June 25, 2025  – A recent report from investment advisory firm Morningstar warns that the rising costs of long-term services and supports (LTSS) could significantly reduce the financial security of Americans entering retirement. According to the analysis, the potential need for long-term care (LTC) is among the most serious threats to income stability in retirement, especially for single women and members of the Baby Boomer generation.

LTSS encompasses a wide range of support for individuals who have difficulty completing daily activities due to age, illness, or disability. These services are typically not covered by Medicare, and private long-term care insurance remains rare among retirees. This leaves many older adults to rely on unpaid family caregivers or spend down their savings to qualify for Medicaid, which can compromise both the quality of care and overall financial wellbeing.

Researchers used models and compared a standard retirement-income projection with a hypothetical model in which LTSS costs were eliminated. The difference was stark: with LTSS costs included, 41% of households are projected to outlive their retirement savings. Without those expenses factored in, that number drops to 26%.

The financial burden is even greater for single women. The study projects that 52% of single women may face retirement shortfalls when LTSS costs are considered, compared to 34% if such expenses are excluded. The analysis also estimates that 43% of Baby Boomers will incur LTSS costs at some point in their retirement.

These findings were published in the report titled The Overlooked Cost: How Long-Term Services and Supports Impacts Retirement-Income Adequacy. The authors argue that better planning is essential to minimize reliance on Medicaid and reduce the strain on family caregivers. They also recommend policy reforms to improve financial protections for older adults.

With the nation’s population aging rapidly, the cost of long-term care is becoming an increasingly urgent concern. This analysis highlights the need for coordinated action—both at the individual and policy level—to prepare Americans for one of the most expensive, and often overlooked, aspects of retirement.