Americans are living longer, healthier, lives, redefining the meaning of aging. Today’s “old” looks much differently than previous generations. With extended lifespans, though, comes new challenges, which often require advance planning and tough conversations with family members.
Given longer life expectancies and the concomitant possibility that protracted care will be needed, health care costs facing elderly Americans are likely to increase. Yet survey data developed by UBS Financial Services indicates that most people avoid planning for long-term care. According to a recent UBS report, just 39 percent of survey participants have talked with their children about who will take care of them in old age. Only half have factored health care costs into their financial plans, and merely 23 percent have saved for their future care.
“I believe people tend not to talk about long term care planning, but ironically it’s one of the things that can have drastic impacts on retirements if not addressed properly,” said Jeff Burke, a San Francisco-based financial advisor for UBS Financial Services, Inc. “While starting the conversation is difficult, being unprepared for the future can be even more overwhelming. It’s important to get everyone on the same page to build a financial plan.”
U.S. Census Bureau data indicates that the population of Americans aged 65 and older will grow to more than 80 million by 2050. The number of people likely to require long-term care is expected to more than double over the period, from 12 million today to 27 million. According to UBS Wealth Management Americas’ survey-based report Unassisted Living, “…aging parents fear being a burden on their children more than they worry about ending up in a nursing home,” said Burke. “Despite the fact that we are living longer lives and seeing increasing health costs as a result, the UBS report shows that fewer than one third of investors have saved for their future care. That needs to change in order to maintain the independence that investors desire late in life.”
The Alzheimer’s Association asserts that caring for Alzheimer’s, a disease that affects older adults, can cost upwards of $75,000 a year. Talking about these realities and budgeting for them with family, according to the UBS survey, keeps everyone happier in the long run. Many survey participants had either taken on primary caregiving responsibilities or share them with siblings. The vast majority see it as a significant undertaking. While they’re happy to help their parents and spend more time with them, they confess to feeling stressed and resentful as well.
“Like every phase of life, having a plan in place before you actually need it will help avoid struggles and burdens down the road,” said Burke. “I suggest families consult a financial advisor about long-term care.”