Generation Xers say they feel unprepared for long-term care and do not feel they are taking the necessary steps to prepare for their futures, according to a survey released today by America's Health Insurance Plans.
The survey, conducted by StrategyOne on behalf of AHIP, found that 52 percent of respondents born between 1960 and 1980 feel somewhat or entirely unprepared and place more immediate financial concerns ahead of affording long-term care, with 44 percent of respondents ranking the need to save for retirement as their first or second priority.
"As the first group of Generation X approaches age 50, they begin to think about financial planning for retirement," said AHIP President and CEO Karen Ignagni. "Preserving their financial independence is crucial to members of this generation, and few things can wipe out a lifetime of savings as quickly as the need for long-term care."
Generation X seems to understand the value of planning for their financial futures, according to AHIP, but many underestimate the cost of long-term care. Half of respondents estimate the average annual nursing home stay is between $20,000 and $60,000 per year, when the national average cost of one year in a nursing home is over $75,000. This misconception leaves them unaware that long-term care planning is an essential part of their financial planning.
Nearly 60 percent mistakenly believe their current policies provide coverage or they do not know if they are already covered. Long-term care insurance provides coverage and also preserves the independence so highly valued by Generation X, as it allows the beneficiary to choose the setting in which care is received.
The current economic downturn has only worsened their financial situations, with 57 percent of respondents stating they have been negatively affected. Of those, 51 percent say they have been forced to stop planning for their long-term care, and another 33 percent are spending less time planning for long-term care.
In order to finance their long-term care, 36 percent say they would rely on government assistance, such as Medicaid, to provide for long-term care. While Medicaid often provides coverage for long-term care services to qualifying low-income Americans, many people have to spend down their savings to the point of poverty in order to quality for this assistance. Others say they would use their retirement savings (26 percent), sell their assets (24 percent), rely on other insurance products (22 percent), or rely on family and friends (13 percent).
The survey was conducted by StrategyOne from December 16-29, 2008 and is based on telephone interviews with a national sample of 1,004 Generation Xers, born between 1960 and 1980.