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Americans grossly underestimate how much money they’ll need in their old age

Americans think they’re healthier and wealthier than they really are. That’s the conclusion of a recent study that shows only one-third of us think we’ll need long-term care in our old age, when history shows more than half of us really do.

If we do need to go to a nursing home, we think it’ll cost around $54,000 a year. Sadly, it’s almost double that, at more than $100,000. And it’s only going to rise, according to Lincoln Financial Group.

The investment firm’s vice president of moneyguard distribution, Bill Nash, feels our ignorance to long-term health costs is reason to begin planning for our final days sooner than later.

“Being proactive before care is needed to make a lasting impact on the quality of care you receive, the ability to maintain dignity, and on your family’s financial security,” Nash says.

He continues, “Comprehensive planning should include meaningful discussions with both family members and a financial professional together to understand the realities and risks of long-term care, lay out care preferences, and assess care options and how they would be paid for care.”

The problem is most people feel uneasy having that talk with family members.

An uncomfortable conversation

There are plenty of painful conversations you’ll have with your parents growing up, but how about planning care for their last years with you? That’s tougher than watching them explain the birds and the bees.

Less than a third (29 percent) of parents talk to their kids about long-term care, and only 24 percent discuss paying for it. Similar results were found in a study from Home Instead Senior Care.

Over half (59 percent) of adults and 76 percent of seniors agree it’s important to talk about long-term care, but only 58 percent of adults have had that talk with their parents. Even more telling of how squeamish long-term care makes us, over three fourths of seniors say they’re more comfortable planning their funeral than the care they’ll receive, according to the survey.

“Final years planning can be easily misconstrued, and many people think they only need to plan for their final days and after,” says Jeff Huber, president and CEO of Home Instead. “Often, we forget about the fact that as we age we might want or need extra care in the final days, months or even years of our lives.”

But, only 13 percent of seniors prepare for their long-term care, says Home Instead’s study.

The importance of planning

Today people live longer, making long-term care planning more important now than decades ago, according to Lincoln Financial Group.

When elderly family members, and we, overlook a financial plan for their long-term care, guess who becomes their caregiver? We do. And we don’t just help them with daily living, we help them financially, says a study from Merrill Lynch.

The study refers to family caregivers as “America’s other Social Security,” because they provide most of elderly family members’ long-term care. There are 20 million family members taking care of an elderly relative in the U.S. today, and they’ll collectively spend $190 billion annually to support them.

“Caring for our aging population has become one of the most pressing financial issues of our lifetime,” says Lorna Sabbia, Merrill Lynch’s head of retirement and personal wealth solutions. “Greater longevity is going to have a profound impact on the caregiving landscape and calls for earlier, more comprehensive planning and innovative solutions to address the health and long-term care needs of our loved ones.”



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Meet the Author

Joe Pye

Joe Pye

Associate editor

Pye is the associate editor of

Budgeting & Saving, Family, Retirement


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