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Overlooked Retirement Risk Facing Millions Of Savers

Most retirement advice assumes two earners splitting expenses, a spouse ready to step in when health falters, and both partners building their own Social Security records.

For millions of Americans, none of that applies, and the gaps tend to surface only after it's too late to fix them.

More than half of women and nearly a third of men over 65 are widowed, divorced, or never married, according to the Administration for Community Living (ACL).

Christine Benz, Morningstar's director of personal finance and retirement planning, has warned that standard planning frameworks fail these households in predictable, preventable ways.

Singles face a long-term care gap with no safety net at all

The most pressing vulnerability belongs to the millions of people who are heading into their retirement years without a partner.

About one-in-five of Americans turning 65 will have long-term care costs exceeding $200,000, ASPE and the Urban Institute estimated in January 2025.

A married person can lean on a spouse for help with daily tasks, which delays the start of expensive paid care. Single retirees need to manage by themselves, and the bills begin from the very first day they require any kind of professional assistance.

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Chris Kawashima, a certified financial planner at the Schwab Center for Financial Research, recommends that single retirees hold enough cash to cover one full year of spending, minus however much income is expected from guaranteed sources such as pension or Social Security, for example.

He also suggested maintaining two to four years of anticipated withdrawals in stable investments such as short-term bonds or bond funds.

Most retirees don't know the limits of what Medicare will cover.

A widespread misunderstanding about insurance coverage compounds the financial exposure that single and one-earner households already bear. Nearly 45% of adults 65 and older believe that Medicare covers long-term care costs, according to KFF.

Medicare handles hospital stays, doctor visits, and rehabilitation services, but the program was never designed to pay for sustained daily assistance.

That gap leaves retirees potentially facing six-figure annual costs that many believe their existing insurance will handle without additional planning.

Only 39% of respondents to a survey correctly estimated nursing home costs, and just 15% gauged assisted living expenses with any accuracy.

Alicia H. Munnell, senior adviser at the Center for Retirement Research at Boston College, reported those findings alongside her research colleagues.

Nearly half of retirees wrongly believe Medicare covers long-term care, leaving many unprepared for costly nursing home care and assisted living expenses.

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Caregivers sacrifice their own retirement security to support their families

The conventional retirement template also overlooks the roughly 63 million Americans who provide ongoing, unpaid care to a family member, according to the National Alliance for Caregiving's and AARP's 2025 Caregiving in the U.S. report.

Caregivers spend an average of $7,200 out of pocket annually, roughly 26% of their income, according to AARP's Caregiving Out-of-Pocket Costs study

About 31% of caregivers have stopped saving entirely due to their care responsibilities, and another 13% have tapped retirement accounts early, according to the survey.

Women bear a disproportionate share of this burden, spending an average of 12 years outside the workforce to provide caregiving for relatives.

Bridget Bearden, research and development strategist at the nonprofit Employee Benefit Research Institute (EBRI), said most future caregivers underestimate costs and wrongly expect Medicare to pay.

These future caregivers are uncertain about the duration, cost and funding sources for care…with many mistakenly believing Medicare will cover a large share of long-term care expenses

Women caregivers over 50 lose an estimated $324,044 in combined wages, Social Security, and pension benefits over their lifetimes, according to a MetLife study conducted with the National Alliance for Caregiving.

“Reliance on family and friends for care can reduce the need for paid long-term care,” Stephen M. Weber, a certified financial planner at Vanguard, noted.

But that reliance could shift costs from one generation’s retirement savings to another generation’s financial security and stability over time.

Single-earner households carry double the withdrawal pressure over time

When one spouse earns the household income while the other manages the home, the retirement math shifts in ways most calculations miss.

A single salary must fund two people’s healthcare needs and build a portfolio large enough for withdrawals that could span three decades.

Morningstar's Benz has emphasized the value of delaying Social Security past full retirement age, for the household’s higher earner in particular.

Each year of delay provides a guaranteed increase in benefits plus inflation adjustments, she noted in her Morningstar guidance on retirement income.

Maximizing the primary earner’s benefit creates a larger survivor benefit that protects the lower-earning spouse if the higher-earning partner dies first.

That approach becomes essential for households where the non-earning or lower-earning spouse has limited work history and few personal credits.

What single and one-earner households should address before retirement arrives

The retirement gaps facing single and one-earner households don't close on their own, and the tools that help usually work only during a relatively narrow window between age 50 and 65.

Schwab's planning guidance notes that long-term care insurance is cheapest to lock in during that window, before premiums climb and denial rates rise.

Funding a health savings account during the same working years builds a dedicated pre-tax buffer for the care costs Medicare will not cover, Schwab noted.

For households with a lower-earning spouse, Benz has emphasized that delaying Social Security past full retirement age for the higher earner locks in both a larger monthly benefit and a larger survivor benefit, the two income streams the surviving spouse is most likely to rely on.

These decisions are most reversible before retirement arrives.

Benz has argued that households often discover the gap only when the need for a caregiver arises, when the tools that would have closed the gap are less available or more expensive.

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