A Northwestern Mutual study released Tuesday found that a third of Americans haven’t factored their long-term care needs into their retirement planning. Almost a quarter aren’t sure how they’ll address long-term care needs and 8% say they’re not going to address them at all.
Steve Sperka, vice president of long-term care for Northwestern Mutual attributed this apparent apathy to a “very large educational gap,” he told AdvisorOne on Thursday.
“The best thing for advisors to do,” he said, “is to wrap the concept of long-term care into the concept of financial security during retirement. We find that for many people, their biggest risk to achieving their retirement hopes and dreams is a long-term care event.”
The Long-Term Care Awareness Study was conducted by Harris Interactive among 2,516 adults in October.
The study found 21% of respondents aren’t sure what options for long-term care are available. Half of respondents said they think an assisted living facility would be available to them if they needed it and 35% said they were considering a nursing home for the long-term care needs. Thirty-six percent said they could rely on in-home care from a family member if they needed it.
This low level of planning is troubling considering 55% of respondents think they will need long-term care at some point. Furthermore, many people don’t appreciate how expensive long-term care actually is. For example, nearly two-thirds of respondents said a year in nursing home would cost less than a year’s tuition at Harvard. One year at Harvard for undergraduate studies is currently going for about $37,500, according to the school’s admissions website. The national average for one year at a nursing home in a semi-private room is $73,000 or $200 dollars per day, according to Genworth’s 2012 Cost of Care survey.