The Hidden Retirement Cost that Could Lead to Financial Ruin

More than one in four Americans, about 60 million, are caregivers for a family member, with about a 29% belonging to the so-called sandwich generation—those who have kids as well. The strain is reshaping American families and their dreams. The University of Phoenix’s 2025 Career Optimism Special Report found that more than half (51%) of mothers in the sandwich generation have left jobs because of these responsibilities, and 55% of sandwich mums report living in a single-family household, with more than 52% of their income going towards the costs of caregiving.

“There’s a big gap between folks in the sandwich generation feeling like they just don’t have that ability to build up and pursue a career,” Ruth Veloria, Chief Strategy and Customer Officer at University of Phoenix, told Investopedia. Meanwhile, Americans vastly misjudge the costs of long-term care outside the home, with a 2024 survey finding most respondents (60%) were off by more than half in estimating the $111,000 annual average cost, guessing $50,000 or less.

For younger generations watching their parents approach retirement, this isn’t just mom and dad’s problem—if it hasn’t happened already, it could become yours too. Below, we take you through what to expect and how you can prepare.

How Your Parents’ Problems Are Likely To Become Yours

By 2033, researchers estimate that 16 million middle-income older adults will be unable to afford the health, personal care, and housing services they need, while 70% of those 65 and over are expected to require long-term care at some point. Long-term care provides the daily assistance millions of Americans need when aging, illness, or disability make routine tasks—bathing, dressing, eating, using the bathroom—difficult or impossible.

This care takes place in nursing homes, assisted living facilities, or at home—the last often by family members and friends who receive no pay for their round-the-clock efforts. Financial problems typically start once care is needed in a facility, since Medicaid, which covers more than half of long-term care services nationwide, is only available to those who meet strict income requirements.

Medicare—the program most older adults rely on for healthcare—provides very limited long-term care coverage. Private health insurance often has similar limitations. In addition, private long-term care insurance can be costly and is thus out of reach for many families.

This can leave millions of American families in an impossible position: too wealthy to qualify for government assistance, yet unable to afford the six-figure annual costs of professional care. The result is that adult children are often called upon to fill the void at a tremendous personal and financial cost.

While Uncomfortable, Here’s How To Start Long-Term Care Discussions Today

Only about four in 10 adults have talked with loved ones about how they would obtain or pay for long-term care. You can begin these discussions by asking older family members these crucial questions:

• What’s your current health insurance situation, and do you understand what it covers?
• Have you looked into long-term care insurance while you’re still healthy enough to qualify?
• What are your preferences for care—would you want to stay at home or move to a facility?

Here are other ideas to consider:

Bring in Your Siblings

Discuss the issue with your brothers and sisters. “A lot [of what] we’ve seen in my own family is just the ability to move people close” to deal with her family’s care needs, Veloria said. “That’s not always possible, but trying to set up for positive conversations with siblings about what the rules of engagement are going to be is very important.”

Look for Community Resources

Adult day care centers, senior centers, respite care services, and support groups can provide crucial relief for caregivers. Yet, only 13% of family caregivers in a 2025 AARP survey have used respite services to give them needed time off.

“It takes a bit of a team,” Veloria said. “You have to surround yourself with support.”

Check Out Technologies That Can Help

Apple watches with fall detection, smart home devices for monitoring, and online grocery ordering can help older adults age in place longer. You can also check online cost estimators (many financial advisors have access to them), such as Waterlily’s AI-supported tool, to help you forecast long-term care costs your family might face.

Buy Long-Term Care Insurance

These policies typically cover care in nursing homes, assisted living facilities, and in-home services, with estimates for premiums in 2025 ranging from about $185 for a single male to almost $600 for a couple per month for 55-year-olds wanting $165,000 coverage.

Use Health Savings Accounts (HSAs)

For families with high-deductible health plans, HSAs offer triple-tax advantages and can be used for long-term care expenses.

The Bottom Line

The long-term care crisis is changing careers and family finances across America. If it hasn’t affected you yet, the most important step is to start talking about it, not just with your parents, but with loved ones about your own eventual needs.

Getting these difficult conversations about money, care preferences, and family responsibilities out of the way today is likely to be far easier than when bills and care needs mount up in the future.