The potential need for long-term care services and support can be a significant source of anxiety for older workers, retirees and their families. A recent study from the Center for Retirement Research (CRR) at Boston College looked at whether retirees who are 65 and older will have the support they need without exhausting their financial resources and family caregivers.
The report found that only about 26% of retirees can cover severe care needs for at least five years using income, financial assets and informal caregivers. To determine what levels of care a retiree could need, the study looked at total care hours required, the amount of unpaid care that a family or friend could provide, the amount of care that can be purchased, and the combination of family care and financial resources.
On the most challenged end, 27% of retirees cannot afford even the most minimal of care needs, while 22% could cover minimal care. In the middle, 25% seem able to afford moderate care, according to the study. The survey notes that providing care, especially high-intensity care over long periods, can have negative effects on the physical and emotional health of caregivers, and individuals might not be willing to deplete their entire financial reserves, leaving no buffer for emergencies.
Those who enter retirement married have the most resources to handle care needs, while women who are unmarried have the least. Only 31% of those who are married are unable to cover the most minimal levels of care. That number goes up slightly to 33% for unmarried men and jumps to 56% for unmarried women.
Clear patterns also exist when screening survey respondents by education level, which the CRR says can sometimes be a good poxy for income. Those with less than a high school diploma will have the least resources for severe long-term services and support, the study found, as only 13% would have enough to cover moderate to severe costs. For those with a high school diploma, that number increases to 33%. For those with some college education, the figure increases to 47%, while 71% of those with a college degree or higher will have enough resources for moderate to severe care.
Race and ethnicity also impact what percent of retirees have enough resources. Only 5% of Black and Hispanic individuals can cover severe care, behind 25% for white retirees. However, a much higher share of Hispanic individuals—64%—end up in the group that cannot cover even a year of care, compared with 49% of Black retirees and 32% of white retirees.
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