Most consumers aren’t sure they will be able to cover their long-term care costs in retirement. That lack of confidence increases as people age.
A report by The Insured Retirement Institute found that 28 percent of Generation X are confident they will be able to meet their long-term care costs, but only 24 percent of Baby Boomers have the same opinion.
"There's an out-of-sight, out-of-mind mentality regarding long-term care," IRI President and CEO Cathy Weatherford said. "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. Yet when it comes to long-term care, similar to many other facets of retirement planning, the silver lining is that those who consult a financial professional have more confidence in covering the costs during retirement."
The report also found that women have lower levels of confidence in covering long-term care costs in retirement compared to their male counterparts. This is particularly concerning because women tend to have greater long-term care needs, as they live longer on average and are more likely to live into advanced ages when the need for long-term care is greatest. Across both genders, singles and those with income of less than $30,000 per year also had lower levels of confidence in meeting long-term care costs.
While individuals lack confidence in paying for their long-term care expenses, confidence in covering those costs for parents is even more depressed, according to the report. Only 21 percent of GenXers and 14 percent of Boomers were confident in meeting these costs for their parents.
IRI found that confidence levels increase when a person works with a financial advisor to develop a plan to meet the costs of long-term care. Among Boomers, confidence levels in having enough money for long-term care costs increased about 58 percent for those who work with an advisor.
“According to the Census Bureau, the number of individuals age 85 and older is projected to increase by 52 percent over the next 20 years,” the report stated. Those who are over the age of 80 are most likely to need long-term care.
In 2010, 71 percent had a disability, 56 percent had a severe disability and 30 percent only needed some assistance with daily living.
The Insured Retirement Institute (IRI) is a not-for-profit organization that for twenty years has been a mainstay of service, commitment and collaboration within the insured retirement industry.