Financial planning and physics operate under rules, not opinions.  Rules are observable, repeatable, and enforceable. When they’re ignored, systems don’t merely underperform — they fail.  In physics, risk and energy are conserved. They don’t disappear; they are transferred or transformed. Financial planning follows the same principle.

First, we insure what we can’t afford to lose. Homes, cars, businesses, income, lives. When a loss would be catastrophic, we transfer the risk off the balance sheet to prevent a single event from collapsing the system.

Second, we diversify what we can’t predict. Markets are stochastic, not linear. Prices move in distributions, not straight lines, so exposure is spread to reduce volatility and avoid betting the outcome on a single path.

Third, we model what we can quantify. Monte Carlo simulations, sequence-of-returns analysis, longevity projections, tax stress tests. If a variable can be measured, it gets modeled. If it can be modeled, it gets bounded.

So here’s the question no one likes to answer: 

Why are Healthcare in Retirement and Long-Term Care (LTC) treated differently?

LTC is the largest unfunded retirement liability most households will ever face — bigger than a market crash, more probable than disability, and often more destructive than inflation. And it strikes precisely when people are least equipped to respond.  Yet the financial services industry and advisory community routinely treat it as an afterthought, hoping assets alone will bridge the gap. That isn’t planning. That’s crisis deferral.  When LTC is considered coherently, it behaves much like a Black Hole in space.  It’s always there, whether acknowledged or not, even though other "known" objects are visible.

Markets pull upward (growth) → volatility pushes downward → so we hedge and diversify.
Taxes erode momentum → so we defer, shift, and shelter.
Longevity extends timelines → so we model probabilities.

Long-term care is different because it introduces non-linear risk — unpredictable timing, unbounded duration, and severe sequence amplification. These characteristics violate the assumptions that make traditional financial models work.  In physics terms, this is a singularity, and like a black hole, the system appears stable until a critical threshold is crossed. Once health deteriorates and independence is lost, income strategies, tax planning, portfolio construction, family dynamics, and legacy plans are pulled inward.  Past assumptions cannot escape.  The damage is not gradual — it is structural.

Long-term care doesn’t merely draw down assets.  It collapses the entire system.  And without a counterforce — without leverage — the rest plan will collapse under its own weight.

Crossing The Event Horizon

The event horizon is the point of no return.  Once an object crosses it, escape is impossible — and for purposes of this discussion, that object is Health.  In financial planning, health is the only asset that exists off-balance sheet. 

It has value, but no price.....

Utility, but no reserve.....

Stability — until it doesn’t.

When morbidity appears, that invisible asset flips instantly into a visible liability — often six or seven figures — paid over an uncertain timeline, under maximum emotional and financial stress. There is no warning. No glide path. No orderly transition.  Health crosses the event horizon — and no other major risk behaves this way.

• Markets are volatile — but diversifiable.
• Death is uncertain — but insurable.
• Inflation is corrosive — but modelable.
• Morbidity is volatile, correlated, and nonlinear.

That combination matters because once health fails, LTC doesn’t just add stress to a plan—it invalidates the assumptions the plan was built on, collapsing inward, simultaneously.   This is why LTC behaves like a black hole.

The system appears stable until a critical threshold is crossed.  Once care is required, past assumptions cannot escape. Liquidity evaporates inefficiently. Taxes spike. Portfolios are liquidated at the wrong time. Family members absorb unpriced burden. Legacy intentions dissolve.  This is not volatility; it’s systemic failure.

Remember Rule#1 – Insure What You Can’t Afford to Lose

LTC is expensive, highly local, and increasing every year — and any credible plan should reflect the actual costs where the client lives, and it often coincides with market stress and frequently affects spouses asymmetrically.  Self-funding is not a strategy.  It is a bet that you can lose 20–50% of net worth without derailing income, compromising a spouse, or destroying legacy goals.  And that is not confidence; it’s unmanaged exposure.

Planning and insuring the risk—using leverage, mortality offsets, and contractual guarantees—is not “spending money.” It is introducing external capital, so the rest of the balance sheet doesn’t also collapse

Remember Rule #2 – Diversify the Unpredictable

Long-term care risk is non-diversifiable within a household.  You can’t dollar-cost average it. You can’t rebalance around it. You can’t wait it out. And you can’t spreadsheet it.  Risk pooling and leverage are the only diversification mechanisms that work because the event risk is binary, personal, and severe.  Ignoring that isn’t conservative; it’s mathematically incoherent.

Remember Rule #3 – Model What Is Quantifiable—or Admit You’re Guessing

If a risk is material, it must be modeled.  If it isn’t modeled, it’s being ignored.  If Reg BI requires care for material risks, how do you justify unmodeled LTC exposure—especially when it is larger, more probable, and more destabilizing than the risks planners model obsessively?

This is the physics that will collapse the planning for millions of Americans – your clients – and the opportunity to change that inertia starts now…...Will you?