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The Growing Influence of Health Risks on Retirement

Author

Chris Heye
Fellow, LIMRA Retirement Income Institute

May 2026

For decades, retirement planning has focused on financial and macroeconomic risks, including market volatility, inflation, taxes and recessions. While these risks are important, Americans are extremely concerned about the threats to their retirement security posed by high healthcare, long-term care, and caregiving costs (see Figure 1). Across multiple independent surveys, large healthcare and long-term care expenses consistently rank among the most significant financial concerns facing both pre-retirees and retirees, frequently exceeding worries about recessions, inflation or market volatility.  This concern is especially worrisome for Generation X.

Figure 1. Financial Concerns in Retirement — Percentage Ranking 1st, 2nd or 3rd

Source: LIMRA — 2025 Protected Retirement Income and Planning (PRIP) Study.

Redefined Retirement Risk

Rising life expectancy is one of the contributing factors to retirement security risk. Americans are living much longer than previous generations, with life expectancy increasing from under 50 years to nearly 80.

Longer life spans extend the length of time retirees must fund essential expenses, including healthcare, long‑term care and caregiving. From an income-planning standpoint, this doesn’t only mean planning for more years; it also increases exposure to health‑related financial risks.

The Health Span–Lifespan Gap

To fully understand the financial implications of longer lives, it is important to define lifespan and health span. Lifespan refers to the number of years a person lives. Health span refers to the number of years a person lives in relatively good physical and cognitive health.

While lifespan has increased dramatically over the past century, gains in health span have been more modest. As a result, many Americans now spend a portion of later life managing chronic disease, functional limitations or cognitive decline.

Healthcare Costs

Healthcare costs are the most immediate and widely experienced health‑related financial risk. Medical expenses are unavoidable, difficult to predict, and heavily concentrated in later life. Even with Medicare, retirees remain exposed to premiums, deductibles, copayments, coinsurance and prescription drug costs.

Medical prices have risen significantly faster than overall inflation for decades. Specialty drugs and advanced therapies can cost tens or even hundreds of thousands of dollars annually. Over the course of retirement, total healthcare spending frequently reaches well into six figures, according to the Fidelity Investments 2025 Retiree Health Care Cost Estimate.

These costs introduce risk that traditional retirement planning models often underweight. For many households, healthcare spending becomes a primary driver of asset depletion later in life.

Central Retirement Risk

Long‑term care represents one of the largest and least-planned‑for financial exposures in retirement. Approximately 7 in 10 adults will require some form of long‑term care services during their lifetime, often for multiple years, according to the U.S. Department of Health & Human Services and LongTermCare.gov. Yet extended custodial care is generally not covered by Medicare, and private insurance provides limited protection.

As a result, most long‑term care costs are shouldered directly by households. Annual costs can exceed $100,000, particularly for individuals with dementia who require continuous supervision, according to the Genworth Cost of Care Survey (2024) and SeniorLiving.org. For many retirees, long‑term care is not a remote possibility; it is a real financial risk that can rapidly undermine retirement security.

Hidden Financial Consequences

Beyond direct medical and care expenses, caregiving imposes significant and often overlooked financial costs. A large share of working‑age adults report caregiving responsibilities, frequently during peak earning years. Many caregivers reduce work hours, delay career advancement, or exit the workforce altogether.

The long‑term consequences of lost wages, reduced retirement savings, and lower Social Security benefits can persist long after caregiving ends. Caregiving is also associated with high levels of emotional stress and burnout, particularly when caring for individuals with cognitive decline.

Retirement Anxiety

Consumer research consistently shows that Americans recognize the severity of health‑related financial risks. Despite some differences in the survey methodologies and question framing, health-related costs remain at or near the top across measures of “greatest concern,” “top-ranked worries,” and “very concerned” responses. And when respondents are required to select a single primary concern, healthcare and/or long-term care costs frequently outrank inflation and other traditional economic risks.

The consistency of these responses persists across organizations conducting the surveys, the investor/consumer populations surveyed, and the time periods during which the research was completed, suggesting that worries about health-related financial risks are always top of mind and a source of anxiety and stress.

Taken together, the evidence indicates that consumers perceive health-related financial risks as central to their financial and retirement security. The convergence of objective health data and consumer sentiment indicates that concerns about health-related financial risks are grounded in everyday lived experience and demographic realities, and not short-term market or political events.

Implications for Retirement

Protected income solutions, particularly those designed to deliver reliable lifetime income, can play a critical role in addressing these health-related financial risks. Predictable income streams help ensure that essential expenses, including healthcare and long-term care costs, can be met regardless of market conditions or declining health. Stable income can also reduce stress and cognitive burden during periods when households are least equipped to make complex financial decisions.

For financial professionals, insurers and policymakers, the opportunity is clear. Reframing health‑related risks as a core component of retirement planning and aligning income solutions accordingly will be essential to helping individuals navigate longer lives with greater financial resilience and confidence.

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