Center for Positive Aging
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Statistics on Long-term Care for Baby Boomers

  • Nearly two-thirds of today’s retirees will drain their finances due to the high cost of long term health care. According to the Center for retirement Research at Boston College, most retirees are ill prepared to absorb the average cost of $77,000 a year for a nursing home room or $20,000 a year for in-home care.
  • A new analysis indicates that when the cost of health care and long-term care is included, 64% of retirees will be unable to maintain the lifestyle they had before retirement. This is the No. 1 issue staring us in the face over the next decade,” said Paul Ballew, senior vice president of Nationwide Mutual Insurance Company, which provided the grant to fund the study. Baby boomers must hear the warning now, or the cost of healthcare will be an unexpected hardship when they retire.
  • Healthcare costs rose nearly 7 per cent last year after costing a total of 2.4 trillion in 2007, about 7,900.00 per person according to the non-profit National Coalition on Healthcare. Options for paying for such care include relying on Medicaid, buying long-term care insurance, selling the family home when long-term care is needed or tapping into the values of the home through a reverse mortgage.
  • Medicaid is the most likely option for the poorest retirees, although in some cases these individuals may be able to extract some of the values of their home to help pay costs. People with higher incomes can afford to buy insurance, which can cost about $3500.00 a year if acquired by age 65. Delaying the purchase increases the price. By the age of 75, a policy could cost around $600 a month.
  • About 48% of long-term care recipients and their families pay long-term care costs out of their own pockets. About 41% qualify for Medicaid, and an additional 8% are getting temporary coverage provided by Medicare. Only 3 % are paying with long-term care insurance. Several factors affect the low percentage of long-term care insurance, including cost and an insurance industry study which found that 20% of the applicants are denied coverage due to poor health.
  • Stand-alone long-term care insurance policies vary greatly in their features. Some have caps on how much they pay and limits on the length of service. These policies may not be fully adjusted for inflation, according to Ms. Munnell, Director of the Center for Retirement Research.
  • Other options have been developed by the industry in the past few years, including life insurance policies and fixed annuities that carry long-term health care riders. These products may cost more than straight insurance policies, but offer guaranteed payout to beneficiaries upon death in addition to providing long-term health care coverage if needed.