Millions of Households with Older Adults at Risk of Economic Insecurity, Survey Finds
A recent survey conducted by the National Council on Aging (NCOA) has revealed that millions of households with adults over the age of 60 lack the financial resources to handle significant financial shocks, such as long-term care needs, health issues, or loss of income due to divorce or widowhood. The survey highlighted the impact of high inflation and rising costs on older Americans, with 80% of households with adults over 60 (equivalent to 47 million households) found to be at risk of falling into economic insecurity.
According to the NCOA survey, 45% of older people have household incomes below the amount necessary to afford basic living needs. Additionally, while a majority of older Americans prefer to age in place, 60% stated that they could not afford two years of in-home long-term services and support. The survey further revealed that most respondents could only afford up to two years of nursing home care in a semi-private room or four years in an assisted living community.
The NCOA emphasized that despite the prevalent need for both short-term and long-term services, the majority of older Americans lack the financial means to afford them. The organization stated, “Although the need for services both in the short- and long-term remains a reality for many older Americans, most do not have the financial resources to afford either.”
The survey also addressed the issue of using home equity to finance care. While many respondents held their financial assets in the form of home property value, cashing out on this investment would only benefit a small portion of those surveyed. Only 18% of adults aged 62 and older would be able to use their home equity to pay for long-term care, according to another analysis cited by the NCOA. The remaining respondents do not have sufficient home equity to make a difference in covering long-term care costs.
The NCOA highlighted the importance of considering the economic stability of future generations, as fewer young adults own property compared to the Baby Boomer generation at their age. The impact of this property ownership disparity on the ability to handle financial shocks for future older adults remains uncertain.
Preparing for long-term care costs was also addressed in the survey. Rising costs of long-term care services and supports (LTSS) pose a significant financial shock for older adults. The price of a private nursing home room increased by 15.4% between 2013 and 2018, while at-home care services saw a 15.1% rise during the same period.
To prepare for long-term care costs, the NCOA suggests making a plan for long-term care needs and discussing them with family members. It also recommends considering long-term care insurance, as Medicare does not cover such costs. Taking out a long-term care insurance policy or adding a long-term care insurance rider to a life insurance policy can help individuals manage these expenses.
In conclusion, the NCOA survey highlights the alarming financial vulnerability of millions of households with adults over 60. The rising costs of long-term care, coupled with inadequate financial resources, underscore the need for better planning and support systems to ensure the economic security and well-being of older Americans in the face of financial shocks.
