A new Nationwide Financial consumer survey found that boomers' beliefs on the cost of long-term care (LTC) and the time they will spend in retirement do not match reality.
In fact, Americans aged 50 and older underestimate the annual costs of LTC by more than three times the actual cost.
According to the
Three in four (75 percent) of the 813 retired and non-retired Americans aged 50 or older with at least
Many are in denial that they will ever need LTC, so they never plan for it. However, the
According to the survey, respondents correctly estimated that it currently costs on average about
"Nursing home costs have increased more than 4 percent annually since 1974," said
Additionally, Americans aged 50 or older who have not retired say they plan to live an average of only 20.7 years in retirement, while those already in retirement say they plan to live 27.1 years in retirement; 31 percent longer than those nearing retirement estimate.
"Often people who intended to work longer are forced into retirement due to health reasons or employment changes. Others may not anticipate their own longevity, especially with today's medical advances," Carter said. "It's critical that pre-retirees change their current mentality of planning to live 20 years in retirement. Too often, once retired they realize they're facing 10 or more years of expenses ahead of them that they didn't plan for."
When planning for retirement, half of Americans (50 percent) do not account for their spouse outliving them. Men are more than twice as likely to plan for their spouse outliving them than women (66 percent vs. 32 percent).
Concern but little planning
Sixty five percent of respondents say their top concern when planning for retirement is having enough money for LTC expenses. That is more than the 60 percent who say they are most concerned about having enough money to last through their retirement and the 49 percent who say they are most concerned about not receiving enough government benefits such as
Most respondents have a plan for their finances in retirement, but more than half (57 percent) do not account for LTC expenses and less than half (47 percent) have sought out information about LTC.
Make a plan
It is important to start discussing LTC planning as a family and develop a well thought out plan so that parents and children understand where LTC funding will come from and both parties feel secure in the approach.
Only one in four boomers we surveyed say they currently own LTC insurance, however industry figures show that only 11 percent of people over 55 actually do. Others say they plan to cover the costs with their 401(k) or retirement savings (22 percent) or other personal savings (21 percent).
"The most commonly known long-term planning choice is the traditional stand-alone LTC policy. While it is very customizable, some people don't like the 'use it or lose it' nature of these products," said
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