LTC Costs Poised to Consume America’s Future


This past Sunday, while dining with a group of people mostly in their 40s and 50s, a woman made a remark that cut through the chatter: “I had to place my dad in assisted living.”

We all sat up and listened for the details of how her father lived with her as he fell into deeper frailty that exceeded her ability to care for him. She was obviously torn up about it, blaming herself and uncertain about her whole family’s future.

It’s the way of the boomer, and no doubt the generations that follow. My dad was a Korean War vet who was vibrant until a stroke rendered him infantile at age 80. He’s still shuffling around an assisted living facility, oblivious that he’ll have to downgrade soon as his care eats his money each month.

Everybody around that table on Sunday had a similar story tinged with regret and anxiety. Ours is a generation picking up the pieces left by longevity. Our parents are living longer, usually in some form of infirmity. We are fortunate to have them still with us on one hand but the time and money they require take from our children. We want to care for the people who cared for us, but we also want to care for our children that way our parents cared for us.

This is a new predicament brought on by ignored risk. People who are now in their 70s, 80s, 90s and beyond didn’t think about long-term care. Why would they have? Their parents died in their 50s or 60s at the latest.

And according to a Northwestern Mutual survey, people are still not thinking about long-term care, even as we see the ravages of LTC costs.

The results are sobering. Fewer than a third of the survey respondents have addressed LTC needs in their retirement plans. More than half, 61 percent had a sense of how they will handle their LTC needs, but half of them said it would be with their own savings. My father’s expenses are about $4,500 a month and he has been in assisted living for four years. How many people have saved enough for that?

A good percentage of Americans haven’t saved enough for even a healthy retirement. A Wells Fargo survey released a few weeks ago showed that 48 percent of middle-class Americans in their 50s do not have enough money to survive in retirement. That’s the middle class. We have to assume lower income folks are not faring better.

The insurance industry has the products that can help with these problems. Long-term-care insurance is an obvious one. But LTCi still has some history to overcome. After those products rolled out, reality knocked the wind out of the actuarial projections. Many of those promises were rolled back, sometimes just as people needed them. Yes, the industry has straightened out its numbers since then, but it’s a scary proposition for consumers to hope that they haven’t wasted money on premiums to be abandoned when they needed help most.

Well, it’s clear we all need help with this now. Sales are not booming for LTCi but they are for annuities and universal life policies with living benefit riders. This is not just a good opportunity for the insurance sector, but a vitally important call to action.





Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Connect with Steve →

  • Barbara Hanson

    Annuities and life insurance policies w/ riders often require a large upfront deposit. LTC policies can be paid monthly, have additional benefits for care coordination and deliver a bigger return than annuities and life insurance LTC benefits. If inflation is not included in a policy, families will be faced with big bills for the shortfall at claim time. LTC insurance can still do the job. Shop carefully.

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