Wealth Is No Buffer to Health Care Costs Concerns

January 23, 2006 (PLANSPONSOR.com) - According to a survey release by The PNC Financial Services Group, Inc., 52% of wealthy adults rated "providing for my health and wellness" as their number one financial concern.

According to the release, “affording health care costs for my family” was rated the number one financial concern for 38% of survey respondents.

“What’s unfortunate is that many successful people spend a lifetime working to build their wealth, sometimes working so hard that they jeopardize their own health. Then they spend a majority of their wealth to restore their health,” said Thomas Melcher, managing director and chief investment officer of PNC’s wealth management unit for ultra high net worth clients, in a news release.

Other key findings of the survey included:

  • Future of Medicare: 42% of respondents perceive the potential insolvency of the Medicare system as a threat or huge threat to their family’s wealth. 49% of those between the ages of 45-64 think its demise would be a threat or huge threat to their family’s wealth. Among those with children, 51% agree their children will not benefit from Medicare in the future.
  • Long-term care costs and medical treatment also posed a risk for 36% of those questioned, with 26% of younger Americans, ages 18-44, with children under 18 expressing fear that their children would eventually have to pay for their long-term health care costs. Close to one-quarter (24%) of those with living parents worried about their parents’ lack of long-term care insurance.
  • The top five financial concerns of those surveyed were: “providing for my health and wellness” (52%), “sustaining and increasing my wealth” (47%), “providing for my family’s security” (41%), “having enough money to support my lifestyle” (41%), and “affording health care costs for my family” (38%).

In spite of their financial concerns, the survey found that many wealthy Americans are not taking steps to protect their assets. Sixty-nine percent of respondents said they do not have a comprehensive financial plan.

As far as health care in their financial planning, 39% of survey respondents have no health care proxy, which establishes treatment desires for when the individual is unable to express them, and 69% have not purchased long-term care insurance for themselves or a spouse. Reasons for not purchasing the insurance included feeling it was unwise to spend money on a premium for something they would never use (36%), the insurance is cost-prohibitive (22%), and they never thought about it (21%).

The survey was conducted online by Harris Interactive in October and November 2005 among a nationwide cross section of 1,485 adults (age 18 or over) with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (if employed) or at least $1 million of investable assets (if retired).