New Approaches to Finance Long-Term Care Costs in Retirement
Ideally, our retirement years should be filled with meaningful activities, less stress, and more time with friends and family. But the reality is that approximately 70 percent of people turning 65 today will need long-term care (LTC) before they die, and many of them will need LTC for several years (US Department of Health and Human Services [HHS] 2019). We have known these risks for years, but few Americans are financially prepared for the high cost of LTC, which represents the most significant threat to retirement security (Webb 2020).
Middle-income Americans face the greatest risk. Higher-income individuals can more easily self-fund LTC costs or purchase private LTC insurance, which is generally unaffordable for middle-income individuals. Low-income individuals receive government coverage of LTC expenses through Medicaid. Many middle-income individuals, however, who have insufficient income from retirement savings and Social Security benefits, are forced to spend down their life savings and other assets to qualify for Medicaid benefits (LongTermCare.gov 2021).