Boomers Mistaken on Paying for Long-Term Care
While baby boomers desperately want to receive long-term care within their own homes, many are ill-prepared in thinking the Affordable Care Act will help them do so, according to a survey from Nationwide Financial.
Of the 801 Americans over age 50 that were surveyed, each with at least $150,000 in household income, only 28% knew that the Affordable Care Act does not cover the long-term care costs.
“Neither the Affordable Care Act nor Medicare will help America’s workers pay for their long-term care costs,” said John Carter, president and chief operating officer of Retirement Plans, Nationwide Financial.
A striking majority, 71% of affluent boomers, want to receive long-term care in their home, but fewer than half think they will actually receive this type of care in their home setting.
While many Americans might not want to end up in a nursing home as they age, few are planning for long-term care costs, he added. Ad ditionally, 54% of boomers said they would rater die than live in a nursing home.
Boomers were also mistaken when asked what they believe their costs for long-term care will be annually. On average, affluent boomers expected their LTC costs to be $36,220 per year—less than half of what they estimated in 2012 ($78,920).
The reality, according to Nationwide, is that by 2030—the year the last of the baby boomers will reach retirement age—the cost of a nursing home is expected to reach $265,000 per year.
“This drastic drop could be due to the media’s focus on the Affordable Care Act and people’s misconceptions about what it covers,” Carter said. “The reality is we can’t count on someone else to fix this problem. We will have to fund our own long-term care costs in retirement.”
While nursing home care is only one form of long-term care, the study revealed that 78% of boomers say that when they hear the term “long-term care” they think of nursing homes.
The misconceptions among boomers when planning for their long-term care needs can provide an opportunity for financial advisors, the study suggests, especially considering that 70% of Americans over age 65 will need long-term care during their lifetime, according to figures from the U.S. Department of Health and Human Services.
“The most common mistake a financial advisor makes is his or her approach to the discussion. When an advisor says the words ‘long-term care,’ the client often hears ‘nursing home,'” said Kevin McGarry, director of the Nationwide Financial Retirement Institute. “This often causes the client to shut down. Instead, advisors should say: ‘Let’s talk about ways we can keep you in your home longer.”
Written by Jason Oliva