If you’re thinking about where to live out your golden years, you might prioritize quality of life — like a warmer climate or somewhere close to your grandkids.

In practical terms, you might want to live somewhere with a lower cost of living, affordable taxes and good access to health care.

But too many Americans (one in five, according to Fidelity) overlook one major expense in their retirement planning: the cost of health care — and the cost of long-term care in particular.

That’s a problem, as four in five (80%) of 65-year-olds will need some form of long-term care at some point, according to a study by the Center for Retirement Research at Boston College (1).

Of these, about 40% will require “high-intensity care” lasting for more than a year.

Yet only 3% of Americans (or 15% of those ages 65 and older) have long-term care insurance, according to the study.

That may be because over half of Americans assume that Medicare will pay for assisted living and nursing home costs (2). In reality, Medicare coverage is limited, typically short-term, and restricted to skilled care.

Medicaid offers some long-term care coverage, but only for eligible low-income individuals.

So if you’re developing a comprehensive retirement strategy, it’s wise to account for the cost of long-term care — which also depends on where you live.

A new Caring.com report reveals which states offer the best value for long-term care — and which are pricing retirees out of care (3).

States with a higher cost of living, higher labor costs, and higher real estate prices — like California and New York — tend to have higher long-term care costs.

According to the Caring.com report and CareScout, senior care in states like Mississippi and Texas costs roughly half as much as care in California and New York.

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Overall, Mississippi is the most affordable state for senior care, with a low cost of living, reputable home care services, and one of the lowest annual assisted living costs.

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The cost of care also depends on what type of care you receive.

This type of accommodation offers personal care and health-related services to people who need assistance with activities of daily living.

The most expensive states for assisted living are Hawaii, Alaska, and Washington, D.C.

South Dakota offers the most affordable assisted living ($52,200 per year), well below the national annual median of $70,800.

A nursing home provides a higher level of medical care and supervision than an assisted living community, including room and board, therapies and rehabilitation, and 24/7 nursing care.

For a semi-private room in a nursing home, the most expensive states are Alaska, Oregon, and Hawaii.

A private room in a nursing home is most expensive in Alaska, Oregon, and Washington, D.C. (5)

The most affordable state for a private nursing home room is Texas, with a median annual cost of $85,045, compared with a national annual median of $127,750. Neighboring Oklahoma and Louisiana have median annual costs of $91,250.

Memory care, which provides specialized care for patients with dementia, typically falls between assisted living and nursing home care in terms of cost — it’s more expensive than assisted living, but typically less than a nursing home with around-the-clock care.

A 65-year-old who retires today needs an average of $172,500 to cover their health-care needs in retirement, according to Fidelity Investment’s 2025 Retiree Health Care Cost Estimate (6).

That’s 4% more than in 2024 (when it was $165,000) — and 115% higher than 20 years ago.

One way to manage these expenses is to explicitly account for them in your retirement plan. Here are some options:

There are two options for coverage:

Traditional coverage, which pays benefits when specific care criteria are met, or

Hybrid coverage, which combines long-term care benefits with life insurance or an annuity. Hybrid coverage is more expensive, but the premium is guaranteed, and if you don’t use it, the coverage can be passed to your heirs as a death benefit (7).

You can save for future long-term care costs through a tax-advantaged health savings account (HSA), provided you’re enrolled in a high-deductible health plan (HDHP).

HSAs are funded with pre-tax contributions, and investment growth is tax-free. Withdrawals are also tax-free — so long as they’re used for qualified healthcare expenses. But there are tax penalties if you overcontribute or if you use HSA dollars for non-qualified expenses.

For 2026, you can contribute up to $4,400 for self-only coverage or $8,750 for family coverage, plus a $1,000 catch-up contribution if you’re age 55 or older.

There are other ways to plan for long-term care needs, including delaying Social Security, setting aside money in a dedicated high-yield savings account (HYSA) or leveraging the equity in your home.

You could also relocate to a state with lower long-term care costs.

“Opting to relocate for more affordable senior care is a big decision, but it can help extend retirement and long-term care funds,” according to CareScout.

A financial advisor can help evaluate these strategies and incorporate them into an overall retirement plan.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Center for Retirement Research at Boston College (1); Nationwide (2); Caring.com (3); CareScout (4); Genworth/CareScout (5); Fidelity (6, 8); Vanguard (7)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.