More than one-third of Americans ages 45 to 70, most known as the baby boomers, fear they will run out of money during retirement, while almost half have no plans to protect themselves should they outlive their financial resources, according to a survey conducted by the Society of Actuaries.
“With the challenges in the housing and financial markets over the past few years, coupled with the fact that people are living longer, many baby boomers are finding themselves unprepared to maintain their lifestyle in retirement,” said Anna Rappaport, president of Anna Rappaport Consulting.
Only 20 percent of respondents said they planned on purchasing an annuity or another form of guaranteed lifetime income and 71 percent said they plan on claiming social security benefits before the age of 70. While three-quarters have home or rental insurance policies to protect their tangible possessions, only 19 percent plan on buying a long-term care policy that would cover many disability and health care expenses.
Many baby boomers are holding off on purchasing long-term care insurance, although they are aware of its benefits. A study by New York Life Insurance found that while 42 percent of boomers said caring for an aging parent made them recognize the value of a policy, only 9 percent had purchased one for themselves.
Nearly half of all long-term care services is currently paid by Medicaid, the state federal health care program. According to Genworth, the annual cost in Illinois for homemaker services is over $45,000 a year and a nursing home over $62,000 for a semi-private room.
For baby boomers, generally over 70 percent will need some care. Rather than long-term care insurance which can be costly, you may be able to use your life insurance policy for medical needs and home care services rather than just a death benefit. Life insurance is becoming more popular as a retirement vehicle. It is important to check with an insurance specialist about the cost and how your can plan your healthcare process now.