John Powell, who devoted a lifetime to innovative work in education and mental health, could have expected a comfortable, middle-class retirement with his wife in their one-story house near Rock Creek Park. With their two children grown, the Powells were reassured by their savings and John Powell's civil service pension and Social Security benefits.

But their plans went awry when John Powell, now 81, got sick and needed continual care. It started four years ago when he suddenly could not add a column of figures. Then he started wandering off and getting lost. Powell apparently has Alzheimer's disease, which results in the slow mental and physical deterioration of the victim, sometimes over more than a decade.

The Powells' plight illustrates how, despite the increasing prosperity of the elderly, chronic illness or incapacitation can wreck even carefully built retirement plans, leaving family members with crushing responsibilities.

Now a visit to the Powells' house is punctuated by bursts of singing and yelling from the back room where John Powell spends his days, bedridden and incontinent. Harriet Powell, his wife of 58 years, is always at home with him.

Their daughter Janet moved back home three years ago to help care for her father. Her dentist became concerned that she might lose some teeth if she kept grinding them at night. "It's godawful here, but I'm needed," she said.

The family is drained -- financially, physically, emotionally.

No government program or traditional private insurance covers the cost of the kind of day-to-day "custodial" care John Powell needs, so they are quickly spending all they have. Harriet Powell, 79, has had health problems herself recently, but planning for her own future is impossible.

Powell, who as a young man had helped start an experimental college connected with the University of Wisconsin, found his way to Washington in 1945, where he organized adult education programs for the D.C. Public Library. Later, he did research in mental health, and in 1960 he helped prepare a volume for a White House conference on aging.

"One of the ironies is that John has spent his life educating people to prepare for this growing old ," said Harriet Powell. "People like us are the ones who get caught in the middle."

They are too well off to be eligible for assistance like that provided for the poor under Medicaid, but not rich enough to pay for around-the-clock care on their own.

Two-thirds of their retirement income goes to personal assistance and medical supplies for John Powell. Harriet Powell does not want her husband to go into a nursing home, she said, but even if she did, she simply could not pay the $2,000 to $3,000 a month it costs.

There are no government programs to deal with long-term health care for elderly Americans who are not poor, though many older people are under the mistaken impression that Medicare will cover these kinds of costs. Private insurance often covers the acute care provided in hospitals but not custodial care.

Medicaid, the federal health program for the poor, will pay the cost of long-term care when people have "spent down" to low-income eligibility levels -- that is, sold off almost all of their assets and used all but a small portion of their income to pay for their care.

Doctors told Harriet Powell to get rid of all her visible assets, to sell the house and put the couple's money in a Swiss bank. Then they could qualify for Medicaid, so that all of John Powell's care would be paid for by the federal government and she would have money to care for herself. But Harriet Powell was not prepared to do that, particularly because she pays only $270 a month for her mortgage and could not rent an apartment for that.

"People with resources don't qualify for help, so they fall through the cracks," said Elizabeth Fox, director of Iona House, a nonprofit group that provides services for the elderly in part of Northwest Washington. She said people who have worked hard for what they have "had an idea of what life would be, and that is failing them at this point." Financial Collapse

Consuelo Potter and her husband, Roland Potter, arrived as a young couple from Texas in the mid-1920s, when they came here to become aides to Sen. Morris Sheppard. They made their home on Capitol Hill and worked in the Senate for more than 20 years, through the Depression and the war. Roland Potter died in 1969.

When Consuelo Potter died last May at 85, she was a pauper.

Her niece sold the contents of Potter's Capitol Hill apartment for $132, the sum total of the assets that remained. By that time, Potter had sold her possessions piece by piece to pay for medical care, finally getting a little more than $1,000 for all her jewelry.

"She was down practically to rock bottom," said Potter's niece, who asked not to be identified by name. "If she had lived another year, I don't know what we would have done."

It was not that Potter had no income: Her civil service annuity and Social Security brought her $1,156 a month. But she was bedridden with a severe degenerative disease of the joints and a kidney condition for the last few years of her life, so that she needed personal care services at home and also had medical expenses. The cost of her personal care, health insurance and medicines exceeded $1,000 a month that was not covered by Medicare, and her income kept her from getting Medicaid coverage.

To receive Medicaid, a person must come within strict resource and income limits. In the District, for example, for a single person the limits are $2,500 in disposable assets -- excluding a house the person is living in -- and no more than $325 a month in income after deductions for medical expenses and various other allowances; the limits for a couple are $2,600 in assets and $343 in income.

Eligibility is calculated anew every six months. And people like Potter, who have some income, can go months in each six-month cycle before their expenses entitle them to any aid at all.

Eventually Potter had to borrow money from her church to pay her $159-a-month rent. A Growing Problem

About 5.6 million Americans over 65, or one in five older Americans, need long-term care, according to the Senate Aging Committee. Most of these receive some form of care at home -- from help with personal needs and chores to medical care -- while 1.4 million are in nursing homes.

The fastest growing segment of the American population is those over the age of 85, dubbed "the oldest old" by social researchers and gerontologists. Of this group now, about 46 percent need some assistance for mild to severe disabilities, the committee found. Severe disabilities -- those keeping persons from eating, dressing or going to the bathroom by themselves -- affect 3 1/2 percent of the noninstitutionalized elderly but more than 10 percent of the oldest-old age group.

While only about 5 percent of the over-65 population is in nursing homes, 16 percent of those 85 and older are. In the Middle

When a spouse is gone, responsibilities generally fall to adult children, many of whom are trying to raise their own children. This leaves whole families wrestling with guilt over not providing all that their parents deserve and hidden anger at having to devote so much of themselves to a losing task.

Barbara and Amos Kermisch cared for his mother in their Arlington home for two years before deciding they could no longer take the 24-hour-a-day strain of dealing with an Alzheimer's patient who generally did not even know them.

It is not that the Kermisches did not try. They first knew something was wrong when his mother, then living in Denver, sent Valentine's Day cards for Hanukah. Soon thereafter Amos Kermisch flew out to settle her affairs and bring her here.

They gave up their bedroom, turning it into a suite for his mother, 73-year-old Liselotte Kermisch. They gave up their life style, giving it over to an elaborate regimen of shuttling between a day care center, work and home.

Amos Kermisch never liked having to bathe his mother, but he finally got used to it. They got used to undressing her again and again when she would get up at night and put on her clothes, sometimes going into the children's room and standing over them, frightening them.

It was a sad demise for the German-born woman, a Holocaust survivor, who never remarried after her husband died in Israel in 1948.

"I really wanted to ask the doctor, 'How long is this going to go on?' but it seemed like such a callous question," said Barbara Kermisch, so she tried asking in roundabout ways. "The doctor finally said, 'You want me to tell you when she is going to die, and I can't tell you that.' "

When the strain got to be too much, the Kermisches found an old-age home, about three hours away in an Amish community in Pennsylvania, that provides personal care but no medical services, and placed his mother there last June.

So far Liselotte Kermisch's Social Security and small pension have paid for her care at the home. But when a nursing home becomes necessary, the situation will be different.

Then her son and daughter-in-law will face the dilemma of whether to give her the best nursing home care they can find or send their children to college. They cannot do both.

"You either abandon your kids or you abandon your mother," said Amos Kermisch, a former newspaper reporter who works for IBM.

Another complication arose in January, when Amos Kermisch was transferred to Tampa, Fla., and the family had to decide whether to leave his mother in a place they like that is far from them or move her once again so they could monitor her care more closely. They decided they will have to bring her to Florida, so Barbara Kermisch now is spending long days searching for a similar home that provides all the necessary personal care but is not so institutional as a nursing home.

Barbara Kermisch and her brothers have talked late into the night about what to do about caring for their own widowed mother, who lives in Kansas City, Mo., and has had a fall and cataract surgery. Amos Kermisch said Barbara's mother should be in an adult care community, but they keep putting off the issue.

"You have to forcefully take your parents and say, 'This is best for you,' say, 'This is where you're going to live because if you don't I'm going to get stuck with you, and I'm not going to be,' " he said. But he added: "We didn't do it with my mother, and we're not doing it with her mother." Who's to Pay?

Many experts on aging consider the high cost of long-term health care the most critical and intractable problem confronting the elderly.

"It is virtually impossible for the most prudent people to protect themselves against this risk" of needing costly long-term care, said Sen. John Heinz (R-Pa.), chairman of the Senate Aging Committee. " When it comes to insuring against the single greatest threat to their life savings and emotional reserves -- the costs of long-term care -- Americans have no protection."

Most individuals are broke within a year of going into a nursing home, according to a recent study prepared for the House Aging Committee. Of married Alzheimer's patients getting care at home, 47 percent are impoverished within the first year, it found.

Consumers' out-of-pocket expenses for nursing home care alone in 1986 are projected at $16 billion -- about half the nation's total nursing home bill, according to government figures. Most of the rest will be paid by Medicaid, with Medicare picking up less than 2 percent of nursing home costs and private insurance less than 1 percent.

President Reagan, in his State of the Union address, directed Health and Human Services Secretary Otis R. Bowen to study ways of providing "catastrophic" health insurance to the elderly through government and private programs, leading some to hope relief is in sight. Bowen has said he plans to look at the issue of long-term custodial care, not just hospital care. At the same time, he hopes to develop a plan that will not cost the federal government any more money.

Already, some experimentation has started with private insurance plans, but these are still in their infancy. If the Pension's Not There

For some elderly, the need for long-term care is complicated by other serious financial difficulties. Some face the shock of finding that after they have worked all their lives, the pension they expected is not there.

Carl Clarence Cook, 82, spent much of his life at building the federal city, from the first Social Security Building to the Pentagon to the Rayburn House Office Building to lesser monuments of modern-day Washington.

He recalls that before he got involved in the construction trade, generally as a courier, he had a variety of jobs that were pure Washington: orderly at St. Elizabeths mental hospital, chauffeur to Sen. Claude Swanson of Virginia, driver for the secretary of the Navy.

Cook said he has been a Teamster ever since the Teamsters Local 639 was chartered in the 1930s. But despite more than 35 years as a union member and working until he was nearly 70, the bedridden Cook is living in public housing with no union pension to help him.

The Teamsters said that because he had breaks in service -- the rule rather than the exception in the construction business -- he was entitled to no pension at all. To qualify, he needed 10 years of continuous service, and he had only three. In 1972, the local gave him a lump-sum disability payment of $324 and considered the case closed.

The Employee Retirement Income Security Act of 1974 put in more pension protections for workers, but it came too late for Cook. "Nobody ever told me what it would take to get a pension," Cook said.

He became disabled in 1972 when he lost all use of his legs, and now he must have help cooking, shopping and cleaning.

Cook, with a third grade education, had been able to buy his own house after years of work. But first Cook and then his wife got sick, so she sold the house and went into a nursing home, where she died about a year ago.

Medicaid pays some of his medical bills now, and Cook gets Social Security income of $524 a month. He pays $131 a month to rent his one-bedroom apartment at the city's Arthur Capper Senior Facility. A homemaker supplied by the city comes in for four hours each weekday to prepare meals, and he does not have to pay for that. But he does pay $65 a month for a man in the building who comes in every day to bathe and shave him and help him into his wheelchair. Holding On

Clifford K. Beck, 72 -- distinguished nuclear physicist and former president of the Montgomery County Board of Education -- has been an Alzheimer's victim for at least six years. His wife, Mary Beth Beck, speaks for the two of them now.

Their white stucco house sits at the edge of 60 acres of upper Montgomery County farm land, away from the urban fray, and growing their own vegetables has been one small help with the financial burden they face.

A diminutive woman whose voice still carries the lilt of her native Louisiana, 67-year-old Mary Beth Beck says she has sweated over finances but made it through with the help of family and friends. It would not take long, however, to wipe out all their resources if her husband had to go to a nursing home.

For him, it is the end of a life filled with a successful career, community service, more than four decades of marriage and four children.

Now, Clifford Beck gets his greatest pleasures from such simple acts as having an infant grandchild plopped on his chest. He laughs and seems to enjoy it, his wife said, but it is sometimes hard to tell because words are so difficult for him now.

"Yesterday he went through a period of wanting me around. I said to him, 'Isn't it wonderful that we've been married 42 years. You remember, we've been married for 42 years. It's a long time,' " she said, making conversation to her usually silent husband.

In a rare moment of contact, before lapsing again into silence, he repeated, "It's a long . . . . "