Planning for Long-term Care Needs: Start Now

Anna M. Rappaport

Anna M. Rappaport is actuary, futurist, and author, and past President of the Society of Actuaries and Chairperson of its Committee on Post-Retirement Needs and Risks. She is a phased retiree and an advocate for improving the retirement system.

Few Americans do much to protect themselves against the cost of long term care (LTC) in later life.  In fact, between half and three-quarters of Americans are anticipated to need LTC at some point, yet only about 8 percent of the US population has LTC insurance. Instead, many people simply hope to deal with long-term care and other health risks when they happen.

This is not a sensible way to deal with one of life’s major shocks, particularly when one could spend several years in such an institution at an annual cost of over $90,000.

Recent Findings

A recent report from the Society of Actuaries offers several insights into this conundrum. Titled Caregiving for Older Individuals: Perspectives of the Caregiver and the Care Recipient, two key findings are as follows:

  • Americans tend to underestimate the amount of long-term care they may need, while at the same time they are over-optimistic about having resources to pay for it. Many people (inaccurately) believe that Medicare and supplemental health insurance will pay for LTC. Moreover, they underestimate how much help they will need and the potential burden this will impose on relatives and others helping them.
  • People age 85+ tend to require much more help with the activities of daily living than do younger persons. For instance, by age 85, most women live alone and hence are likely to need more help than couples. People age 85+ also tend to rely on informal support provided by family members, rather than formal support from institutions and organizations.

The Role of the Family

The report also showed that family members are often willing to help when care is needed, but few relatives plan to do so in advance, or have discussed expectations and long-term care options with their older relatives.  Additionally, many parents are concerned about not burdening their children, in many cases adult children do provide help when needed. Such help can include driving, assistance with household tasks are money management, taking people to the doctor or shopping, etc.

  • Adult children do help with tasks, more often than they provide financial support to their elderly parents. In fact, older parents are more likely to provide their adult children with financial support than vice versa.
  • Most people do not think of the fact that they will be caregivers when they plan for retirement, and/or that they will need such care. Nevertheless, survey evidence shows that both giving and providing care is emotionally and financially grueling.

The Role of Paid Help, Inside or Outside Nursing Homes

Paid help and/or assisted living or nursing home care are more likely to be needed when people need help with the activities of daily living.

Specifically, having bathing difficulties is the strongest predictor of needing nursing home care. Limitations in feeding oneself and dressing are also influential in driving LTC admissions.

Further Reading

Several related resources from the Society of Actuaries may be of interest:


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