As healthcare and long-term care costs grow with inflation, the need to plan efficiently for retirement is now more important than ever.
A new Transamerica survey on extended care fielded responses from 1,700 individuals on their attitudes towards workplace benefits, finding that 74% of respondents completely agree that extended care should be a part of retirement planning, yet only 45% have thought about planning for their own long-term care needs.
In fact, most respondents hadn’t taken the necessary steps to prepare for long-term care needs, finds Transamerica. Instead, individuals begin to make plans regarding future needs once they reach their 50s. While 13% of those ages 20 to 29 have thought about extended care planning, compared to 27% of 30- to 39-year-olds and 37% of 40- to 49-year-olds, 55% of those ages 50 to 59 have taken long-term care into consideration.
“This report is a clarion call, highlighting the critical intersection of retirement planning and extended care,” said John Stanley, senior managing director for Employee Benefits at Transamerica. “With nearly all respondents acknowledging the importance of planning for long-term care, it’s clear that awareness is not the issue. The challenge lies in translating this awareness into action.”
Costs ranks as top issue
Respondents categorized costs as the leading concern regarding extended care needs, with 75% of respondents classifying it as their top issue. While 45% of respondents plan to use insurance to pay for their extended care, only 22% said they had extended care insurance.
This concern was followed by qualms of becoming a potential burden to family or friends, along with being unsure of the type of extended care they’ll need to receive.
When asked how they would pay for their needs, 54% with insurance said they will also use personal funds, including retirement accounts, pensions, and reverse mortgages, among other tools. This percentage skyrocketed for individuals without insurance, to 80% who plan to use personal resources. Moreover, 37% of those without insurance and who are planning to use personal funds have a household income of under $75,000.
Additional information from Transamerica’s Extended Care survey can be found here.
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- Younger Workers Likelier to Become Caregivers
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.