Long-Term Care Costs: The Retirement Risk People Often Miss

Many people calculate retirement as if it were simply today’s healthy life extended forward: food, electricity, transport, routine medicine, a bit of emergency cash, then adjusted for inflation.

That calculation looks tidy. The problem is that old age is not always tidy.

There comes a phase when someone is still alive, but can no longer bathe alone. Or can still speak, but needs supervision so they do not forget the stove is on. Or still owns a home, but the bathroom is too slippery, the stairs are too steep, and the children live in another city.

At that point, retirement costs change shape. They are no longer just monthly living costs. There are daily assistance costs, assistive devices, medical checkups, transportation for companions, home modifications, lost working time for family members, and sometimes the cost of moving somewhere new.

Indonesia is entering an ageing-society phase. The ILO notes that Indonesia had around 33.9 million older people in 2025, roughly one in nine residents, and that number is expected to keep rising over the coming decades.¹ Statistics Indonesia (BPS) also released a dedicated Elderly Population Statistics 2025 publication, a sign that this is now part of the demographic structure, not just a family-by-family issue.²

For investors, this matters because one bad assumption can break an entire retirement plan: assuming that future old-age costs are just today’s living costs plus inflation.

BPJS helps with medical costs, but it does not automatically cover the cost of being cared for

BPJS Kesehatan is an important part of health planning. For many families, the existence of JKN (Indonesia’s national health insurance system) reduces the risk of hospital bills that can immediately wreck household finances.

But long-term care is different from an ordinary hospital stay.

The JKN-KIS service guide explains JKN benefits as personal healthcare services covering promotive, preventive, curative, and rehabilitative care, including medicines, medical devices, and consumable medical supplies according to medical need.³ That is the language of a health system. Its focus is medical service.

Meanwhile, the needs of old age often go beyond medicine.

For example:

• help with bathing and dressing;
• supervision because of fall risk;
• specially prepared meals;
• medication reminders;
• transportation to routine checkups;
• bathroom grab bars, non-slip floors, a special mattress, or a bedroom on the ground floor;
• a spouse or child cutting back working hours to provide care.

Some of those needs may overlap with healthcare services. Many do not. And it is precisely this non-medical portion that often never makes it into a retirement spreadsheet.

So the question is not “Do you have BPJS or not?” That should already be settled. The more honest question is: if our bodies are still alive but our independence declines, who pays for the gap between medical services and daily life?

The assumption that “the children will take care of it” should still be counted as a cost

In Indonesia, many families still rely on children, spouses, or relatives to care for ageing parents. That is not a bad thing. Many people do want to be cared for at home, close to family, in familiar surroundings.

But “cared for by family” does not mean “free.”

The cost simply moves somewhere else:

• from caregiver bills to a child’s time;
• from care-facility fees to space in the home;
• from a monthly invoice to a slower career;
• from the parents’ retirement fund to sandwich-generation pressure.

The ILO highlights that without adequate retirement income, the sandwich generation will carry the cost of parents and grandparents, while many older people still depend on family support or informal income sources.¹

This is the part rarely discussed in FIRE or early-retirement content. Many simulations stop at the portfolio number: 25 times annual expenses, some withdrawal rate, safe until age 90. Those simulations can be useful, but they are often too clean. There is no line item for a child who has to stop working temporarily. No line item for an overnight caregiver. No line item for renovating the house so a parent does not fall in the bathroom.

If a retirement plan still treats family as a “free option,” that plan is not finished.

Long-term care hits a portfolio in a different way

Normal retirement spending is usually fairly repetitive: food, electricity, transport, dues, entertainment, routine medicine. The numbers go up and down, but the pattern is still somewhat modelable.

Long-term care is harder because it comes in clusters and often appears late.

Through your 60s and early 70s, the portfolio may look safe. The withdrawal rate may feel comfortable. The emergency fund may rarely be touched. Then at age 78 or 82, needs change: a fall, stroke, dementia, fracture, or simply a body that keeps getting weaker.

What used to be Rp10 million per month can become Rp18 million, Rp25 million, or more, depending on the city, the standard of care, and whether the family uses professional help. There is no need to guess from overseas articles. What investors need to do is ask for local estimates: caregiver costs, physiotherapy, medical transport, assistive devices, and home renovation costs in the city where they plan to grow old.

T. Rowe Price writes that long-term care planning should include housing options, care duration, family health history, whether a spouse or children are available as caregivers, and a dedicated reserve for those costs.⁴ That principle is relevant in Indonesia, even if the insurance products, retirement system, and formal care facilities are different.

What matters is not the American numbers. What matters is the way of thinking: separate the cost of healthy living from the cost of declining independence.

How to add long-term care to a retirement plan

You do not need perfect numbers to start. Begin with scenarios.

1. Create three old-age scenarios

Use three layers:

Mild scenario: still living at home, but needing help a few times a week. Extra costs may include transport to checkups, physiotherapy, assistive devices, and household help.

Moderate scenario: daily assistance is needed. The family is still the center of care, but there is also a caregiver, special meals, non-routine medicine, and home modifications.

Severe scenario: almost full supervision is needed, for example because of dementia, severe stroke, or a high risk of falling. Here the family must choose between a full-time caregiver, a care facility, or some combination of several family members taking turns.

You do not need to jump straight to the most expensive answer. What matters is seeing whether the portfolio still holds up if there are 2–5 years of major extra costs in old age.

2. Separate “medical costs” from “assisted-living costs”

In your spreadsheet, do not lump everything together under “healthcare.”

Create separate lines for:

• premiums/contributions and routine medical costs;
• medicines and checkups not covered;
• assistive devices;
• a caregiver or daily companion;
• home renovations;
• transportation for a companion;
• living costs for family members who help;
• a buffer for the surviving spouse.

This separation makes the risk more visible. If everything is put into one “healthcare” line, the number is usually too small.

3. Audit the house, not just the portfolio

A house is a retirement asset. But it can also become a source of cost.

Ask now:

• Is the main bedroom on the ground floor?
• Is the bathroom safe for an older person?
• Is there room for a live-in caregiver?
• Is the house accessible for a wheelchair?
• Is the house close to healthcare facilities?
• If you have to move, can the house be sold or rented out easily?

Many investors focus too much on portfolio returns, then forget that where you live determines care costs. A large house in a hard-to-reach location may look like an asset on the balance sheet, but become a burden once mobility declines.

4. Discuss family expectations before a crisis

This is not a comfortable conversation. Precisely for that reason, it should happen before a crisis.

The discussion should not stop at “Who will take care of Dad/Mom later?” Make it more concrete:

• If a caregiver is needed, who chooses and supervises them?
• If large monthly costs are needed for several years, which assets will the money come from?
• Is selling the house allowed?
• Are children expected to contribute money?
• Is there one child who lives closest and will automatically carry more of the burden?
• If one spouse gets sick, how do you protect the spouse who remains healthy?

Without this conversation, families often make decisions in panic. And when that happens, the choices are usually more expensive and more emotional.

Investors need a frailty reserve, not just an emergency fund

A normal emergency fund is designed for job loss, a short illness, or sudden needs. In retirement, you need another layer: a frailty reserve, meaning funds set aside for the phase when the body weakens and daily assistance becomes necessary.

Its form can vary:

• time deposits or short-term SBN (Indonesian government bonds) for 1–2 years of extra costs;
• money market mutual funds for liquidity;
• a conservative slice of the portfolio that is not used for normal spending;
• a home that can realistically be sold, rented out, or downsized from;
• support from children that is discussed explicitly, not assumed.

For families with substantial assets, this reserve can become a dedicated bucket in the portfolio. For families with limited assets, the minimum is to create a decision map: which assets get liquidated first, who helps, and what spending limit is still affordable.

What is dangerous is having no numbers at all.

Do not let your retirement numbers look safe just because old-age costs are hidden

A retirement plan that only counts food, electricity, and leisure will always look easier to achieve.

Add long-term care, and the picture changes. The retirement target may need to go up. Retirement age may need to be pushed back. The house may need adjustments. Children may need to be included in the discussion earlier. The portfolio may need a more liquid allocation in later life.

That is not bad news. It is news arriving earlier, while it can still be managed.

A secure retirement is not only about stopping work. A secure retirement means the family knows what to do when health declines, costs rise, and decisions have to be made quickly.

Start with one new line in the spreadsheet: long-term care costs.

If that line is still empty, your retirement number is not honest yet.

Quick checklist

Before feeling that your retirement target is already safe, check this:

• Is your BPJS membership active and your participant data in order?
• Have you separated medical costs from assisted-living costs?
• Have you asked for local estimates for caregivers, physiotherapy, assistive devices, and home renovations?
• Have you created a 2–5 year scenario for extra care costs?
• Have you checked whether the home is safe for older age?
• Have you discussed with your spouse/children who provides care, who pays, and which assets may be liquidated?
• Do you already have a dedicated liquid reserve for a frail old-age phase?

If not, that is the next retirement homework.