They want to get started with planning for long-term care, for themselves or others. Credit: Adobe Stock
Most Americans believe they can look forward to more years in retirement than their parents experienced. The tradeoff, however, is that more than 6 in 10 also believe they eventually will require long-term care.
Only 42% of baby boomers and 35% of Gen Xers say they have planned financially for the possibility of long-term care, according to Northwestern Mutual’s 2025 Planning & Progress Study. In addition, less than one-third of both groups have planned for the possibility they will need to provide these services for a loved one.
“Long-term care is a common financial blind spot, something that individuals and families think they can deal with in the moment if it happens,” said Kamilah Williams-Kemp, the company’s chief product officer. “The truth is this -- long-term care events happen frequently, and if people plan proactively, they will have more good options for care to choose from. This is where a trusted financial advisor is absolutely critical, helping assess each person’s unique financial situation and creating a customized plan to help them navigate these complex decisions.”
Although three-quarters of respondents would prefer to age gracefully at home if they experienced a long-term care event, this may be out of the financial reach of many. The annual cost of a home health aide providing eight hours of care a day is $96,360. If those costs hypothetically increase by just 5% over the coming years, potential out-of-pocket costs could exceed half a million dollars by 2058, when many of today’s working adults may need care.
Many people also assume that the costs will be completely covered by health insurance or Medicare, but they typically are not. Medicare pays for doctors, hospitals, medication and short-term rehab after hospitalization but not for independent or assisted living. Financial planning can help provide a realistic assessment of the challenges of long-term care and how to address them.
“Planning ahead for long-term care can help people age gracefully according to their wishes, protect loved ones from having to make difficult decisions and safeguard the legacy they hope to leave behind,” Williams-Kemp said. "That’s why a comprehensive financial plan is so critical. A holistic plan combining risk products with investments can help people create wealth, protect what they’ve already built and achieve their greatest goals in life.”
About half of Americans have been a caregiver at some point in their life. Two in 10 say they currently are providing care, including 28% of Gen Z and 27% of millennials, while 28% say they have provided care for someone in the past.
“Caregiving is one of the most selfless acts, but it can take an emotional, physical and financial toll,” Williams-Kemp said. “Through proactive planning, people can shield their loved ones from having to shoulder the full financial weight of a long-term care event. Done well, proactive planning can help to free families from financial anxiety and enable them to focus their attention on their loved ones.”
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