"There’s an out-of-sight, out-of-mind mentality regarding long-term care."
Confidence in covering long-term care costs in retirement diminishes with age and between genders, according to a new Insured Retirement Institute (IRI) report.
While just over one-quarter (28 percent) of Generation Xers are confident they will be able to meet long-term care costs, Baby Boomers are even less confident, with only 24 percent expressing confidence they will meet long-term care obligations.
“There’s an out-of-sight, out-of-mind mentality regarding long-term care,”IRI President and CEO Cathy Weatherford said in a statement. “As consumers near retirement, the realization sets in that long-term care may be required and many begin to understand just how expensive it can be. Without a plan, the thought of meeting long-term care needs for either an individual or family member can be daunting.”
Women, not surprisingly, were found to be less confident than men that they would be able to meet long-term care costs in retirement. One reason cited in the report is that women on average have a longer life expectancy.
Being responsible for the long-term care costs of aging parents is another key issue for individuals. Only 21 percent of Generation Xers and 14 percent of Boomers were confident in meeting these costs for their parents, the report found.
The IRI defines long-term care as “services and assistance provided for individuals who have impairment in at least two of the defined activities of dialing living: eating, bathing, grooming, toileting, and transferring into our out of chairs and beds.” refers to services and assistance
Health care costs continue to rise faster than the overall rate of inflation, according to the Bureau of Labor Statistics. A 2012 MetLife market survey found that the annual rate for a semi-private room in a nursing home is $81,030, while a private room could run $90,520. Housing in an assisted living community runs $42,600 annually.
This can only exacerbate aging and health care concerns.. Sixty-five percent of high net worth households surveyed by Millionaire Corner are worried about the financial consequences of a spouse’s health issues, up from 59 percent last year. Sixty percent of these households with a net worth between $5 million and $24.9 million are worried about the financial consequences of their own health issues, up from 56 percent last year. Nearly half are worried about the financial consequences of a family health catastrophe. Concerns about aging and long term care are also reflected in the fact that 44 percent of the high net worth are worried about “having someone to care for me in my old age.” Thirty-six percent are concerned about being responsible for aging parents.
One strategy for easing these concerns, the IRI report finds, is working with a financial advisor. In the case of baby boomers, 30 percent said they were extremely or very confident they would have enough money to pay for their own long-term care costs compared with only 19 percent who do not work with an advisor.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.