Long-Term Care

A study from the Center for Retirement Research (CRR) at Boston College examined whether retirees 65 and older will have the support they need without exhausting their financial resources—and family caregivers.

The report found that only about 26% of retirees can cover severe care needs for at least five years using income, financial assets and informal caregivers. To determine what levels of care a retiree could need, the study considered total care hours required, the amount of unpaid care that a family or friend could provide, the amount of care that can be purchased, and the combination of family care and financial resources.

On the most challenged end, 27% of retirees are unable to afford even the most minimal care expenses, while 22% could pay for only minimal care. In the middle, 25% seem able to afford moderate care, according to the study. The paper notes that providing care, especially high-intensity care over long periods, can have negative effects on the physical and emotional health of caregivers, and individuals might not be willing to deplete their entire financial reserves, leaving no buffer for emergencies.

Those who enter retirement married have the most resources to handle the expense of medical care needs, while women who are unmarried have the least. Only 31% who are married are unable to cover minimal levels of care. That number goes up slightly to 33% for unmarried men and jumps to 56% for unmarried women.

Clear patterns also exist when screening survey respondents by education level, which the CRR says can sometimes be a good indicator of income. Those without a high school diploma will have no resources for severe long-term services and support, the study found. Only 13% of this group would have enough to cover moderate to severe costs.

Race and ethnicity also affect what percentage of retirees have adequate resources. Only 5% of Black and Hispanic individuals can cover severe care vs. 25% of white retirees. As to Hispanic individuals, 64% cannot cover even a year of care, compared with 49% of Black retirees and 32% of white retirees.