Health-, Long-Term-Care Costs Can Be Major Retirement Risk Factors

When financial advisers ask clients about their health, it is not just small talk—it could be a crucial retirement planning detail. A LIMRA paper published last week argued that although mental and physical decline are key elements of longevity risk, retirement savers and their financial advisers often view these risks with differing levels of concern.

Multiple independent consumer surveys cited in “The Growing Influence of Health Risks on Retirement Security” showed that retirement savers’ top worries included health- and long-term-care costs, while economic concerns were less common. In one cited example from last year, when LIMRA asked 3,502 U.S. adults and 500 financial professionals to list their three most significant retirement concerns, health care ranked second (61%), behind only inflation (67%), with market volatility far lower (27%). Financial professionals, meanwhile, were most worried about clients outliving savings (56%), while also worrying about health care (51%) and market volatility (51%).

“It’s a pretty big disconnect between what [advisers are] trying to protect the clients from and what the clients actually want protection from,” says Chris Heye, the study’s author and the CEO and founder of Whealthcare Solutions Inc.

Heye cited a 2025 Centers for Disease Control and Prevention study that estimated that 76.4% of U.S. adults live with at least one major chronic disease and that 51.4% have at least two chronic conditions. Of 12 major chronic conditions measured between 2013 and 2023, the largest increases were for obesity (4.4 percentage points) and depression (2.4 percentage points), and only heart disease and chronic obstructive pulmonary disease saw slight decreases.

With age comes rising risks of cancer, cardiovascular disease and dementia, and LIMRA cited federal statistics that real, per-capita spending on insurance premiums and out-of-pocket costs has nearly doubled since 1987.

“[Clients are] managing a chronic illness, their spouse[s are] managing a chronic illness, they’re helping their parents manage a chronic illness,” Heye says. “Clients care a lot more about what their father with dementia is going to do than what the Fed’s going to do.”

Heye was inspired to investigate longevity’s financial risks about 10 years ago, when his mother was diagnosed with dementia and two friends’ aging parents made bad financial decisions. Given that a person’s financial skills decline years before an official dementia diagnosis, Heye says advisers need to direct clients to plan for long-term medical needs, long before the issue will arise.

If a client is reluctant to discuss these issues, Heye says the adviser can empathize but should still stress the risks of avoiding action.

“That’s an approach that you could take with a client: ‘I know this is hard to talk about, but if we don’t talk about it, the consequences might be even worse,’” Heye says.

Long-Term-Care Costs

Perhaps the most unpredictable retirement expense is long-term care, which may be needed after a major health event, may increase gradually with chronic conditions like coronary heart disease, and could turn into a 24/7 need, as with Alzheimer’s disease and dementia.

According to the LIMRA report, 69% of adults will need at least three years of long-term care, according to the U.S. Department of Health & Human Services. It also pointed out that most long-term care is not covered by Medicare; that private health insurance may only provide partial coverage; and that costs are often taken on by a caregiver.

Lily Vittayarukskul, CEO of Waterlily, developed an artificial intelligence-powered platform that allows users to input health and financial information and to build a personalized long-term-care timeline and plan, including projected costs. She says advisers and clients often believe—mistakenly—that long-term care planning is a task for specialists.

She hopes programs like hers can help people start to visualize solutions. For example, Vittayarukskul remembers a single woman in her 40s who used the website to estimate her eventual long-term care costs. Consulting with an adviser, the woman determined that if she opened a Roth individual retirement account and contributed the maximum amount, she could save enough to cover the eventual costs.

“You don’t have to [necessarily] buy insurance. It’s even looking at your existing [savings] vehicles and optimizing your strategy,” Vittayarukskul says. “I see [clients] at the end of our session … having a deep amount of peace of mind.”

The LIMRA paper echoed that sentiment: Addressing health care costs will bring relief to clients.

“Your clients are managing their health constantly; that’s on their mind constantly,” Heye says. “[If] you’re not meeting their demands, they’re going to go to someone else.”