August 6, 2013

Middle-Income Boomers More Likely to Plan for Death Than LTC

About half haven’t discussed LTC with anyone

Almost two-thirds of middle-income boomers have no plan to address long-term care they might need in retirement, according to a survey released Tuesday by Bankers Life and Casualty Company Center for a Secure Retirement. Only 20% have even a rough plan for care in retirement.

Bankers Life surveyed nearly 1,300 Americans between 49 and 67 with incomes between $25,000 and $75,000.

“Retirement care is an important and often overlooked component of planning for retirement,” Chris Campbell, senior vice president of marketing and communications at Bankers Life and Casualty, said in a statement. “Boomers today need to consider moving beyond simply creating a retirement financial plan to also creating a retirement care plan that reflects their own needs, preferences and financial circumstances.” 

In a morbid turn, the study found respondents are almost five times as likely to have a plan for what they want their family to do when they die. Over 80% have taken at least one step to prepare for their death like sharing preferences on funeral arrangements or burial location, buying life insurance or creating a will. Just 17% of respondents have taken even one step to prepare for care they may need later in life.

Reluctance to speak with an advisor might be understandable, but the survey found that some boomers haven’t even talked to their spouse about how they want to be cared for if they can’t do it themselves. Fifty-six percent of respondents said they’ve haven’t discussed how to pay for long-term care with anyone, not even their spouse, and 43% haven’t talked about what kind of care they would want.

They might think it’s a conversation they just don’t need to have. Only a third said they might ever need long-term care. The survey referred to data from the Department of Health and Human Services, though, that showed the chance of needing care was closer to 70%.

In addition to setting their clients straight on being prepared for a common eventuality, advisors can also disabuse them of misconceptions about long-term care in general. The majority of respondents underestimated the cost of a year in a nursing home by almost half, putting the average cost at almost $47,000. The actual cost is over $90,500, according to Bankers Life. When asked to estimate the hourly rate for a home health aide, though, respondents significantly overestimated the cost. According to the 2013 Genworth Cost of Care survey, the national rate for a home health aide is $19 per hour.

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