Preparing for Long-Term Care: Statistics and Financial Insights
When planning for your financial future, determining how to address the potential for a long-term care event will be one of the hardest decisions to make. The topic is particularly complex given the uncertainty around whether or not you will even have a long-term event; and if you do, how long will it last, what will it cost, and when will it occur. The decision is complicated even further by the higher cost of insurance or the high cost of long-term care planning strategies.
The purpose of this article is to educate on the prevalence of long-term care and provide context on how to think about long-term care in retirement.
I am pulling these statistics from various sources. I believe these statistics to be from accurate sources and that their analysis was performed with the proper techniques. The statistics may also provide different estimates based on the sources and techniques they used. For those needing a refresher on different statistical terms, see Basic Statistics and Other Finance Terms – Gilbert Wealth
You Are Not a Statistic
When evaluating the risk of needing long-term care (LTC), it is essential to understand that statistics, while informative, represent pools of people rather than individual outcomes. Statistics provide a broad picture, showing the likelihood and trends across populations, but they do not predict specific individual experiences. This distinction is crucial as one assesses their potential future needs and plans accordingly.
Your experience with long-term care depends on a number of factors such as:
- Your personal health situation including mobility and cognitive health
- Your family health history
- Your supportive networks
What is Long-Term Care?
In most of the studies, Long-Term Care need is defined as requiring help with two out of six activities of daily living (ADL’s). These are:
Toileting: The ability to use the bathroom, or manage bowel and bladder functions.
Bathing: The ability to bathe or shower.
Dressing: The ability to put on or take off all clothing and/or medical devices.
Feeding: The ability to feed oneself food after it has been prepared.
Transferring: The ability to transfer from bed to chair and vice versa.
Mobility: The ability to move from one place to another.
These are often called “Basic ADL’s” as they are really what is needed to survive as a human but there are more activities that have been identified that are required for successful independent living called “Instrumental ADL’s”.
How Likely Are You to Need Long-Term Care?
Summary: Around 50% to 70% of those turning age 65 will have some form of long-term care need.
- Joe Tomlinson, another advisor in the financial planning community, performed a review of various studies published on the topic and created this comparison. The bars represent the likelihood, generally measured at age 65, of needing long-term care. The far left represents needing any long-term care with additional sections breaking down various timeframes that long-term care is needed. The range in estimates is due to variations is what definitions are used.
- According to the below comparison, anywhere from 35% to 70% of those age 65 will have projected long-term care needs. That leaves the inverse of that, 65% to 30% that will have no long-term care needs.
When Will You Need Long-Term Care?
Summary: Most of those who do need long-term care will need it after age 80.
- The average (mean) age upon entering a nursing home facility was 83.3 with 50% of those being after age 85 1
- According the the American Association for Long-Term Care Insurance…
- According to the Society of Actuaries, the following graph shows the claims incurred by age.
How Long Will You Need Long-Term Care?
Summary: Most of those who end up using nursing home care will need it for less than 1 year but the average of all long-term care need is 3.1 years.
- The average number of years for paid use of long-term care services is projected to be 9.6 months with 54% of the total population of those turning 65 not using any paid care. 25% of the total population received less than 1 year. 2. Focuses on Paid Care
- The average number of years of long-term care need is 3.1 years 2. Focuses on All Long-Term Care Need (paid or not) for all timeframes.
- See the above chart from Joe Tomlinson for usage.
Focusing on Nursing Home Stays…
- The average (mean) stay in months was between 13 and 14 months. The median stay was around 5-6 months with the 25th Percentile and 75th percentile months being between 1 and 20. That means of those who need long-term care in nursing home facilities, 75% of those will need under 20 months.1
- Marriage status influences length of stay with unmarried staying on average 3-4 months longer than married.
- Higher net worth households have shorter nursing home stays likely due to a greater ability to pay for in home care. 1
- Healthier people have longer nursing home stays than unhealthy people. Individuals with no chronic diseases stayed an average of 17 months versus 10.8 months for those with 4 or more chronic conditions. 1
- The following chart breaks down the lengths of stay be number of decedents for those who used a nursing home facility.
From “Lengths of Stay for Older Adults Residing in Nursing Homes at the End of Life” from 1992 to 2006
How Much Will Long-Term Care Cost?
Summary: Most people will have fewer than $100,000 in expenses. But for those who need care, they need a lot of it!
- Genworth has a nice calculator to determine the costs of care in your area for various services: Cost of Long Term Care by State | Genworth
- 50% of those turning age 65 are not projected to have any long-term care expenditures and 75% will have fewer than $100,000. 14.7% will have $250,000 or more! 1
Other Statistics
- Sex at Birth: Women are more likely to require more long-term care services than men (not sources because this is in practically every study).This is generally due to longer life expectancies and that married women are generally younger than their spouse.
- Where Care is Obtained: 45% of claims on long-term care are for Home Care, 31% is for assisted living, and 17% is for nursing home facilities. 3
- Most Needed Services: Of the Basic ADL’s, bathing (90%) and dressing (88%) were the highest. If the IADL’s, Preparing Food (95%), Housework (95%), Transportation (87%), and Taking Medications (83%) were the highest needs not able to be met. 3