Americans' Retirement Readiness Gets a Bad Grade in One Area

Americans' Retirement Readiness Gets a Bad Grade in One Area

Millions of Americans score poorly on retirement readiness due to this Achilles' heel. Are you prepared?

By Steven Orlowski, CFP, CNPR

When it comes to preparing for retirement, many Americans believe they’re on the right track. They may be contributing to a 401(k), paying down debt, or even working with a financial advisor. But beneath the surface, there's a widespread vulnerability undermining retirement security — one that too few people recognize until it’s too late.

The Achilles’ Heel: Long-Term Care Planning

According to recent studies, the one area where Americans consistently earn a failing grade in retirement readiness is long-term care planning. Despite mounting evidence that a majority of retirees will need some form of long-term care — whether at home, in assisted living, or in a nursing facility — most people are shockingly unprepared for the costs and logistics involved.

The Numbers Tell the Story

The U.S. Department of Health and Human Services estimates that 70% of people turning 65 today will need some form of long-term care services in their remaining years. Yet, less than 10% of Americans over 50 have long-term care insurance, and even fewer have a strategy to pay for it out-of-pocket.

And the costs? In 2024, the average national cost for a private room in a nursing home was over $110,000 per year. Assisted living facilities averaged $60,000 annually, and even home health aides cost upwards of $30 per hour. These numbers are rising faster than inflation, straining retiree budgets and threatening financial plans that otherwise looked solid.

Why the Disconnect?

There are several reasons why long-term care remains an overlooked aspect of retirement planning:

1. Denial or Optimism Bias: Many people underestimate their likelihood of needing care or assume family members will provide it.

2. Misunderstanding of Medicare: A common myth is that Medicare covers long-term care — it doesn’t. Medicare may cover short-term rehabilitation, but not ongoing custodial care.

3. Cost and Complexity of Insurance: Long-term care insurance can be expensive and confusing, causing many to avoid the subject entirely.

4. Procrastination: Like estate planning, long-term care is easy to postpone — until it becomes an emergency.

A Ticking Time Bomb for Families

When a loved one suddenly needs care, the burden often falls on adult children, who may have to scramble to rearrange their lives or dip into their own savings. Without a plan, families face difficult choices that can create emotional and financial strain — sometimes for years.

How to Strengthen Your Retirement Plan

Being truly retirement-ready means accounting for more than market returns and portfolio balances. Here are practical steps you can take:

• Start the Conversation Early: Discuss long-term care preferences with family members before a crisis arises.

• Understand Your Options: Explore long-term care insurance, hybrid life insurance policies, health savings accounts (HSAs), and annuities with LTC riders.

• Work With a Financial Planner: A Certified Financial Planner™ can help integrate long-term care planning into your broader retirement strategy.

• Consider Your State’s Programs: Some states offer partnership programs that can help protect assets if you eventually need Medicaid.

The Bottom Line

Retirement is about more than just having enough money to quit working. It’s about ensuring dignity, independence, and peace of mind as you age. Ignoring long-term care planning is like building a house with no roof — everything underneath is at risk.

If your retirement strategy doesn’t include a plan for long-term care, you might be less prepared than you think. The good news? It’s not too late to fix it.

Are you ready — really ready — for retirement?