Baby Boomers Confident in Ability to Save in Retirement

Today’s baby boomers are more financially prepared for death than life, according to the latest research from the Bankers Life Center for a Secure Retirement®. The new study by the national insurance provider revealed that 81% of middle-income boomers have made at least one formal preparation for when they pass away, while only 32% have a plan for how they will receive care in retirement, should they need it.

The new study, A Growing Urgency: Retirement Care Realities for Middle-Income Boomers, surveyed 1,500 middle-income baby boomers about their expectations and financial preparedness for retirement and long-term care, and caregiving expectations. As 10,000 Americans continue to turn 65 each day, retirement care—whether at home or in a facility, due to injury, chronic illness or decline in physical or cognitive function—is becoming an increasingly urgent issue for which boomers need to plan and address. By a certain age, most Americans will not only need medical and preventive care but will also require ongoing care in retirement from a home healthcare provider, in an assisted living facility or nursing home. Key findings in the study include:

• Just 18% of boomers report that planning for retirement care is a high priority.
• 45% of boomers expect they will need long-term care at some point—but according to the U.S. Department of Health and Human Services, someone turning 65 today has an almost 70% chance of needing some type of long-term care in their lifetime.
• 30% of boomers surveyed have less than $1,000 saved for a financial emergency.
• 74% of boomers are somewhat or very confident in their ability to manage their and their spouse’s healthcare costs as they age, however, 79% of boomers have no money set aside specifically for their long-term care needs.

“Although nearly half of middle-income boomers believe they will need retirement care someday, almost 80% do not have savings for that care,” said Scott Goldberg, president of Bankers Life. “As the survey shows, there is a growing urgency to educate boomers on the need to prepare for their retirement. Pre-retirees and boomers need to review their retirement plans and consider not only how they plan to spend their time and money for enjoying retirement, but to also consider unexpected healthcare expenses that can often drain retirement savings.”

Boomers confused about the cost of health care 
The Bankers Life Center for a Secure Retirement survey results indicate a knowledge gap among middle-income boomers about the costs of retirement care, possibly contributing to the lack of it being a priority. According to the survey, four out of ten middle-income boomers could not even guess at the cost of a home health aide (42%). A third couldn’t provide an average monthly cost of nursing home care (35%).

In addition, more than half (56%) of boomers mistakenly believe that Medicare will pay for their ongoing long-term care. In truth, Medicare does not pay for ongoing long-term care services.

The urgency for boomers to have a plan for their retirement care is growing as more and more retire every day and get closer to the age when they or their partner will likely need long-term care. According to the survey, boomers expect that they will start to need assistance via home modifications around age 70, with care in a nursing home coming around age 84.

“The U.S. Department of Health & Human Services estimates that boomers will face an average of $138,000 in long-term care costs over the course of their lifetime. These large sums can negatively impact the financial security of retirees, as well as take an emotional and financial toll on their loved ones,” Goldberg said.

“Even if pre-retirees and boomers have taken steps to build a financial plan for their retirement income, they should not consider their plans complete until they discuss retirement care. This includes their wishes for how and where they want to receive care, and how to pay for it. There are many tools and resources that can help boomers better understand and plan for care in retirement. It’s never too late to better understand their current healthcare coverage and to prepare for the effects of aging.”