Core Insights - The gap between retirement income and long-term care costs is rapidly widening, presenting a significant challenge for financial advisors in their planning processes [1][2]. Group 1: Income and Cost Trends - During the 2010s, income growth for older households outpaced the increase in long-term services and supports (LTSS) costs, but this trend has reversed since then [2]. - From 2019 to 2024, costs for commonly used services like home care and assisted living surged by nearly 50%, while median income for households aged 65 and older increased by approximately 22% [2]. - In 2024, the median older household income of about $60,000 is insufficient to cover a year of part-time home care and falls short of the costs for assisted living or nursing homes, which can exceed $70,000 and $100,000 annually, respectively [3]. Group 2: Planning Assumptions - Long-term care expenses consistently outpace general inflation and income growth, necessitating a shift in how financial advisors model retirement outcomes [4]. - Financial advisors, such as those at Summit Financial Consulting, incorporate a higher-than-average inflation rate for long-term care forecasts, using 5% for college and medical inflation compared to 2.5% for general inflation [5]. - A modest income growth rate of 3% is typically assumed, leading to a 2% lag behind college and medical inflation, which exacerbates the widening gap between LTC costs and average household income over time [6].