Baby boomers underestimate cost of long-term care: study
Baby boomers have mistaken ideas about the future costs of long-term care and about the years they will spend in retirement, according to a recent Nationwide Financial survey.
When asked to estimate how much a year nursing home care will cost in 2030, they estimated an average of $111,507 -- roughly half the actual estimated costs for that year. However, most correctly estimated current costs at approximately $67,000 a year.
"Nursing home costs have increased more than 4 per cent annually since 1974,” says John Carter, Nationwide's president of retirement plans. "What a year of nursing home care costs today will not even come close to the actual cost when boomers really need it."
Three-fourths of the respondents say they think of long-term care as nursing home care or assisted living. In fact, nearly half of long-term care is done in the home by a home health-care workers or is adult day care, according to Carter.
Many baby boomers are in denial that they will ever need long-term care and underestimate their life expectancy, Nationwide maintains, and this could be a costly error.
One of the reasons people buy long-term care insurance is to avoid burdening a spouse or grown children when they can no longer care for themselves.
"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 says.
Trouble is, It's always been been an expensive product and is now getting a lot pricier -- especially for single women who may most
need help in old age.
Most respondents say they have a plan for their finances in retirement, but 57 per cent admit they have not taken long-term care costs into consideration.
Only 25 per cent have long-term care policy, for instance. Others say they plan to cover the costs with retirement savings (22 per cent) or other personal savings (21 per cent).
What about you? Does LTC coverage factor into your plans? Or is it simply too expensive?
By Gordon Powers, MSN Money