April 24, 2018
Nursing home, assisted living and other long-term care costs are rising as financial concerns for retirees, according to a new poll. Photographer: Emile Wamsteker/Bloomberg News.
Long-term care and overall medical expenses are growing as financial worries for retirees.
Nearly half of seniors have little or no confidence they have enough money for nursing homes and other long-care.
That worry grew to 49 percent this year from 45 percent last year in an annual report released today from the Employee Benefit Research Institute (EBRI), a Washington non-partisan think tank.
Twice as many retirees requiring long-term care in the last five years said the expense was much higher than expected compared to the elderly who haven’t needed the intense medical assistance (22 percent versus 11 percent).
For overall medical care, the share of retirees who told EBRI they have little or no confidence they will be able to pay the bills climbed to 30 percent in 2018 from 23 percent in 2017.
Much of the talk about retirement is on spending down assets—the IRS requires yearly withdraw at age 70 ½ for IRAs, 401(k)s and self-employed retirement plans.
However, twice as many retirees told the EBRI researchers they are trying to build up assets than gradually depleting them (25 percent versus 11 percent).
Close to half of retirees who were in a defined contribution plan said they rolled it over when they retired (44 percent) against 29 percent who said they kept the money in workplace retirement savings plans.
Only 8 percent said they cashed it out and spent it.
About a third of retirees said they moved their money out of a workplace retirement savings plan because a financial professional told them that was the smart thing to do.
The survey, which included adults in the workforce as well as retirees, had a message to the young from the old:
Don’t expect to get a big help in retirement from on-the-job savings programs and working during the so-called “golden years.”
Nearly one of every two retirees said workplace savings vehicles such as 401(k)s and 403(b)s are providing no money from them in retirement compared to four of every five workers who said they expect to get major or minor financial help from the plans.
Likewise, only 26 percent of retirees said from experience working in retirement is providing a minor or major source of income while nearly two-and-a-half times of workers (68 percent) are anticipating it will.
Some workers may be guilty of having a false sense of confidence they will be gainfully employed late into life, the researchers cautioned.
They noted workers expect to retire later than retirees actually do.
Retirees are overwhelmingly secure in their ability to pay basic expenses, but the number has declined in a year to 80 percent from 85 percent.
The results are based on an EBRI poll of 1,040 retirees and 1,002 workers 25 and older between January 3 and 16 of this year.
The margin of error is plus or minus 3.16 percentage points for all workers and 3.1 percentage points for all retirees.