When it comes to retirement planning, there’s one financial wildcard, one blind spot that can upend the best-laid plans: the high cost of long-term care — if you ever need it.
Like many people, this reporter has not given much thought to the cash cushion or funding vehicles to pay for long-term care (LTC) later in life. My wife has an LTC insurance policy she got through work 15 years ago that will offset her costs. However, despite diligently building a retirement nest egg, I never really investigated whether I would need long-term care, how much it would cost, and, more importantly, how I would pay for it. Like most folks, I have read stories citing cost guesstimates based on the “average” person. But I’ve done little planning specific to long-term care.
Until late October, that is. That’s when I decided to test run an AI-powered platform called Waterlily that uses artificial intelligence (AI) to predict long-term care needs — decades before they happen — as well as estimate the cost of care and help people find the most optimal LTC insurance policy. These long-term care predictions, according to Waterlily, are powered by an AI platform that compares an individual’s information, like mine, with similar data from 50,000 families and draws from a dataset with over 500 million data points to personalize the LTC predictions.
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It was an eye-opening exercise that went by in a New York minute — not hours, days, or weeks. In a matter of seconds, after filling out a three-minute intake form that collected information on my personal health, prescriptions, family health history and other relevant data, the Waterlily platform spit out a report to me via email that quickly got the attention of my future self.
So, will I need long-term care one day? Unfortunately, yes, according to Waterlily, which uses prediction models trained on the LTC journeys of other families.
I am currently in my early 60s. Waterlily found that there is a 70% chance that I’ll require long-term care (that’s higher than the 56% odds for the average 65-year-old, Waterlily says, but in line with the 70% of Americans who will eventually need LTC). Waterlily’s AI-driven analytics tool also weighs in on when my care will start. When is that? When I’m 86 years old.
My long-term care needs will last 4.2 years, Waterlily estimates, with a mix of care that starts at home with help from family members (which is less costly), then moves to an assisted living facility, and finally to a nursing home that provides full-time care.
Waterlily predicts my long-term care costs
While hearing that I’ll need care in the later stages of my life was not totally unexpected, it was nonetheless sobering. It was a reality check.
The Waterlily analysis didn’t stop there. The next part of the analysis dives into a topic that keeps Americans up at night: the cost of LTC. And AI doesn’t pull any punches: LTC is not cheap. The $64,000 question is: how much? And, of course, how do you pay for it?
Most people age 50 and older say they are not confident they can pay for a nursing home (62%), assisted living (58%), or home care (51%), according to the University of Michigan’s Institute for Healthcare Policy & Innovation.
No doubt, a long-term event can be financially ruinous. In fact, Lily Vittayarukskul, CEO and founder of Waterlily, says a driving force behind her starting the company was her family’s financial hardship during her teenage years that resulted from providing long-term care to her aunt, diagnosed with terminal colon cancer. “Navigating those two years nearly bankrupted us,” said Vittayarukskul.
Funding long-term care is a costly endeavor. So, getting your arms around the cost sooner rather than later can give you time to plan for and fund any care needs with greater confidence.
My potential costs are staggering. The AI algorithm projected my cost at $1.48 million in inflation-adjusted dollars, with 60% of the cost attributed to an estimated 18-month stay at a full-care facility starting at age 89.
Families can conduct a mathematically complete analysis of hundreds of thousands of policy permutations … all in a span of a second.
Lily Vittayarukskul, CEO and founder of Waterlily
Waterlily maps out a funding plan for long-term care
The final piece of the puzzle is Waterlily’s analysis of how to fund this large potential expenditure later in life.
One myth is that Medicare will cover long-term care costs. In fact, 58% of Americans think Medicare will provide LTC coverage, according to the 2025 Nationwide Retirement Institute Long-Term Care Survey. But Medicare’s LTC coverage is limited and short-term, and does not provide the extended, day-to-day support aging Americans will eventually need, the survey noted.
Waterlily helps you build a plan to pay for LTC. Funding options include self-funding, or using savings to cover LTC bills, buying LTC insurance, as well as using other income sources, such as an annuity.
I opted for a hybrid approach in my hypothetical analysis, using a combination of personal investments and an LTC insurance policy to cover as close to 100% of the total estimated LTC cost as possible.
Waterlily’s platform runs the funding numbers for you. You plug in your funding preferences, and it does the computations. I started with self-funding, earmarking $200,000 of retirement fund assets at a 5% annual return rate with 20-plus years of growth runway. But Waterlily ran the numbers and seconds later informed me that self-funding would only pay for 52% of my projected LTC expenses.
Why getting a high return on investment for LTC insurance can improve retirement outcomes
The next step was using Waterlily’s AI platform to help me close the funding gap by finding an LTC insurance policy that could capture the most coverage in total dollars for my initial lump sum investment, which Vittayarukskul dubs “ROI,” or return on investment.
This is the part of the process where the power of AI shines.
The test. I opted to see whether a $100,000 LTC policy would close my funding shortage. (Of course, this is not an insignificant-sized investment and may not be an option for all Americans.) Waterlily’s new offering, “Quote-and-Apply,” then used AI to crunch and analyze hundreds of thousands of insurance policy configurations and half a billion data points to find the most “mathematically optimal” policies to fit my personal situation. “It calculates the precise return on every premium dollar on the policy you’re considering purchasing,” said Vittayarukskul.
The policies presented are ranked by ROI, highlighting those that will generate the biggest dollar amount of total coverage for my $100,000 policy. Waterlily’s analysis also lets you know if your application is likely to be accepted or rejected for coverage by insurance underwriters based on your medical information.
The results. In less than a second, Waterlily found a $100,000 policy with a 494% ROI and total coverage of $574,000. In my hypothetical example, the combination of self-funding and buying an LTC policy covered 91% of my projected LTC cost. So, in just a few minutes, I was able to determine the age at which my care would begin, how long it would last and its cost. The system also provided a funding plan to cover the costs.
Since my analysis was journalistic in nature, I did not use Waterlily’s Quote-and-Apply system — which skips or pre-fills 70% of application fields based on what’s already known about the applicant — to apply for coverage.
“Families can conduct a mathematically complete analysis of hundreds of thousands of policy permutations, a process that is physically impossible for a human, all in a span of a second,” said Vittayarukskul. “(They can) instantly arrive at (LTC insurance) options with the highest return on investment personalized to an individual or couple.”
LTC plans for couples. Vittayarukskul notes that joint LTC policies that include both spouses can often be less costly than individual ones.
The Waterlily AI platform will also analyze existing LTC policies you might have. For example, Waterlily factored in my wife’s LTC policy with a self-funding investment of $200,000. The system calculated that she would be able to cover 68% of her inflation-adjusted total LTC costs of $1.72 million.
Privacy. As with any AI platform, you should be careful when handing over personal health and financial data. Waterlily’s privacy policy states that you may request the deletion of your data by contacting the team via email at hello@joinwaterlily.com.
The University of Michigan’s long-term care study found that only 11% of adult respondents said they had bought long-term care insurance.
Vittayarukskul says Waterlily is currently offering this analysis free to consumers on their website, although there is a charge for use by financial advisers.