80% of U.S. households with an adult aged 60 or older lack the resources to cover long-term care or manage a financial emergency, the National Council on Aging found. Only 42% of Americans are on track to maintain pre-retirement spending, Vanguard's 2025 Retirement Outlook reports, and median-income baby boomers face an annual shortfall of about $9,000. The problem is both financial and structural: housing, care, health and social supports lag behind longer lifespans, say John Hancock and the MIT AgeLab, Manulife John Hancock, and the Milken Institute. Absent coordinated changes to retirement plans, benefits, housing and care financing, households and public budgets will be strained as the 65-plus population grows toward 80 million by 2040.

42% of Americans are on track to maintain their pre-retirement spending, Vanguard's 2025 Retirement Outlook found, a figure that signals broad underpreparedness even before longer lifespans are counted. Vanguard breaks the readiness down by generation: 40% of baby boomers, 41% of Gen X and 42% of millennials are positioned to preserve their lifestyles in retirement, while 47% of Gen Z appear prepared. For a median-income baby boomer earning about $56,000 a year, Vanguard projects retirement savings will replace just 56% of pre-retirement income, leaving an estimated annual gap of roughly $9,000.

Those shortfalls are partly structural. Vanguard analysts note that many boomers entered the workforce before automatic features in defined contribution plans became commonplace. The Pension Protection Act of 2006 helped raise participation through auto-enrolment and auto-escalation for younger cohorts. At the same time, defined benefit pension coverage has contracted, shifting more longevity risk onto individuals and employers via 401(k)-style accounts and personal savings.

Money is only one side of the problem. The Longevity Preparedness Index from John Hancock and the MIT AgeLab, alongside the Manulife John Hancock Financial Resilience and Longevity Report, argue that readiness includes housing, care, health and social supports.

The Milken Institute's Longevity Ready report frames the challenge as systemic and calls for earlier awareness, improved access to resources and stronger private-public collaboration to help people age at home. Practical signals of the non-financial shortfall are stark. Fewer than 5% of U.S. homes have basic accessibility features, and only about 18% of older adults have made home modifications to support aging in place.

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Misunderstandings about public coverage make household planning harder. Many Americans expect Medicare to cover long-term care costs, but Medicare doesn't generally pay for custodial long-term care. The National Council on Aging highlighted that most older adults will require some level of ongoing care or support, yet planning for those needs remains rare. That mismatch puts pressure on family caregivers, employer-sponsored benefits, the long-term care insurance market, and state and federal budgets that must meet rising demand for services.

Demography is intensifying the gap. The population aged 65 and older rose to about 61 million in 2024 and is projected to exceed 80 million by 2040.

The oldest baby boomers reach age 80 in 2026, a milestone that has already shifted attention from a short, fixed retirement horizon to a potential 30- to 40-year period after leaving the workforce. Retirement advice and program design haven't fully absorbed that reality, the reports say, leaving many people, employers and public plans exposed to longer payout periods.

Across the reports the proposed responses share a common logic. They call for expanding retirement planning to cover longevity readiness beyond savings alone, rethinking employer and public benefits so longevity risk is shared more effectively, and integrating home modification and community supports into ageing strategies. The Milken Institute specifically urges earlier awareness and better access to resources, while John Hancock and the MIT AgeLab emphasise housing and social supports as critical components of preparedness.

Absent coordinated changes to retirement plan design, benefit programmes, housing stock and care financing, households will face longer retirements without adequate income or support, the research warns. Employers that have shifted risk to workers may see retiree financial strain translate into workforce and productivity challenges. Public programmes will confront higher demand and cost pressures as populations age and care needs grow.

Policymakers and plan sponsors can act in several ways that are already present in the reports. First, broaden retirement planning tools and guidance to include likely care costs and housing adaptations. Second, explore benefit designs that share longevity risk between employers, individuals and the state. Third, invest in home modification initiatives and community supports so more people can age in place with dignity. The reports offer these steps not as a neat checklist but as a realignment of systems built for shorter lives to a new reality of extended retirement.

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The immediate benchmark is demographic: the oldest baby boomers turn 80 in 2026 and the 65-plus population is projected to top 80 million by 2040. Those milestones will strain retirement design and public budgets unless policy and benefits are realigned for longer lives.

This article was created with AI assistance.