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Life Health > Long-Term Care Planning

Here's What Really Scares Retirees the Most

By Allison Bell

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Life insurers are uneasy about taking on long-term care risk. So are older U.S. consumers.

Lincoln Financial recently asked U.S. adults about how well prepared they felt they were for seven major retirement challenges. Long-term care costs ranked first as a source of fear.

Only 14% of all survey participants, and just 16% of the retirees in the sample, said they thought they were very well prepared for long-term care costs, according to the survey report.

About 48% of all participants and 42% of the retirees admitted that they were not prepared for LTC costs.

What It Means

Many consumers say they need help with long-term care planning.

The Survey

Lincoln is a Radnor, Pennsylvania-based insurer that sells policies that combine long-term care benefits with life insurance.

The company asked about long-term care planning fears when it sponsored an online consumer survey program. The survey program collected responses from about 1,000 people per month from March 2022 through November 2022.

Taxes

Lincoln put long-term care costs on a list of retirement challenges that also included estate taxes, income taxes, longevity risk, medical expenses, overall living expenses and the rising cost of living — long-term care costs were the clear winner.

Many of the survey questions focused on taxes and tax planning.

The survey team found, for example, that 52% of the survey participants said they expected to receive a tax refund this year, and that 14% of the participants said they would add any tax refunds they received to their retirement savings.

Insurers’ Fears

Many U.S. life insurers are leery of assuming long-term care risk because they sold poorly designed, mispriced long-term care insurance policies from the 1970s through the 1990s and are still coping with the financial fallout.

A few insurers still have stand-alone long-term care insurance policies.

Others offer life-LTC hybrids, annuities, short-term care insurance policies or other arrangements, in an effort to balance their fear of assuming long-term care risk with consumers’ need for protection against long-term care risk.

(Image: Adobe Stock)

Allison Bell

Think_Allison

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