People are living longer but a large percentage are refusing to deal with the consequences of the cost of health care due to that longer life span, says a new study by Northwestern Mutual.
"Healthier lifestyles coupled with advances in health care means people are living longer, yet our research shows they are underestimating their lifespan when thinking about their future financial security," says Steve Sperka, vice president of Northwestern Mutual. "The increase in longevity coupled with economic uncertainty elevates the need to protect their nest egg while planning for long-term needs."
Northwestern's Long-Term Care Awareness Study found that less than half of the respondents (47 percent of the 2,516 adults) feel financially prepared to live beyond age 75 and only 38 percent say they are prepared to live beyond 85.
At the same time, only half are aware of assisted living facilities as solutions for long-term care needs.
Thirty-six percent consider living home with a family member as an option and 35 percent consider a nursing home as a solution. But younger respondents (ages 18 to 24) don't realize what nursing homes cost: 65 percent think a year's tuition at Harvard is more expensive than a year in a nursing home when a nursing home stay is actually nearly double the cost, Sperka says.
At the same time. 47 percent of all respondents think health insurance, Medicare or Medicaid will pay for long-term care.
"People need to have their own solutions in place," Sperka says. "The good news is that planning for long-term care gives people comfort and the freedom to use their money to enjoy their lifestyle while in retirement because their potential needs are covered."