BGM-1A | Series 1: The Cost of Growing Old*
They did everything right.
Dave and Linda retired at 66 with the house paid off, a 401(k) they’d been feeding for decades, and Social Security checks that covered the basics. They had a plan: keep the house, travel a little in the early years, stay healthy, and live modestly. They’d watched their parents do it. They figured they could too.
What they didn’t figure was the $315,000.
That number, from Fidelity’s most recent Retiree Health Care Cost Estimate, is what an average 65-year-old couple retiring today can expect to spend on healthcare alone over the course of retirement. Not total living expenses. Just healthcare. Just the premiums, copays, deductibles, prescriptions, dental visits, hearing aids, and out-of-pocket costs that Medicare leaves behind.
Dave and Linda had saved well. Better than most. But sitting at their kitchen table with a calculator and a stack of statements, they started to understand something that nobody had explained clearly enough: growing old in America is one of the most expensive things a person will ever do, and the true cost is hidden until you’re already inside it.
The Full Ledger #
The Fidelity number is large, but it only covers healthcare. The full cost of retirement includes housing (maintenance, property taxes, insurance, and potential modifications as bodies change), food, transportation, utilities, and the wild card that can restructure everything overnight: long-term care.
Add those together and the picture gets harder to look at. The Employee Benefit Research Institute estimates that a couple needs roughly $1 million to have a 90% chance of covering basic expenses and healthcare through a 30-year retirement. The Federal Reserve’s most recent Survey of Consumer Finances puts median retirement savings for households approaching 65 at roughly $185,000. For Black and Hispanic households, the median is significantly lower.
That gap between need and savings is the central financial fact of aging in America. It is not a gap that most people can close through discipline alone. Median household income for working-age Americans has been largely flat in real terms for decades. Healthcare costs have grown at multiples of general inflation. The shift from employer pensions to individual 401(k) accounts transferred the entire risk of retirement funding onto people whose wages weren’t rising fast enough to absorb it. A family earning the median income, saving diligently, and avoiding major financial mistakes could still arrive at 65 with less than a fifth of what they’ll need. That is not a failure of character. It is a failure of arithmetic, built into a system that asks individuals to privately fund what every other wealthy nation treats as a shared obligation.
This matters because the loudest response to data like this is often “people should have saved more.” Some should have. But the math doesn’t support that prescription as a population-level solution. When the gap between median savings and projected need is this wide, the problem is structural, not behavioral. Acknowledging that is not an excuse for inaction. It is the starting point for honest planning within a broken system, which is what this series is about.
Healthcare as the Central Cost #
No other stage of life consumes healthcare dollars the way aging does. Americans over 65 account for roughly 16% of the population and nearly 36% of total healthcare spending. Per-capita spending for people over 65 is roughly three times the rate for working-age adults, according to CMS National Health Expenditure data. For those over 85, it roughly doubles again.
The reason is straightforward: chronic disease accumulates. Most Americans over 65 live with at least two chronic conditions. Many manage four or five. Heart disease, diabetes, arthritis, chronic pain, depression, hypertension, kidney disease, and cognitive decline do not take turns. They layer. Each condition requires its own management, its own medications, its own specialist visits, and its own potential for acute crisis. A hospitalization for one condition often destabilizes another.
Even with Medicare, out-of-pocket costs are substantial. Medicare Part B premiums, Part D premiums, Medigap or Medicare Advantage premiums, and the copays, coinsurance, and deductibles that come with each add up to thousands per year. Kaiser Family Foundation research shows that traditional Medicare beneficiaries spent a median of roughly $4,600 out of pocket on healthcare in recent years, with the top quarter spending considerably more. And those figures exclude the services Medicare doesn’t cover at all: dental care, routine vision, hearing aids, and most long-term custodial care. We’ll examine those gaps in detail in the next installment.
The variability problem makes planning even harder. Two 70-year-olds with the same income and the same Medicare plan can face wildly different costs depending on their health, their geography, their diagnostic luck, and their race. A senior in rural Mississippi managing diabetes and hypertension faces different access, different costs, and different outcomes than a senior in suburban Connecticut with the same conditions. The averages are useful for understanding scale. They are nearly useless for predicting what any individual will face.
The Long-Term Care Wildcard #
If healthcare is the predictable drain, long-term care is the financial earthquake that may or may not hit. And roughly 70% of people turning 65 today will experience some form of it.
Long-term care means help with the activities of daily living: bathing, dressing, eating, moving around the house, managing medications. It can mean a home health aide for a few hours a day, or full-time assisted living, or round-the-clock nursing home care. The need can arise from a stroke, a hip fracture, Parkinson’s disease, advanced arthritis, cancer recovery, or dementia. It is not limited to any single diagnosis.
The costs are staggering. The Genworth Cost of Care Survey, the most widely cited source, shows national median costs for a home health aide at roughly $6,300 per month, assisted living at roughly $5,500 per month, and a semi-private nursing home room at roughly $8,700 per month. A private room runs over $10,000. These are medians; costs in major metropolitan areas and the Northeast run significantly higher.
About 20% of people who need long-term care will need it for more than five years. Do the math on five years of nursing home care at $10,000 a month and you arrive at $600,000, a number that will consume most families’ entire savings and then some. Dementia-related care is often the most expensive scenario within this category because of its duration and the intensity of supervision required, but it is not the only path to financial catastrophe. Any condition that steals independence can trigger the same cascade.
The financing gap is severe. Medicare covers very little long-term care (short-term skilled nursing after a hospitalization, not ongoing custodial help). Private long-term care insurance has become expensive, hard to qualify for, and less widely available than it was a decade ago. Most families end up paying out of pocket until the money runs out, then turning to Medicaid, which requires near-total impoverishment as a condition of eligibility. That process, the spend-down, is the subject of Installment 4 in this series. It is one of the most consequential financial mechanisms in American aging, and one of the least understood.
Where Technology Enters the Picture #
The economic picture described above is bleak, but it is not static. Emerging technology, particularly in AI-driven preventive care and remote health monitoring, has genuine potential to shift some of the cost dynamics of aging. The key word is “some.”
The economic logic of prevention is straightforward: catching cardiovascular risk, pre-diabetes, early cognitive changes, or cancer at earlier stages reduces the most expensive acute care episodes. AI-powered screening tools are beginning to identify risk patterns in routine data (lab results, imaging, even speech patterns) that human clinicians miss or catch later. If a $200 screening prevents a $150,000 hospitalization, the math works. Several health systems are piloting programs along these lines, with early results showing reduced emergency department visits and hospitalizations among monitored seniors.
Remote monitoring and telehealth offer a related benefit. Wearable devices tracking heart rhythm, blood glucose, activity levels, and sleep can flag problems before they become crises. Telehealth visits reduce the travel burden and cost for seniors managing chronic conditions, particularly in rural areas where specialists are scarce. Medicare’s coverage of telehealth expanded significantly during COVID and has been partially maintained since, though the policy landscape remains uncertain.
The honest limitation is this: technology can improve efficiency, catch problems earlier, and reduce waste. It cannot eliminate the fundamental cost of bodies that age, cells that degrade, and conditions that require sustained human attention. A fall sensor does not prevent all falls. A remote monitor does not replace a home health aide. An AI screening tool does not make the resulting treatment affordable. Technology bends the cost curve. It does not break it. And the benefits reach those with access to devices, connectivity, and digitally equipped healthcare providers first, which means the people facing the steepest costs are often the last to benefit.
What This Means at Your Kitchen Table #
If you’re reading this in your fifties or sixties, wondering whether you’ve saved enough, here is the honest answer: probably not, and that is not primarily your fault. The cost of growing old in America exceeds what most middle-class families can accumulate over a working lifetime because the system was not designed for people to live this long on this little institutional support.
That does not mean planning is pointless. It means planning should begin with clear eyes about what you’re planning against. The conversations most families avoid (how will we pay for care, what happens if one of us can’t live independently, who has power of attorney, where are the accounts) are the conversations that prevent the worst financial surprises. They don’t eliminate the structural problem. They reduce the chaos when the structural problem arrives at your door.
This installment is the foundation. Over the next five pieces, we’ll walk through the specific systems that create, multiply, and distribute these costs: Medicare’s coverage gaps (Installment 2), prescription drug pricing (Installment 3), the Medicaid spend-down (Installment 4), the erosion of the retirement safety net (Installment 5), and the vast unpaid economy of caregiving that holds the whole system together with love and exhaustion (Installment 6). Then the synthesis will ask: given all of this, what would it actually take to fix the system, and what can you do right now while it remains broken?
Every piece will come back to this table. Your table. Because that’s where these numbers stop being statistics and start being your life.