Report: Going Without LTC Insurance a “Potentially Catastrophic” Risk

Home and home-related expenses are the biggest source of spending for Americans aged 50 and older, according to a report by the Employee Benefit Research Institute, followed closely by steadily rising health costs.

“Health care spending is the only component which steadily increases with age: It captures around 10 percent of the budget for those between 50-64, but increases to about 20 percent for those ages 85 and older,” said Sudipto Banerjee, research associate with EBRI and author of the report, in a statement.

Retired persons generally spend about 80% of what working households spend, but because they have different financial obligations compared to when they were still working, they may be able to “maintain their level of preretirement well-being with very different income levels.”


Having long-term care insurance has a “significant effect” on higher spending by retired households, the study found, as people with policies spent more in every category and overall than those without. This can be explained when considering that insurance premiums are included in health spending, or the assumption that “relative sick” people by LTC insurance.

According to government estimates, 12 million older Americans will need long-term care by 2020.

“Since this is a large and potentially catastrophic health expenditure risk, people without LTC insurance may be forced to cut their spending and save more,” the report says.


View the full report, “Expenditure Patterns of Older Americans, 2001-2009” here.

Written by Alyssa Gerace

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