Assisted living costs vary significantly by location, level of care, and facility type, so a realistic plan uses ranges rather than a single number and builds in a buffer for the unexpected. The national median monthly cost for assisted living increased 5% to $6,200 per month, or $74,400 annually, according to the 2025 CareScout Cost of Care Survey. The goal of this planning is not to predict an exact number. It is to understand your potential exposure, model how you would pay for it, and put a funding strategy in place before urgency forces a rushed decision.
Key Takeaways
- Assisted living costs depend heavily on location, care level, and room type, and national averages may not reflect your market
- Budget for the base monthly fee plus care add-ons, which can be substantial for higher-needs residents
- Plan for costs rising with both inflation and increasing care needs over time
- Medicare does not cover assisted living, so understanding how you would fund care is an essential part of retirement planning
What Drives Assisted Living Costs
Location
Location is the single largest driver of assisted living costs. The national median cost of assisted living is approximately $6,313 per month, but state medians range from $4,715 per month in Mississippi to $12,000 per month in Hawaii. Major metropolitan areas, coastal markets, and high-cost-of-living regions consistently run above national medians. Seven of the most expensive states for assisted living are in the Northeast, while six of the least expensive are in the Southeast.
For retirement planning purposes, the relevant number is not the national median. It is the cost in the specific area where you expect to receive care. Research local communities directly, or use cost-of-care tools available through Medicare.gov and private sources that allow you to compare costs by zip code and facility type.
Level of Care and Support
Assisted living communities charge based on how much support a resident requires. Most facilities conduct an initial care assessment at move-in and reassess periodically as needs change. Residents who need minimal assistance with daily activities pay less than those who require extensive help with bathing, dressing, mobility, and medication management.
Memory care for residents with dementia or Alzheimer’s typically costs 20% to 30% more than standard assisted living, with memory care units nationwide averaging approximately $7,000 to $8,500 per month. This matters for retirement planning because a significant percentage of assisted living residents eventually transition to memory care as cognitive conditions progress, which means planning for standard assisted living costs alone may underestimate actual exposure.
Private Room vs. Shared Options
Room type affects cost significantly. A private one-bedroom apartment in an assisted living community carries a higher base fee than a shared or studio option. Amenity level also matters. Communities with resort-style dining, fitness centers, pools, and premium programming charge more than those with basic services.
Understanding what is and is not included in the quoted monthly fee, and whether the fee structure is all-inclusive or adds services a la carte, is essential before comparing facilities. Two communities quoting similar base fees may have very different actual costs once care services, medication management, and other add-ons are included.
Typical Cost Categories to Include
Monthly Base Fee
The base fee covers housing, meals, housekeeping, laundry services, scheduled transportation, basic activities programming, and emergency response systems. It does not typically cover personal care services beyond a minimal level. Assisted living costs typically range from about $4,000 to nearly $11,000 per month depending on the state, apartment size, and level of care required.
When comparing communities, always request an itemized breakdown of what the base fee includes and what triggers additional charges. Some communities use all-inclusive pricing, while others use tiered or a la carte structures that can produce significantly different total bills as care needs evolve.
Care Services and Medication Management
Care services are charged on top of the base fee in most communities using tiered or a la carte pricing. These services include assistance with bathing, dressing, grooming, eating, mobility, continence care, and medication management. Each service or level of assistance carries its own daily or monthly charge, and the total care services bill can add hundreds to thousands of dollars per month beyond the base fee.
Medication management, specifically the administration and monitoring of prescription medications by facility staff, is commonly charged separately and can add $200 to $600 or more per month depending on the number and complexity of medications. For residents with multiple prescriptions or scheduled injections, this is a meaningful line item that deserves explicit budgeting.
Move-In Fees and One-Time Costs
The national median move-in or community fee for assisted living is approximately $3,000. This one-time charge, similar to a security deposit, is due at or before move-in and is sometimes partially refundable. Some communities charge significantly more, particularly higher-end facilities or those with long waiting lists.
Additional one-time costs at move-in may include a care assessment fee, apartment customization, the purchase or rental of certain safety equipment, and the cost of furnishing the apartment if moving from home. These costs are in addition to the first month’s base fee and care services and should be included in the transition budget.
How to Build a Care-Cost Buffer Into Your Plan
Estimating Duration Risk
The duration of assisted living use varies significantly. The average length of stay in assisted living is approximately 22 months, producing an average total cost of approximately $136,400. However, averages mask a wide distribution. Some residents stay for a few months before transitioning to skilled nursing or passing away. Others remain in assisted living for five to ten years. Residents with dementia or other progressive conditions often have the longest stays and the highest total costs.
Planning around the average understates exposure for a meaningful segment of retirees. A more conservative planning horizon of three to five years of assisted living, at current local costs and adjusted for inflation, captures a realistic range for most situations without assuming a worst case.
Inflation and Rising Care Costs
The average annual cost of an assisted living community rose 10% from 2023 to 2024, and costs have generally outpaced overall inflation over the past decade. Planning for care costs to increase at 4% to 5% per year is a reasonable conservative assumption that prevents a plan built on today’s costs from becoming inadequate over a multi-year care horizon.
A care cost that appears manageable today can become significantly more burdensome in five to ten years if the budget was not adjusted for inflation. Build this escalation into your planning model rather than assuming today’s cost is the right planning number for the duration of care.
Setting a Funding Strategy
The most important output of care cost planning is a funding strategy, not a budget line. Knowing that care could cost $6,000 to $9,000 per month in your area is only useful if you also know specifically how you would pay for it. Would the cost come from retirement income and portfolio withdrawals? From long-term care insurance benefits? From home equity? From a combination?
A funding strategy that is specific, documented, and reviewed periodically with your financial advisor is what converts an abstract risk into a manageable plan. The families who navigate care transitions most smoothly are typically the ones who worked through this question in advance rather than discovering on a Tuesday that a parent needs care by Friday.
How People Typically Pay for Care
Income and Savings
Most assisted living is paid privately using a combination of Social Security income, pension income, investment account withdrawals, and savings. For retirees with consistent monthly income and a well-funded portfolio, ongoing care costs are absorbed as a line item in the retirement income plan, similar to any other significant ongoing expense.
The challenge arises when the monthly care cost significantly exceeds monthly income, requiring accelerated portfolio withdrawals that were not anticipated in the retirement income plan. A care event that requires $7,000 per month in additional spending can deplete a modestly sized portfolio within a few years if not planned for in advance.
Insurance Benefits
Long-term care insurance, when in place, provides a benefit pool or daily benefit amount that can be applied to covered care expenses including assisted living. Benefits typically begin after a waiting period of 30, 60, or 90 days following the qualifying care need, and continue until the benefit pool is exhausted or the specified benefit period ends.
Hybrid life insurance policies with long-term care riders function similarly. The death benefit is accelerated to pay care costs, with remaining benefit passing to beneficiaries if the full benefit is not used for care.
Home Equity Options
For homeowners who move to assisted living, the sale of the primary residence often generates a significant source of care funding. Proceeds from the sale, after any capital gains tax considerations, can be invested to generate ongoing income for care expenses.
For retirees who want to fund care while retaining the possibility of returning home, or who want a surviving spouse to continue living in the home, a reverse mortgage can provide a line of credit specifically designated for care funding. The costs and terms of a reverse mortgage warrant careful review with your advisor and an independent housing counselor before proceeding, but it is a legitimate option in the right circumstances.
Family Support Expectations
Many families assume, often without explicit conversation, that family members will help fund care or provide care directly. These assumptions deserve an honest and specific discussion before a care event makes them urgent. Who is realistically available to provide care? What financial support is actually possible? What does each family member actually want to contribute?
A care plan that depends on specific family contributions should document those expectations explicitly rather than leaving them as informal understandings. Families that have these conversations in advance, including with their financial advisor and estate planning attorney, are better positioned to coordinate care in a way that is fair, realistic, and not financially devastating to the people providing support.
FAQs
Generally yes. Assisted living is generally more affordable than nursing homes but more expensive than in-home care, with costs varying significantly by location and level of care required. Skilled nursing facility care, which provides the highest level of medical support, typically runs $9,000 to $12,000 or more per month for a private room in many markets. Assisted living serves residents who need personal care support but do not require 24-hour skilled nursing, which is reflected in the lower cost. Memory care falls between the two, typically running 20% to 30% more than standard assisted living due to the specialized supervision and programming required.
The most commonly overlooked costs are the care services add-ons above the base fee, medication management charges, the one-time move-in fee, and the transition costs of furnishing or adapting a new space. People also frequently underestimate how quickly care needs and therefore care costs escalate over the course of a stay. A resident admitted with modest care needs may transition to significantly higher care levels within two to three years, adding hundreds of dollars per month to the care services line. Budgeting for a static monthly cost rather than a progressively increasing one tends to underestimate total exposure.
Medicare does not cover assisted living. As noted in the prior long-term care article, Medicare covers short-term skilled nursing care following a qualifying hospital stay and some home health services, but it does not cover custodial care, which is the ongoing personal assistance that assisted living provides. Medicaid may cover assisted living in states that have Medicaid waiver programs for home and community-based services, but eligibility requires meeting income and asset limits that typically involve significant asset spend-down. For most middle-income retirees, assisted living is a private-pay expense.
Start with Medicare's online cost-of-care comparison tool at Medicare.gov, which provides state and regional median costs for different care settings. CareScout, formerly Genworth, publishes an annual Cost of Care Survey that includes state and metro-level data. Call local assisted living communities directly for current pricing and ask specifically about their pricing model, what is included in the base fee, and how care services add-ons are structured and priced. Using a range of two to three local communities gives you a realistic picture of what care in your specific area actually costs rather than relying on national averages that may not reflect your market.
The average length of stay in assisted living is approximately 22 months, producing an average total cost of approximately $136,400. However, this average reflects a wide range of individual experiences. Some stays are brief, ending in transfer to a higher level of care or death. Others extend for many years, particularly for residents with well-managed chronic conditions or early-stage dementia. Planning for the average understates the risk for a meaningful portion of retirees. A planning horizon of three to five years at local current costs, adjusted for inflation, provides a more conservative and more appropriate estimate for most retirement plans.
Home care is a legitimate and often preferred alternative to facility-based care. Professional home care aides typically charge $25 to $35 per hour, and full-time in-home care for a resident needing around-the-clock support can cost as much as or more than assisted living depending on hours needed. Part-time home care for several hours per day, combined with informal family support, is often a more cost-effective starting point. Plan for the possibility that home care costs increase as needs increase, that there may be a transition point where facility-based care becomes the safer and more cost-effective option, and that a home modification budget for accessibility upgrades may be needed before or alongside home care services.
Selling the home is a common and often appropriate source of care funding, particularly for single retirees or surviving spouses who move to assisted living and no longer need the home. The proceeds provide a meaningful funding pool and eliminate the ongoing carrying costs of maintaining an unoccupied property. The capital gains exclusion of $250,000 for single filers and $500,000 for married couples may apply to reduce or eliminate the tax on the sale, depending on the gain and how long the property was the primary residence. For married couples where one spouse moves to care and the other remains in the home, selling is typically not immediately appropriate, and other funding sources should be evaluated first.
A starting point for planning purposes is three years of estimated local assisted living costs at your anticipated care level, adjusted for inflation to reflect costs at the age when care is likely to be needed rather than today. For a couple, plan for both partners separately rather than assuming they will have simultaneous needs of identical duration. A two-person household facing two independent care events over a multi-decade retirement faces meaningfully higher total exposure than a single-person plan. The 2025 Milliman Long-Term Care Index estimates that a 65-year-old would need to set aside $135,000 today to cover average expected future lifetime costs of long-term care across all settings including home care and facility care. That figure represents an average across all care paths, and higher-cost markets or longer care durations can produce significantly higher exposures.
Next Step: Integrate Assisted Living Costs Into Your Retirement Plan
Understanding what assisted living costs in your area, and how you would fund it, is one of the most important and most often postponed conversations in retirement planning. If you want to model your long-term care exposure and build a funding strategy that protects your income and your family, schedule a complimentary consultation with a CFP® professional at Bauman Wealth Advisors. We will help you estimate realistic care costs, evaluate your funding options, and make sure your retirement plan accounts for what care in retirement actually costs.
