so the home-care growth rate is an endpoint comparison across related categories, not an unchanged service-price index.

Future Two-Year Costs: 10, 15 and 20 Years Ahead

If the calculated 2015–2025 growth rates continue, a two-year care expense could become much larger. The table projects from the 2025 cost baseline to 2035, 2040 and 2045.

Care setting	2025 baseline	2035	2040	2045
Non-medical home care	$160,160	$280,300	$370,800	$490,500
Assisted living	$148,800	$256,300	$336,300	$441,300
Private nursing-home room	$259,150	$368,000	$438,500	$522,600

Method: projected two-year cost = 2 × 2025 annual cost × (1 + annual growth rate) raised to the number of years, rounded to the nearest $100. Both years of care are priced at the projected start-year rate. These are scenarios, not forecasts or guarantees. Actual future costs may grow faster or slower than the historical rates.

What Percentage of Net Worth Could Be Consumed

The tables compare a two-year care expense with fixed net-worth amounts. The first uses 2025 national median costs; the second uses the 2045 projections above.

Two years at 2025 rates

Fixed net worth	Home care	Assisted living	Private nursing
$1.5 million	10.7%	9.9%	17.3%
$2.0 million	8.0%	7.4%	13.0%
$5.0 million	3.2%	3.0%	5.2%

Two years at projected 2045 rates

Fixed net worth	Home care	Assisted living	Private nursing
$1.5 million	32.7%	29.4%	34.8%
$2.0 million	24.5%	22.1%	26.1%
$5.0 million	9.8%	8.8%	10.5%

For example, projected private nursing-home care of about $522,600 equals 34.8% of $1.5 million, 26.1% of $2 million and 10.5% of $5 million. These are cost-to-asset ratios, not net-worth forecasts. Estate values are held constant; investment growth, withdrawals, taxes, income and other spending are not modeled.

How Families Usually Try to Pay

Self-Funding

Self-funding uses savings, investments or other assets to cover care costs (NAIC). It offers flexibility, but spending those resources can reduce what remains for other retirement and family priorities.

A self-funding plan should identify which assets would be used, how quickly they can be accessed, and how withdrawals would affect the surviving spouse. Consider the consequences if care begins during a market decline rather than assuming investments can always be sold at favorable prices.

Traditional Long-Term Care Insurance

Traditional long-term care insurance may pay or reimburse covered expenses, subject to its limits and eligibility rules. Premiums can rise, and coverage may not pay the entire bill. Traditional coverage can also cost less than a comparable hybrid policy, so both approaches deserve consideration (NAIC).

Family Support and Medicaid

Family help may be part of a care plan, but availability should be discussed rather than assumed. Medicare generally does not pay for non-medical long-term care (Medicare.gov). Medicaid may help eligible people, but income and asset rules apply and vary by state, including protections for some spousal resources (NAIC).

Age Better for Longer: A Preventive Layer

Planning for care can begin with supporting health and independence today. The National Institute on Aging explains that regular physical activity can help older adults maintain strength, improve balance, lower fall risk and continue everyday activities (National Institute on Aging).

Some programs pair participants with a coach or ally through recurring online or video meetings. The aim is to translate intentions into practical habits: an appropriate activity plan, regular check-ins, and help working through barriers to participation.

A 2026 pilot study tested a 12-week home-based activity program with coaching every two weeks. Among 55 adults aged 45–80 with cognitive concerns and mental-health symptoms, the share meeting all applicable activity guidelines rose from 6% to 44% (JMIR Aging). That is encouraging, but the study had no control group and short follow-up. It did not establish that coaching prevents nursing-home admission or reduces future long-term care costs.

Wellness support should complement, not replace, medical care or a financial funding strategy. Choose activity suited to the individual's health and abilities, with appropriate professional guidance.

The Hybrid Alternative: Repositioning Assets

A hybrid long-term care solution combines life insurance or annuity value with benefits that can help pay for qualifying care. Depending on the contract, riders may extend the care benefit beyond the underlying death benefit or annuity value (NAIC).

Potential features include a dedicated care benefit, optional inflation protection and value remaining for beneficiaries if care is not needed. Care payments can reduce the death benefit, and premiums, access rules and guarantees vary by policy.

Qualified long-term care benefits may be excluded from federal taxable income, subject to applicable requirements and limits, including rules for per-diem payments. Tax treatment should be reviewed for the specific contract (IRS Publication 525).

This Is About Control

For affluent retirees, this planning discussion is about control. Decide how much of a future care expense the household is comfortable funding from its own resources and which assets it wants to preserve.

Compare self-funding, traditional insurance and hybrid coverage using the same care assumptions. Review benefit triggers, waiting periods, coverage limits, inflation features, premiums and the consequences for beneficiaries before choosing a policy.

If one spouse needs care, how much of the estate is the family truly comfortable spending before a dedicated solution should be considered?

Reliant's estate-planning, wealth-management and insurance teams can help you answer that question as part of one coordinated plan. Call us at 602.325.8447 to start the conversation.

Sources

Calculations use published cost endpoints, not provider forecasts; future values are nominal dollars. This article is educational and is not individualized financial, insurance, tax, legal or medical advice.

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