Retirement may be one of the best times in life, but the golden years are not without their fair share of concerns for baby boomers. Chief among them is the cost of living, specifically as it pertains to long-term care, according to the results of a new survey.
For those nearing retirement as well as individuals just recently entering the post-working world, 70 percent point to the expense of long-term care and inflation as their most worrisome issues, based on a recent poll conducted by the Society of Actuaries. Over two-thirds cited the cost of health care as something they were troubled by.
Pre-retirees plan on continuing to work, but will they?
Of course, one of the ways that older Americans can pay for health care is by continuing to work, whether on a full- or part-time basis, in retirement. However, what people say and do are two different things entirely. For example, the poll found that among pre-retirees, close to 70 percent planned to work in some capacity. But for those who already in retirement, just 30 percent were still in the labor force.
"There is still a disconnect between what people think they will do in retirement to manage risks, compared to what approaches retirees actually used," explained Cindy Levering, SOA associate and co-chair for SOA's Committee on Post Retirement Needs and Risks.
Similarly, many older Americans underestimate how long they will live. Among pre-retirees, the median number of years that respondents projected living for was 85, SOA reported from the poll. But for 55 percent of participants 45 and older and not yet retired, at least one family member lived into his or her nineties.
Anna Rappaport, chairperson for SOA's Committee on Post Retirement Needs and Risks, indicated that the survey's findings are somewhat conservative.
"The gaps in planning are worse than indicated by this data as few people try to plan for the long term," Rappaport explained. "The most common type of planning is based on relatively short-term expected income and expenses, such as less than five years."
65 and older population to top 70 million by 2030
Back in 2000, roughly 35 million Americans were 65 or older. That total is expected to more than double by 2030, reaching an estimated 71.5 million, according to the American Association for Long-Term Care Insurance. Because people are living longer, disabilities are expected to swell also. Come 2040, a projected 21 million people in the U.S. will have some kind of infirmity, according to AALTCI analysis. That's up from 10 million in 2000. Currently, of Americans with long-term care needs, 30 percent have "substantial" needs, meaning three or more limitations.
While wealth provides Americans with the means to pay for medical treatments and long-term care services, high income earners may also have a greater need for this type of care compared to those who earn less, according to a recent study performed by the Urban Institute.
Commenting on the report, Jesse Slome, AALTCI director, acknowledged that well-off Americans typically have lower rates of cardiovascular disease and diabetes. Still, because they tend to live longer, age-related decline is still a major risk factor.
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