The Overlooked Budget Line Item Draining Retirement Savings: Why Long-Term Care Demands Urgent Planning

When Americans sketch out their retirement blueprint, they typically account for housing, healthcare, and travel. But there’s one massive expense lurking in the shadows: long-term care. According to CBS News, nearly 70% of retirees will face it, with costs frequently climbing into six figures. Most retirement calculators simply skip it—an omission that can torpedo financial stability years into retirement.

Why Standard Planning Models Miss the Mark

Here’s the puzzle: unlike fixed expenses such as mortgage payments or utility bills, long-term care costs defy conventional prediction. They don’t arrive as a lump sum. Instead, they materialize gradually—beginning with a few hours of in-home assistance, then escalating into round-the-clock support as mobility and cognitive needs decline.

Lily Vittayarukskul, co-founder and CEO of Waterlily, explains the core challenge: “Most retirement calculators are engineered for neat equations and predictable patterns. Yet the reality of long-term care is messy and contingent. It doesn’t resemble a single fixed expense. It unfolds across stages, constantly shifting as someone’s circumstances change.”

The knowledge gap compounds the problem. Many retirees believe Medicare covers far more than it actually does. Whitney Stidom, vice president of consumer enablement at eHealth, notes that this misunderstanding is why “the average American needs nearly $200,000 earmarked for retirement healthcare expenses. The disconnect between what Medicare pays and what families must cover themselves—particularly for personal assistance beyond skilled nursing—creates dangerous blind spots.”

The Emotional Dimension Nobody Discusses

Long-term care operates at the intersection of two crises: one financial, one deeply human. Jeremy Clerc, founder and CEO of Assisted Living Magazine, observes that families rarely initiate these conversations voluntarily. “We see families racing against time when an aging parent suddenly requires care. Long-term care matters not just because of its financial weight, but because of its emotional gravity—it reshapes the identity of retirees and transforms family members into caregivers or financial pillars.”

The discomfort is real. Planning for utility bills feels neutral. Strategizing for help with bathing, cooking, or walking triggers vulnerability and denial. Vittayarukskul describes the trajectory: “Costs start manageable, almost invisible. But as months stretch into years and needs expand, the budget erodes. Eventually, the financial foundation cracks.”

A Structured Path Forward

Rather than hoping for the best, experts recommend a methodical approach:

Develop a personalized care blueprint. Don’t rely on national averages. Factor in your health trajectory, available family support networks, and local wage rates for care workers. This produces a realistic timeline for when care might be needed and how intensive it might become.

Quantify the gap. Convert your projected care needs into today’s dollars, then layer in inflation assumptions year by year. This reveals the true shortfall between your current savings and anticipated expenses.

Build dedicated funding mechanisms. Rather than hoping general retirement savings will stretch far enough, create a separate “care reserve.” Trim discretionary spending to feed it. Explore long-term care insurance, hybrid policies, annuities, or tax-advantaged vehicles like health savings accounts (HSAs) for qualifying expenses.

Arrange governance in advance. Designate a financial agent and healthcare proxy. Have candid family conversations about who can realistically provide care, reducing your dependence on paid services.

The Bottom Line

Long-term care isn’t a luxury problem for the wealthy. It’s a near-universal reality for most retirees. By anchoring it in your retirement plan now—before a health crisis forces rushed decisions—you can safeguard your nest egg, preserve your autonomy, and sidestep the impossible choices many families face when they wake up too late.