LTC costs keep going up, threatening the retirement security of millions of Americans. How do boomers feel?
LTC costs continue to rise, threatening the financial security of Americans who will eventually need some type of long-term care, according to the 2011 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.
Private nursing home care rose 4.4 percent to $239 daily or $87,235 a year in 2011, reports the MetLife Mature Market Institute, which produces the annual survey. Adult day services rose 4.5 percent to $70 a day. Hourly rates for LTC services provided by home health aides and companions remained unchanged at $21 and $19 an hour, respectively.
“This year’s increases are greater than previous years,” said Sandra Timmermann, head of the institute. “The state of the economy, combined with rising health care and energy costs, are having a significant impact on long-term care rates.”
LTC costs are rising faster than the medical inflation rate, said Timmermann. “The result is dramatic protracted inflation that will impact consumers.”
Rising LTC costs add to the worries of millions of baby boomers facing an insecure retirement as the prolonged economic downturn continues to erode their ability to earn and save. “As the cost of care continues to rise, Americans need to discuss long-term care planning with their families now, to ensure they receive the kind of care they want in the future,” said Timmermann. “This is especially critical at a time when retirement savings rates are low.”
The recession has prompted some investors to purchase more insurance, but Millionaire Corner research has found that a large majority of investors do not have LTC policies. A December survey shows that 79 percent of Mass Affluent investors have no long-term care coverage. Mass Affluent investors have a net worth of $100,000 to $1 million, not including primary residence, and are largely made up of baby boomers.
Boomers may be reluctant to purchase long-term care policies, but that doesn’t mean they’re not extremely worried about retirement and health issues. More than 60 percent say they are worried about the health of their spouse, while close to 60 percent say they are worried about their own health and the financial impact of a family health catastrophe. Half say they worry about having someone care for them in their old age, and a similar percentage worries about caring for aging parents. The boomer generation is also aware they are not saving enough for retirement and this is personal financial concern expressed by 63 percent of Mass Affluent investors.
Boomers may be delaying the purchase of LTC insurance to avoid the monthly premium costs, though the products can protect against longevity risk – the risk of outliving one’s assets – and medical inflation.