As they phase into retirement, Americans aren’t counting on their savings to cover long-term care (LTC) expenses. Instead, they plan to rely on Medicare.
The latest research from Nationwide’s Retirement Institute Long-Term Care survey shows that 58% of U.S. adults ages 29 and over and with a minimum household income of $75,000 believe that Medicare will take care of LTC costs.
The expectation might end in disappointment, Nationwide reports, as potential cuts to Medicaid and Medicare could impact LTC options for adults as they retire. Still, 50% of Americans say they do not believe reductions to Medicaid will affect their own long-term care costs—highlighting a potential need for education on the costs associated with aging.
“Too many Americans are entering the most vulnerable stage of life with a false sense of security,” said Holly Snyder, president of Nationwide’s life insurance business. “We underestimate how long we’ll live, how likely we are to need long-term care, how much that care will cost, and how we’ll pay for it, leaving a growing number of Americans – and their families – unprepared for the financial and emotional toll that often comes with aging.”
Even those with access to financial advisors have not thoroughly discussed long-term care plans, Nationwide finds. Thirty-four percent of respondents who work with an advisor say they have not discussed LTC costs because it has not been brought up as a topic of discussion. Another 38% believe long-term care insurance to be too expensive and 64% overestimated the monthly price of a LTCI plan.
When presented with accurate pricing, 47% said they would be more willing to consider purchasing coverage.
“Proactive education and planning are more important than ever,” said Snyder. “Many people don’t realize how comprehensive long-term care insurance can be – it’s not just for nursing homes. It can help cover home modifications for accessibility, compensate friends or family members who provide care, and, if the benefits go unused, it can even pay out tax-free to beneficiaries.”
While a growing number of retirees are moving homes due to affordability reasons, 54% of respondents to Nationwide’s survey say the current real estate market has made it difficult for them to move. Others plan to age at home to evade higher LTC costs, yet 41% believe their current home to not be safe or accessible for potential long-term care needs. Of those who plan to stay home, 47% say modifying their home would be unaffordable to them.
Further, 42% of Baby Boomers now plan to stay in their current homes without making any renovations in the future.
More details on Nationwide’s study can be found here.
SEE ALSO:
Gen X Planning to Retire Later Due to Caregiving and Inflation
Americans Miscalculate Healthcare Expenses
T. Rowe Price Launches Guide For Long-Term Care in Retirement
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.