A large majority of older Americans expect they will likely need long-term care services in the future, but even so, they still lack confidence in their financial ability to pay for this care, a recent report finds. And adults age 40 and older may also be getting less realistic about their eventual needs.
Just 32% of Americans age 40 and older say they are “very” or “extremely” confident they will have the financial resources to pay for ongoing living assistance, according to the latest Long-Term Care Poll conducted by the Associated Press-NORC Center for Public Affairs Research. Conversely, 35% are “somewhat confident,” while 30% are are “not very” or “not at all” confident.
These findings are consistent with previous years’ reports from the AP-NORC Center which, with funding from The SCAN Foundation, conducted 1,735 phone interviews with a national sample of Americans age 40 and older for the 2015 survey.
Confidence, however, seemed to get better with age, as older respondents felt more financially prepared to tackle these costs than their younger counterparts. For example, adults age 40-54 (26%) and 55-64 (33%) had lower levels of confidence in their financial preparedness than adults age 65 or older (40%).
Personal health and household incomes fed into Americans’ confidence levels, with those rating their personal health as “excellent” or “very good” having greater faith in their ability to pay for long-term care than those who rated their health as “good,” “fair,” or “poor” (41% vs. 29% vs. 22%).
Meanwhile, adults with household incomes greater than $50,000 were more likely than those with incomes of less than $50,000 to say they are confident in their financial preparedness for long-term care (40% vs. 24%).
Although a majority of Americans expect they will need long-term care later in life, most are doing little to no planning when it comes to saving for this critical life phase.
Two-thirds of Americans age 40 and older reported doing little to no planning for their own care needs (67%) in 2014, compared to just over half reporting this in 2015 (54%).
Conversely, 21% of Americans in 2015 report doing a “great deal”or “quite a bit” of planning, compared to just 13% who reported the same last year.
Breaking down responses by age, older adults are more likely to report taking many of these planning actions. And the likelihood of planning for aging varies greatly by household income.
Those age 40 and older with a household income of $50,000 or greater were more than twice as likely as those who earn less to set aside money to pay for their own care (45% vs. 19%).
This demographic was also more likely to take other actions such as looking for information about long-term care insurance, creating an advanced directive or living will, and discussing funeral plans.
A growing likelihood
In 2000, Americans age 65 or older made up only 12% of the national population; however, seniors are projected to comprise about 22% by 2040, according to statistics cited by the AP-NORC Center.
“With this expanding need comes a demand for ways to maintain high-quality services and to make financing such care manageable for families and governments alike,” the report states.
But over the past two years, there has been a steady decline in the number of adults age 40 and older who believe in the likelihood that they will need long-term care when they age.
In 2015, slightly more than half (53%) of these Americans say it is at least “somewhat likely” they will need ongoing assistance one day, including the 19% of adults who believe it is “very” or “extremely” likely.
The percentage of adults age 40 and older who reported this is “somewhat likely” was 60% in 2014. In 2013, this proportion was 65%.
There are a number of potential reasons for this decline in expectations about the need for care.
“One potential explanation is a general increase in optimism and future outlook due to improvements in the economy since this poll started in 2013,” the report states. “This improved outlook could lead people to feel more optimistic about their own long-term health situation.”
Another potential reason, the AP-NORC Center notes, could be due to a slow generational shift in the group of Americans who are age 40 and older for each of these polls, including fewer Baby Boomers and more Gen-Xers.
“If the younger groups have parents who are living progressively longer, this could impact how they anticipate their own needs for future care,” the report states. “These hypotheses are speculations that we cannot substantiate with data from this survey.”
Written by Jason Oliva