Long-term Care Crisis Is Really a Retirement Crisis—and the Stats Back it Up

By now you’ve read plenty about the looming care crisis in our country. Advances in modern medicine are resulting in people living longer than ever before. At the same time, the costs of long-term care and access to that care are becoming more restrictive.

However, another story that doesn’t get quite as much attention in that conversation is the fact that retirement savings aren’t coming close to covering those “golden years,” which, when added to the fact that most people are woefully unprepared for the increasingly expensive costs of long-term care, leads to even larger concerns. AARP sums it up best when it says, “Only a modest percentage of Americans have the wealth needed to afford whatever long-term care needs emerge in their later years.”

Employees Simply Aren’t Saving Enough for Retirement

There’s little doubt that many Americans aren’t thinking about their need for long-term care earlier in their lives. However, you can’t say the same for retirement. People, in fact, are thinking about their retirement. They are saving for retirement. But they may not be doing enough to prepare themselves.

Consider that the average retirement savings, according to a recent Forbes article, is $255,200. The average monthly social security check for a retiree, according to an article on Bankrate, is $1,693. You don’t have to be a financial planner to understand those dollars aren’t going to stretch very far in retirement for most folks.

A recent survey from Retirable shared that 63% of respondents don’t feel they saved enough to get themselves through retirement. Many are changing their plans for retirement or looking at a second job to make up the difference. Others are simply working longer than they originally had planned. Obviously, this isn’t the retirement many had envisioned for themselves!

Long-Term Care Costs Are Skyrocketing

Then you start to look at the numbers for the costs and likelihood of long-term care—this is where things get a little scary. According to the Genworth Cost of Care Survey, 7 out of 10 people over age 65 will require long-term care. 70%! That same survey says the average national cost of an in-home health aide per month is $5,148. The average monthly cost of an assisted living facility is $4,500. And the average cost of a private room in a nursing home facility is $9,000-plus!

Those costs are mind-boggling to many, but they are our new reality. But to really understand the magnitude of this challenge, we need to look a little closer at the numbers. Let’s say the average American who’s retiring with that average savings we referenced above ($255,200) retires at age 65 and requires long-term care starting at age 70. If she lived in an assisted living facility, she’d run out of money by age 78. Lived at home with an in-home health aid? Age 76. Nursing home? Age 73.

Adding to the pain is this: We’re not even factoring in the costs of living, let alone travel and other activities a retiree may want to enjoy. If anything, this paints a rosier picture than the truth! Again, statistics say 70% of our age 65+ population will need long-term care at some point. Many will face bigger challenges than this—smaller retirement savings, higher costs of care, and again, we’re not even factoring in their costs of living leading up to the start of their long-term care services.

Can Voluntary Benefits Be a Lifeline?

Certainly, there’s no magic bullet here. But voluntary enrollment can be a great opportunity to educate and engage employees on a number of tools that, if offered, could positively impact their retirement and, inevitably, care.

During those enrollment sessions, you can educate employees on care planning programs, help employees get smarter about participating in the company 401(k), and provide general financial wellness education. All of this represents a big step forward for many employees.

What’s more, these voluntary enrollment periods are also the perfect time to educate employees on the wide variety of voluntary products that can help them protect their retirement and ensure they’re set up well from a care standpoint. For example, hybrid life insurance and long-term care products are becoming increasingly popular as a way to address the care crisis.

These hybrid products offer life insurance protection with care benefits and can help cover the costs of care and protect retirement savings. Stand-alone long-term care policies are harder to find and expensive but still available. And newer products even pay benefits to family members who provide care to a policyholder.

On top of the more direct protection from long-term care coverage, there’s also a need for financial protection from medical costs. Voluntary products such as accident, hospital indemnity, or critical illness insurance have a role to play in a conversation about planning for retirement.

The care crisis we’ve all heard so much about is also a retirement crisis. Framing it in that way may be a more effective approach, as retirement is far more top of mind for employees and employers. Whether it’s seen as a “care crisis” or a “retirement crisis,” there’s a need to act. By raising awareness for employees and employers on this critical topic, we can work toward finding solutions.

Zach Iovino is a regional sales director at Trustmark Voluntary Benefits covering West Virginia, as well as parts of Pennsylvania and New York.

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