Key Takeaways
- San Diego ranks among the most expensive cities in the U.S.
- Long-term care costs are significant across the nation, including in San Diego.
- Medicare has major limitations when it comes to long-term care coverage.
- Multiple funding options exist, including long-term care insurance. Various strategies can help San Diego retirees manage long-term care costs.
- Professional guidance can help by maximizing income sources, tax strategies, and long-term care funding to protect your financial future.
Planning for retirement in San Diego brings unique challenges, especially when considering long-term care costs that can easily reach six figures a year. While you may have saved diligently for retirement, the potential need for assisted living, nursing home care, or in-home assistance can quickly overwhelm even the most well-funded retirement accounts. What retirees in San Diego should evaluate goes beyond basic savings: Living in one of America’s most expensive cities means higher costs across the board, requiring careful planning and smart strategies.
Step #1: Understand the Cost of Living & Healthcare in San Diego
High Cost of Living
Recently ranked the 9th most expensive city in America to live in, San Diego consistently sits among the top U.S. cities for housing costs and daily expenses. Even more concerning for retirees, San Diego has experienced the highest cost of living increase among major U.S. cities since 2019, with costs rising 20.3% over the past six years.
Spiking grocery, restaurant, and retail prices have hit San Diego harder than many of the nation’s other premier cities. Everyday expenses continue to climb, putting additional pressure on fixed retirement incomes.
Healthcare Costs
Healthcare costs are also rising faster than general inflation, putting additional strain on retirement budgets. Healthcare costs are expected to grow by 8% in 2025 — the largest expected increase since 2012. Prescription drug spending, behavioral health usage, and ongoing inflationary pressures are driving this trend.
Healthcare inflation affects everything from routine doctor visits to prescription medications and chronic illness management. For San Diego retirees, these costs add to the area’s already high cost of living.
Long-term care represents the most significant potential healthcare expense in retirement. Unlike routine medical care, long-term care services — whether in-home care, assisted living, or nursing home care — focus on helping with daily activities like bathing, dressing, and medication management. Depending on the type of care, these services can easily cost $70,800 to $127,750 annually. Without proper planning, long-term care services can potentially drain decades of retirement savings in only a few years.
Step 2: Explore Your Long-Term Care Options
Planning for potential long-term care needs isn’t only about dollars and cents; it’s about maintaining quality of life and making sure you have choices. Whether you envision aging at home, prefer the social aspects of community living, or need specialized medical support, understanding your options can help you make informed decisions about both care and costs. While personal preferences matter, it’s important to recognize that unexpected illness or changing health conditions may ultimately determine what type of care you need.
Assisted Living
In San Diego, assisted living averages $5,475 monthly, though costs can vary significantly based on location and amenities. Premium communities in areas like La Jolla (such as Vi at La Jolla Village and White Sands La Jolla) or Carlsbad (Bayshire Carlsbad and La Costa Glen) typically cost more than those in other locations.
Nursing Homes
According to recent data, private room rates at California nursing homes average $12,167 monthly, making them 110% more expensive than assisted living facilities. San Diego’s costs generally align with these state averages, with premium facilities commanding higher rates for specialized care and upscale amenities.
In-Home Care
In-home care allows individuals to receive assistance while remaining in familiar surroundings, often providing comfort and emotional benefits. However, costs can add up quickly depending on the level of care required. According to local data, full-time long-term care assistance in San Diego costs on average about $73,000 per year, and with typical healthcare inflation, future costs could be significantly higher.
Adult Day Care
Adult day care provides supervised activities, meals, and basic healthcare services during daytime hours, typically 8–10 hours per day. This option offers valuable respite for family caregivers while providing social interaction and structured activities for participants.
According to national data, adult day care costs around $103 daily nationwide, with San Diego centers like those run by the Foundation for Senior Care charging around $85 per day (though many offer reduced rates for income-eligible seniors). Popular local options include Silverado Encinitas and Sungard Terrace in Lemon Grove. Adult day care requires family support during evenings and weekends but may cost significantly less than full-time residential care.
Step #3: Create a Plan to Pay for Long-Term Care
Understanding who pays for what in long-term care is essential to create a realistic financial plan. Retirees are often surprised to learn their existing insurance coverage has significant gaps when it comes to long-term care expenses.
Medicare Limitations
A common misperception is that Medicare or Medicare Supplement Insurance (i.e., Medigap) will cover long-term care needs. However, Medicare and Medigap don’t cover long-term care services.
Medicare only covers skilled nursing facility care under specific conditions: after a qualifying hospital stay, for medically necessary care, and for a maximum of 100 days per benefit period. After 20 days, patients are partially responsible for the costs through coinsurance (a percentage of the cost you pay for covered services). In 2025, patients without supplemental coverage pay $209.50 in coinsurance for every covered day between 21 and 100.
Medi-Cal (California Medicaid)
California’s Medicaid program offers more options than Medicare for long-term care, though services must be medically necessary and generally you must meet certain income eligibility requirements. Medi-Cal primarily covers long-term care in nursing homes or assisted living facilities, or at home.
Assisted Living Waiver Program
One notable exception is California’s Assisted Living Waiver Program. This program helps cover a portion of care costs for eligible California residents who are elderly or disabled and need nursing home-level care but prefer to reside in assisted living facilities. However, the program has limited spots and an extensive waiting list, and participation is restricted to specific counties, including San Diego.
Alternative Funding Options
Long-Term Care Insurance: Policies specifically designed to cover long-term care expenses can provide substantial financial protection. It’s important to apply for coverage while you’re healthy, typically in your 40s or 50s, when you’re more likely to qualify for better rates and discounts. Long-term care insurance costs increase significantly with age, and health changes can make qualification more difficult.
Personal Savings: Building a dedicated fund through consistent saving and strategic investing may offer more flexibility when it comes to your care choices.
Veterans Benefits: VA Aid and Attendance benefits may help eligible veterans and their spouses pay for long-term care.
Reverse Mortgages: Homeowners age 62 and older can borrow against their home’s equity without making monthly mortgage payments. The funds can be used for care expenses but you must continue living in your home and pay property taxes and insurance. That means you generally can’t move to a nursing home or assisted living facility if you have a reverse mortgage. The loan becomes due when the homeowner sells the home, moves out, or passes away.
Trusts: Properly structured trusts can help preserve assets for future generations instead of being consumed by long-term care costs. These complex legal instruments require careful planning with experienced financial planners.
Step #4: Evaluate Your Retirement Income
Creating sustainable retirement income requires careful analysis of all income sources, such as Social Security, pensions, 401(k) and IRA distributions, rental income, part-time work, and investments. Your income needs to support your current lifestyle as well as potential future care needs that could dramatically increase your expenses.
Consider how your income sources will perform throughout retirement. Social Security provides inflation adjustments but other income sources may not keep pace with rising costs. Retirement planners in San Diego can help ensure your income strategy accounts for planned-for expenses and potential long-term care costs.
Step #5: Fully Understand Your Social Security Benefits
Maximizing Social Security benefits requires strategic planning around several key factors. When you claim, it significantly impacts your lifetime benefits; claiming early reduces payments while delaying increases them.
Spousal benefits allow married couples to maximize household Social Security income. It’s also important to understand any tax implications, since a portion of your benefits may be taxable depending on your total income.
Step #6: Know Your Required Minimum Distributions (RMDs)
RMDs from traditional retirement accounts begin at age 73 and can significantly impact your tax situation and long-term care planning. These required annual withdrawals are taxed as ordinary income and must be carefully coordinated with your overall retirement strategy.
Strategic RMD planning might involve coordinating withdrawals with other income sources to manage taxes, or using funds to purchase long-term care insurance while you’re healthy. Proper planning can help minimize taxes while making sure you have the funds you need for future care needs.
Step #7: Be Aware of the Benefits of Working with a Financial Advisor
Long-term care planning involves complex interactions between income sources, tax strategies, insurance options, and estate planning. Partnering with experienced financial advisors provides several key advantages that can save you money and stress:
Everything Works Together: An advisor can help coordinate long-term care planning with your overall retirement strategy, ensuring all the pieces work together.
Unbiased Recommendations: An experienced advisor can objectively evaluate your specific situation and recommend the most cost-effective combination of strategies, whether that’s insurance, savings, or alternative funding approaches.
Your Plan Evolves With You: Long-term care needs and options change over time. Professional advisors monitor your plan and make adjustments as regulations change, new products become available, or your personal circumstances evolve.
Keep More of Your Money: Proper coordination of RMDs, Social Security timing, and long-term care funding can significantly reduce your tax obligations while making sure you have the income you need to fund the lifestyle you want and address potential long-term care needs.
Peace of Mind for Your Family: An advisor can help facilitate important conversations with family members about care preferences and financial responsibilities and make sure everyone is on the same page.
At Blankinship & Foster, we specialize in comprehensive retirement planning that addresses the unique challenges facing San Diego retirees, including the high cost of living and rising healthcare expenses.
Long-term care planning requires careful consideration of costs, options, and funding strategies but addressing these issues with the help of a qualified professional can help you maintain your quality of life and protect your assets. Contact us for help creating a comprehensive plan that protects your financial future while ensuring you have access to quality care when you need it.