By Mark Hill, Corey Tower, and Allen Wastler

Subject matter and communication experts for MassMutual.

Posted on May 20, 2021

The doubling of the elderly population over the coming decades means a substantial increase in the number of people who will need long-term care. As the need for care increases, so too does the cost of services.

Long term care services typically include institutional care (i.e., nursing home and assisted-living facilities) and home-based assistance, provided to meet the health or personal care needs of individuals for an extended period of time.

With the growth in the elderly population and increases in longevity, public payments like Medicare for long-term care are growing, and will likely put stress on the program.

Indeed, “paying for long-term care continues to be one of the great financial risks facing Americans during retirement,” declared the National Association of Insurance Commissioners in a joint study of long-term care needs conducted with the Center for Insurance Policy and Research.

That makes many people approaching their retirement years concerned about paying for long-term care. In fact, over a third of pre-retirees in a survey said they were “very concerned” about paying for long-term care, making it one of their top financial concerns. Meanwhile, only 27 percent were not concerned.1

How many people will need long-term care?

Slightly more than half (52 percent) of individuals turning age 65 will need long-term care, according to NAIC estimates. The average need is expected to last about two years. However, for 26 percent of individuals, it will last longer. The statistics for women in the NAIC report are more compelling. Nearly 58 percent will need long-term care, and 30 percent will need it for more than two years.2

The average lifetime long-term care expenditure for individuals turning 65 in 2020-2024 is $137,800. However, only about 28 percent of people will have an expected cost that will exceed $100,000. That percentage estimate shrinks as expenses get higher, with 24 percent facing expenditures over $150,000 and roughly 18 percent having expenses in excess of $250,000. Again, the expected expenditure is higher for women than for men.3

What about government support?

Beyond partisan battles that routinely affect budgets for entitlement and support programs, there are limitations to the extent of support available inherent in the programs themselves.

Retirement planning options for long-term care

There are a number of ways to be better prepared for the cost of long-term care during retirement.

Finding a strategy that’s right for you

There is no single “best” way to prepare for long-term care expenses during retirement. What is right for you will depend upon a number of factors that include your age, health, family history and how much control you want to have over your care. A financial professional who specializes in long-term care planning can help you make an informed decision. Planning sooner rather than later, may give you more and better options to choose from.

This article was originally published in May 2019. It has been updated.
Insurance products issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 0111 1-0001.
1 Society of Actuaries, “2017 Risks and Process of Retirement Survey,” January 2018.
2 National Association of Insurance Commissioners and the Center for Insurance Policy and Research, “The State of Long-Term Care Insurance: The Market, Challenges and Future Innovation,” May 2016.
3 Department of Health and Human Services Office of Disability, Aging and Long-Term Care Policy, “Long-Term Services and Supports for Older Americans: Risks and Financing,” Issue Brief, January 2021.
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