Many Americans agree they’ll probably need long term care at some point following retirement, but they are failing to provide for it, two new studies by Prudential Financial conclude.
Twenty percent expect they might need nursing home care in the first 10 years of retirement, and 40% think they may need it in the second decade, according to a survey of Americans aged 30-69 by Prudential, Newark, N.J.
In the other survey, 70% of near-retirees said fast-rising health care costs in the past 5 years have hurt their prospects for a comfortable retirement.
Among those who expected to need nursing home care in retirement, more than 90% worried that they could run out of retirement savings.
For those closest to retirement, their most important goals are to remain financially independent and not become a burden to loved ones. Of this group, 70% say it is “very important” to be able to afford medical care or nursing home care if needed.
Yet many of those who could need LTC don’t understand it too well, the study found. Even among those who are on the verge of retiring, just 20% claim to have a good understanding, and nearly 50% say they need help understanding coverage and options.
Asked to rank their most important financial goals, 70% of near-retirees cited affording any needed medical care after retirement, while 78% cited not becoming a financial burden to loved ones and 90%, not running out of money in retirement.
To Eric Holtzman, vice president of Prudential’s LTC insurance business, such conclusions point up the central problem for producers: Many potential clients think they will need LTC, but they aren’t seeing it as a retirement planning issue.
“They see it more as a health care issue,” he says.
For producers, he says, the immediate goal is to help people see that if they get a long-term illness or injury, the federal government is not going to provide much help. They also need to be shown that such a turn of events would be a big emotional and financial strain on their families.
But the way to convince customers of that is not to launch immediately into a sales presentation, he says.
“Salespeople tend to throw out statistics and wait for consumers to react,” says Holtzman. “We believe agents need to ask the customer questions, such as ‘Has someone ever needed long term care in your family?’
“Then draw on those experiences. Ask them, ‘Have you thought about this? Do you have a plan if you need some form of care? Do you have an idea how you’re going to pay?’”
Once the sales rep has listened to the answers, he is in position to educate the customer, Holtzman explains.
“Debunk the myths, and allow them to make an educated and informed decision about whether long term care insurance is right for them,” he advises.
Many near-retirees are afraid that fast-rising health costs will make them a burden to their family in retirement.