To the dismay of many baby boomers who believe Obamacare will fund the costs of long-term care (LTC), a new survey reveals just how ill-prepared this demographic is when planning for their aging care needs.
Of the 801 Americans over age 50 surveyed by the Nationwide Financial Retirement Institute’s annual survey, only 28% were aware that the Affordable Care Act does not cover LTC costs. That leaves more than seven in 10 boomers who mistakenly think the opposite.
“Neither the Affordable Care Act nor Medicare will help America’s workers pay their long-term care costs,” said John Carter, president and chief operating officer of Retirement Plans, Nationwide Financial, in a statement.
While many older Americans might not want to age in a nursing home to accommodate their LTC needs, the survey showed few have actually planned for these costs. And that is true even among affluent boomers with at least $150,000 in household income—the main demographic surveyed by Nationwide.
On average affluent boomers expect their LTC costs to be $36,220 annually—less than half of what they estimated in 2012 ($78,920) and far below the expected cost of $265,000 per year by 2030 when the last of the baby boomers will reach retirement age.
“This drastic drop could be due to the media’s focus on the Affordable Care Act and people’s misconceptions about what it covers,” Carter said. “The reality is we can’t count on someone else to fix this problem. We will have to fund our own long-term care costs in retirement.”
Boomers were particular about what care settings in which they would like to age to support their long-term care needs, with 71% saying they want to receive LTC in their own homes.
Two in five boomers said they think they will end up in an assisted living facility, while one in 10 believe they will be in a nursing home.
While nursing home care is only one form of long-term care, the study revealed that 78% of boomers say that when they hear the term “long-term care” they think of nursing homes.
The misconceptions among boomers when planning for their long-term care needs can provide an opportunity for financial advisors, the study suggests, especially considering that 70% of Americans over age 65 will need long-term care during their lifetime, according to figures from the U.S. Department of Health and Human Services.
“The most common mistake a financial advisor makes is his or her approach to the discussion. When an advisor says the words ‘long-term care,’ the client often hears ‘nursing home,'” said Kevin McGarry, director of the Nationwide Financial Retirement Institute. “This often causes the client to shut down. Instead, advisors should say: ‘Let’s talk about ways we can keep you in your home longer.”
Written by Jason Oliva