Long-Term Care Issues Neglected In Retirement Planning

Most Americans are aware of the need to save money for retirement, but relatively few make adequate provisions to cover potential health care and nursing home costs, according to a study by Prudential Financial.

Results of two national surveys of adults between the ages of 30 and 69 showed that 42% of retirees and 57% of non-retirees think they are not financially ready for retirement, and 40% of both retirees and non-retirees believe they are ill-prepared to deal with health and fitness issues in retirement. Seven in 10 respondents agreed that rapidly rising health care costs could shrink their prospects for a comfortable retirement.

Asked which financial goals they considered very important, respondents approaching retirement cited not running out of money in retirement (90%), not becoming a financial burden to loved ones (78%), and affording necessary medical care or nursing home care (70%).

Among respondents of all ages, 20% predicted they would require nursing home care in the first 10 years of retirement, and 42% in the second decade of retirement. Of those who anticipate needing nursing home care, 91% said they are concerned they could run out of money in retirement. By contrast, just 8% of those not expecting to require nursing home care consider it likely they would exhaust their financial resources in retirement.

Even among survey participants nearing retirement, long-term care insurance awareness is not high, results showed. Of respondents between the ages of 55 and 64, 20% claimed to have a sound understanding of long-term care insurance, 37% said they know enough to make a decision about whether to obtain coverage, and 43% said they would need help with understanding long-term care insurance coverage and options. Respondents in this group with lower levels of retirement savings were more likely than those with greater financial resources to say they would need help in understanding long-term care insurance.