Are the Baby Boomers Prepared for Retirement Care?

While a majority of middle-income baby boomers report having at least a rough retirement financial plan in place, an alarming number—72 %—have no plan of any kind to address the day-to-day care they may someday need in retirement, according to a recent study released by the Bankers Life and Casualty Company Center for a Secure Retirement (CSR).

The study, Retirement Care Planning: The Middle-Income Boomer Perspective, focused on 1,299 Americans ages 49 to 67 with an annual household income of between $25,000 and $75,000, and found that only one in five (20%) have a rough plan for their retirement care and just 8% have a detailed plan.

More Prepared for Death than Life

In fact, the study cites that boomers today are nearly five times more likely to be concretely planning for when they pass away than to have a detailed plan for the ongoing long-term care they may need, such as nursing care or home care, while they live out their retirement years.

Eight in ten (81%) of boomers have taken at least one detailed action to prepare for when they pass away, including:

  • Communicating preferences about funeral arrangements
  • Identifying burial location
  • Purchasing life insurance to cover final expenses
  • Creating a will

By comparison, less than one-fifth (17%) of boomers have taken concrete action to plan for their care during the later years of their life.

Long-Term Care Expectations and Reality

Although boomers today anticipate that they will have less financial security and support in their retirement years than previous generations, the study found that the current generations of retirees significantly underestimate the likelihood of one day needing long-term care. Only one-third (36%) believe they will need long-term care services, whereas the actual chance of needing care is 70%, according to the U.S. Department of Health and Human Services.

When it comes to discussing retirement care, only about half of all middle-income Boomers have had a conversation with anyone (even their spouse) about how they wish to receive long-term care (43%) or how they will pay for it (56%). Furthermore, eight in ten could not venture a guess on the cost for home health aide services (81%) or nursing home care (78%).

Even though boomers acknowledge that a typical nursing home stay will impact their finances, the vast majority significantly underestimate the annual cost of nursing home care by estimating that a year's stay averages $46,890 when the actual average cost is nearly double at $90,520. On the other hand, boomers overestimate the hourly cost of a home health aide by more than double.

Unclear on Long-Term Care Funding

More than three-quarters (78%) of middle-income boomers either incorrectly think Medicare will pay for ongoing long-term care or simply do not know how they will fund their care.

When asked how their care would be paid for, fewer than one in ten (9%) of boomers indicated they expected children to provide their care and even fewer, a mere 2%, say they would expect children to pay for their care.

"Retirement care is an important and often overlooked component of planning for retirement," said Chris Campbell, senior vice president of marketing and communications at Bankers Life and Casualty Company, a national life and health insurer. "Boomers today need to consider moving beyond simply creating a retirement financial plan to also creating a retirement care plan that reflects their own needs, preferences and financial circumstances."

Source: The Bankers Life and Casualty Company Center for a Secure Retirement's studies and consumer awareness campaigns provide insight and practical advice for how everyday Americans can achieve financial security during retirement. To learn more and to read more of the Retirement Care Planning: The Middle-Income Boomer Perspective study, visit their website.