| Draining the Middle Class and Deepening Intergenerational Wealth Inequality

| Shalini Kathuria Narang

| On April 9, New York think tank Roosevelt Institute released the report How Long-Term Care Costs Drain the Middle Class and Deepen Intergenerational Wealth Inequality by Jessica Forden, a PhD candidate in economics at The New School and a research fellow at the Schwartz Center for Economic Policy Analysis. By examining how long-term care needs impact older Americans’ finances, the report showcases the outcomes of long-term care on low- and middle-income families in the U.S. Here are some key takeaways and report findings. Tomorrow, we’ll publish an interview with Dr. Forden.

Key Takeaways:

• Growing old in the U.S. is expensive. Median household income for those aged 65+ is approximately $57,000, but nursing home care can cost $115,000-$129,000 annually.
• Few Americans have enough savings to cover long-term care costs out-of-pocket. After the onset of care needs, middle-class individuals face permanent wealth reductions to just 42% of their original levels, whereas the top quartile of earners eventually recover 94% of their assets.
• Even among upper-middle-class couples with lifetime earnings over $4.75 million, nearly half will spend down their assets paying for long-term care and eventually enroll in Medicaid if they require long-term care for five years or more.
• Unpaid family care is not without its own intergenerational costs. Unpaid caregivers provided an estimated $600 billion in economic value in 2021, often at the expense of their own career growth and retirement savings.
• The lack of public support turns long-term care from a personal health challenge into a structural component of downward mobility and intergenerational wealth inequality.

Not Just a Personal, But a Societal Issue

Long-term care is not just an individual health concern but a structural driver of wealth inequality. The report lays bare a system that depends on unpaid family caregiving, provides public support only after families nearly exhaust their savings, and allows private, profit-driven companies to capture rising care costs. Moreover, long-term care is deepening the wealth divide in the U.S., determining who gets to grow old with security and who bears the financial cost of care.

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Most Americans underestimate their financial need for long-term care: 62% mistakenly think Medicare will cover costs if they need to move into a nursing care facility. Medicare does not cover long-term care. Adults must pay their own care costs out-of-pocket unless they qualify for Medicaid long-term care by meeting much more stringent income and asset eligibility thresholds. Those at the bottom of the wealth distribution can rely on Medicaid long-term care, and those at the top of the distribution will be able to pay for care out-of-pocket as needed, but a portion of the American middle class will likely spend down their assets until they qualify for Medicaid or rely on unpaid family caregiving. This forgotten middle often relies more heavily on unpaid care from family members, largely wives and daughters.

Long-term care is expensive. The national yearly median cost of long-term care in 2025 was roughly $80,000 for in-home care, while community and assisted living costs $25,000–$74,000, and nursing home care costs $115,000–$129,000. Families are estimated to pay more than a third of the expected costs that adults age 65 and older will incur from long-term care, with 14% expected to pay at least $100,000 out of pocket. 

In the absence of a unified or universal long-term care system, the nation relies on a medley of unpaid family caregiving, out-of-pocket private pay options, and limited, difficult-to-access public support through Medicaid. This situation leaves the majority of Americans and their families to navigate a complex and costly set of options to meet their own and their loved ones’ long-term care needs. Unpaid family and friends perform 75–80% of all eldercare hours in the U.S.

Medicare, the federal health insurance program for adults age 65 and older, provides short-term (up to 100 days) skilled nursing or rehabilitation after a hospital stay. It does not cover ongoing assistance with activities of daily living such as using the bathroom, eating, or getting in and out of bed.

According to Forden, “They are piecing together their care through a combination of what they have saved in the bank, what they have in terms of housing equity and then maybe they have a spouse or a family member, an adult child, who can also help to provide some of that care, unpaid, whether it’s 100% of the care or even, half or a quarter of that care.” 

She continues: “It’s important to note the unpaid side of things, because even when folks are getting formal care, family members are providing some level of unpaid care, typically in conjunction. They’re not direct substitutes. They’re often complementary.” 

Shalini Kathuria Narang is a Bay Area-based independent writer and software professional. She writes about health, wellness, education and technology.