Bill Benson

The increasing cost of medical care in America threatens the dream of a comfortable retirement, even among people with $250,000 or more in household assets. A recent poll of Americans between the ages of 55 and 65 found that, among the seemingly financially prepared, there was a lack of planning for healthcare expenses and a widespread misunderstanding of Medicare benefits. The results revealed that Americans have many misconceptions about their potential medical expenses during retirement. Among them, respondents estimated that Medicare would pay for 68 percent of their healthcare costs during retirement and cover long-term care expenses, which it does not. They also underestimated the average amount Americans spend annually on medical expenses and few had a plan for dealing with the cost of long-term care, despite the fact that a majority of older adults will need it at some point. More here.

Americans age 65 and older have a 70 percent chance they’ll require long-term care at some point in their lives. And, as the costs associated with such care increase, so does the need for retirement-age Americans to have a plan in place for their long-term needs. In 2009, long-term care support and services accounted for one in every seven healthcare dollars in the U.S., or nearly $295 billion. And that number would be even larger if not for the 62 million Americans providing uncompensated care for elderly friends and family. In 2009, unpaid caregiving resulted in an estimated savings of $450 billion. But with demographic trends indicating a coming decline in the number of unpaid caregivers and an increasing number of elderly Americans, experts warn that individuals should be paying more attention to these long-term care costs and planning in advance for their future expenses. More here.

The Employee Benefit Research Institute’s annual retirement confidence survey finds Americans once again expressing concern about their ability to afford retirement. Among respondents, only 14 percent say they are very confident they’ll have enough money to live comfortably in retirement. Medical expenses and long-term care costs remain among their chief concerns, ranking far below their confidence in their ability to pay basic expenses. And though current retirees express a higher level of confidence than current workers, retirees also say they are significantly more reliant on social security as a major source of income than workers expect to be. Also in the report, the number of workers who said they expect to retire after age 65 has risen to 37 percent, up from 11 percent in 1991. And 60 percent of workers say the total amount of their household’s savings and investments, excluding the value of their primary home, is less than $25,000. More here.

According to the Employee Benefit Research Institute’s 22^nd Annual Retirement Confidence Survey, just 14 percent of Americans say they are very confident that they’ll have enough money to live comfortably in retirement. The new survey finds retirement confidence at historically low levels due largely to job uncertainty, which ranked highest among the most pressing financial issues facing surveyed participants. Being able to afford healthcare expenses and long-term care costs also ranked high among retirement fears. Current workers expressed more concern about their finances than the already retired, though current retirees relied more heavily on Social Security than current workers expect to. Among current workers, 60 percent report that their total savings and investments, not including their primary home and benefit plans, is less than $25,000. More here.

Though more seniors are aware of the costs associated with living longer than in past years, a recent survey found just 45 percent knew they’d need nearly 90 percent of their pre-retirement income to maintain their standard of living and 45 percent said they’d likely end up working longer than planned. Still, the number of respondents who were aware of the cost of living longer rose to 62 percent from 56 percent in 2008 and 23 percent in 2003. A majority of seniors were unaware of the financial tools available to them, including long-term care insurance, reverse mortgages, and delaying social security. A quarter of respondents were familiar with reverse mortgages, though 42 percent of surveyed Americans believe health insurance or Medicare will cover the price of long-term care. More here.

Despite having a better understanding of their long-term needs, Americans still underestimate the costs associated with long-term care. According to a poll conducted by the California Partnership for Long-Term Care, 52 percent of consumers said more than half of older Americans would need long-term care in their lifetimes, which is up 10 percent from six years earlier. Still, the actual percentage of older Americans who will need some type of long-term care is 70 percent. Participants also underestimated the costs of nursing-home care. But, despite being twice as likely to know typical health insurance plans don’t cover long-term care than they were when the survey was first conducted 17 years ago, 55 percent said they haven’t thought about purchasing long-term care insurance. According to data from the U.S. Census Bureau, only 18 percent of seniors have purchased individual long-term care insurance nationwide. More here.