Study Shows Long-Term Care is a “Major Concern” for Retirement Planning

A study focused on retirement planning risks found that many of today’s seniors are spending more time in retirement than in the years planning for it.

The study, titled “The 2009 Risks and Process of Retirement Survey,” was conducted by the Schaumberg, Ill.-based Society of Actuaries, and asked respondents about a number of risks relating to retirement. The main concerns, according to the survey, relate to keeping the value of investments up with inflation, income varying due to changes in interest rates, the affordability of health care and long-term care, outliving assets and maintaining a reasonable standard of living.

Housing continues to be the most significant asset for many in their pre-retirement years, and for most, home equity represents two-thirds or more of their total assets.

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The study indicates many people will have to look to other housing options rather than to remain in their homes. “Owning a house outright reduces monthly expenses in retirement, and therefore the need for income. Yet, for some, even a paid-for house is not affordable when considering total retirement resources and expenses,” the report says.

When it comes to retirees leaving the homes they own, the survey shows that home equity use toward retirement is not part of the plan for most. Another key finding is that health care and the ability to provide for long-term care continues to be a major concern. “Given the uncertainties surrounding health care delivery, it is encouraging that virtually all respondents cite pursuing a healthy lifestyle as a primary risk management strategy,” the report states, “although it is not clear for how many this is a reality rather than an ideal.”

Ultimately, the survey indicates a need for people to better manage risk as it relates to retirement planning. Other findings show that many individuals, or more than 80%, do not look more than 20 years ahead when making important financial decisions and only 5% look to or beyond their life expectancy.

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On the flip side, the study found the majority of retirees are managing savings and spending including 68% of retirees who create a plan to manage their money each year to prevent them from outliving their finances. Additionally, 73% of retirees consider allocating their investments and savings to different types of assets. Only 24% of retirees, however, have purchased or plan to buy a product with guaranteed income for life.

View the full study findings.