A recent study reveals that many Americans acknowledge their potential need for long-term care, but do not understand their options to afford such care. Many consumers who had overseen the long-term care of a loved one recognize the impact and financial strain long-term care can cause their family, and 36 percent of survey respondents with assets of less than $100,000 fear they will be a burden to their family.
Only 39 percent felt confident that they have planned for the costs of long-term care. Of those over 65-years old who have planned for these costs, 55 percent say they feel more confident generally.
The Lincoln Financial Life Stages Survey: Long-term Care found, through a survey of 1,002 Americans, that 65 percent felt it was important to plan for long-term care, yet less than half (44 percent) actually have a plan. Of the survey respondents who did have a plan, they were primarily dependent on increasing some form of savings. Nearly three-fourths, or 73 percent of Americans, said their lifestyles would change in order to pay for long-term care. Over half said they were willing to sell their homes, while 21 percent said they would be willing to accumulate debt, and 18 percent said they were willing to declare bankruptcy in order to qualify for government aid like Medicaid.
“The survey shows consumers are not aware of all of the funding options they have to pay for long-term care. Unfortunately, many do not realize that programs like Social Security simply will not cover all those costs,” said Mark Konen, President of Insurance & Retirement Solutions, Lincoln Financial Group.
With an average savings of $120,000, most American families could not afford long-term care for an extended period of time, since costs can easily exceed $60,000 in a year. However, the majority of respondents, at 75 percent, said they would use their savings to pay for the costs of long-term care, revealing that many Americans are simply unprepared for such financial burdens.
For those who had overseen the long-term care of a loved one, 26 percent said their loved one had to sell their home in order to pay for their own long-term care. Others sold their cars (21 percent), stopped donating to charity (32 percent), and stopped going out to dinner (33 percent). While some of the survey respondents had heard of long-term care insurance, it ranked seventh amongst likely sources for long-term care funding.
“As Americans live longer and healthcare costs continue to rise, the issue of long-term care takes on greater importance,” said Lou Moore, a Lincoln financial planner with Lincoln Financial Advisors. “The emotional burden of taking care of a loved one is difficult enough without having to also worry about the financial impact. The good news is there are funding options that can provide the flexibility consumers need when planning for unexpected long-term care needs.”
Written by Kelly Mellott