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The Overlooked Cost

How Long-Term Services and Supports Impacts Retirement-Income Adequacy

As Americans age, the financial risk of needing long-term services and supports (LTSS)—such as in-home care or nursing home stays—has become one of the most significant threats to retirement-income adequacy.  

In our new report, The Overlooked Cost: How Long-Term Services and Supports Impact Retirement-Income Adequacy, our researchers use the Morningstar Model of US Retirement Outcomes to study the impact of needing LTSS on retirement security. 

Key Findings

  • 41% of households are projected to run short on money in retirement when LTSS costs are included. Without LTSS costs? Just 26%. 
  • Single women are particularly exposed to LTSS risk: 52% may face retirement shortfalls with LTSS costs, compared to 34% without. 
  • About 43% of Baby Boomers will incur LTSS costs in retirement, which illustrates why the inclusion of LTSS costs raises the share of households at risk so significantly. 
  • Longevity risk and LTSS risk are interconnected. The longer someone lives, the more likely they will need LTSS.  
  • LTSS costs are highly skewed. Many will not incur them at all, but for those who do, the costs are substantial. The average unconditional present value of LTSS costs for Baby Boomers from retirement age through death is $130,700. The average cost for those who are projected to incur costs is $242,373. 

Why It Matters: 

Medicare does not cover long-term care. Private insurance is rare. Without policy reform or better planning, many will have to rely on unpaid family caregivers or spend down their assets to qualify for Medicaid—potentially resulting in a lower standard of care, while also increasing the financial burden on taxpayers. 

Read the technical appendix here.

Learn more about the Morningstar Model of US Retirement Outcomes.

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