With the instance of people 65 and older entering nursing homes and other long term care communities on the rise, most are seeing the cost of this care as the biggest drain on their assets and wealth.
The drain on household wealth, tracked on an annual basis, is in the tens of thousands starting day one, according to an Employee Benefit Research Institute (EBRI) issue brief on the Effects of Nursing Home Stays on Household Portfolios.
Nursing home stays among retirees have increased steadily in the last ten years, increasing from 6% in 2000 to 8.5% in 2010 among those aged 65 and older.
“One of the biggest health expenditure shocks a retired individual can experience is entry into a nursing home,” says Sudipto Banerjee, the report’s author.
Compared to those who did not enter a nursing home, those who did saw their assets and wealth decline, as nursing home stays have “strong and statistically significant negative effects on every type of household asset holdings except higher-risk assets such as stocks, bonds, and mutual funds,” the report found.
The median household wealth of nursing home entrants falls from $79,000 upon entering a nursing home for the first time, to $60,720 two years later.
After spending just six months or more in a nursing home, the median total household wealth was just $5,518, and six years into a stay, residents’ median housing wealth falls to zero.
Check out the full EBRI Issue Brief.
Written by Alyssa Gerace