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What’s the Likelihood You’ll Need Long-Term Care?

None of us knows for sure what aging has in store for us. Will we live into our 90s healthy and spry, get struck down by illness at an early age, or endure years or even decades of disability and incapacity? This uncertainty has great implications for how we live our lives and plan our lives. It influences how much money we will need for retirement, where we choose to live, and when we retire. After all, if you know you’ll live into your 90s, you may want to keep working into your 80s. But if there’s a risk you’ll become disabled in your 70s, perhaps you’d prefer to retire early so you can travel, hike, bike or do whatever brings you pleasure as long as you can.

And if you don’t know, what should you do? Switch to semi-retirement so you can keep earning some money, but also spend more time doing what you want?

A Look at the Statistics

While no one has a crystal ball, your current health and the histories of family members can provide some clues about your own future. In addition, statistics about the long-term care needs of the population in general can provide some guidance. A recently released report Richard W. Johnson and Judith Dey of the Urban Institute, “Long-Term Services and Support for Older Americans: Risks and Financing, 2022,” provides the latest numbers. Here are a few of its findings:

For Americans turning 65 today:

  • More than half (56%) will develop a disability requiring some long-term services and support.
  • Most will need care for less than three years.
  • But one in five (22%) will need help for more than five years.
  • Average out-of-pocket long-term care costs will be $122,900 (in today’s dollars).
  • For those with significant disabilities, family members will provide unpaid care valued at $204,000 on average.
  • Fewer than 8% of Americans have long-term care insurance.

You’re Likely On Your Own

Given the size of the Baby Boom population, the authors project the number of seniors with significant disabilities to grow from 7.6 million today to 14.7 million in 2065. While this number in some ways may be more significant to policy makers than to individuals making plans, it’s also relevant to individuals and their advisors because it means that absent a course correction in public policy most seniors and their families will be on their own. Seniors and their families are already having difficulty finding both home health workers and high-quality nursing home placements.

The Boston Globe has reported the recent closing of 10 nursing homes in the state, the continuation of a long-term trend which I witnessed when I was on the board of a non-profit nursing home. With the growth of assisted living facilities as an alternative, over the years the population of nursing homes has become older and sicker increasing the costs and challenges of providing care to residents. When we were faced with a large capital cost to install fire-prevention sprinklers in the old building housing the nursing home, we determined this was not economically feasible and closed the facility.

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The Boston Globe reports that the number of nursing homes in the state has dropped from 422 in 2014 to 367 in 2022 with the number of nursing home residents declining over the same period from 41,145 to 32,018 (the latter figure actually a small increase after a severe drop during the height of the pandemic). In a recent editorial it correctly calls for increasing compensation to home health workers. Higher wages for nursing home workers are also needed. As we’ve reported before, the need for personal care attendants and home health aides in Massachusetts is expected to grow 20% over the next 10 years.

The Statistics and You

Getting back to individual predictions, the Urban Institute study provides some useful guidance. If at age 65 you are in excellent health, you have a 44.5% chance of never needing assistance and a 19.5% chance of requiring more than five years of care. If, on the other hand, you are in fair to poor health, your likelihood of escaping any need for care drops to just under 40% and your likely need for more than five years of assistance increases to just over 25%.

Gender, marital status and income also influence the prospects for long-term disability. Married people at age 65 are less likely to require long-term care than single people — 20.6% as opposed to 24.7% needing more than five years of assistance. Women are much more likely to require long-term care than men — 26.3% as compared to 17.5%. And more people with lower-incomes need such care than those with higher incomes — 28.6% of those in the lowest quintile as compared with 19.6% of those in the highest quintile (though the numbers are more uniform for all but the lowest quintile).

To summarize, if at age 65 you are an unmarried (including widowed), low-income woman in poor health, you are much more likely to need long-term care than if you are a married, high-income man in good health. Unfortunately, this pattern is probably the inverse of what we might want. The high-income man is much more likely than the low-income woman to have the resources to pay for his care. Being in good health, he’s also more likely to be able to continue working if necessary to save up sufficient reserves to pay for care when it’s needed.

The upshot if you’re a Baby Boomer if you are able to do so, factor in the potential need for long-term care into your financial and life plans. Whether or not that’s an option, let your elected officials know that we need a public policy solution as well.

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