Life expectancies continue to extend, the risks associated with longevity continue to garner attention from retirees, pre-retirees, and their children. The reality is that in addition to the longevity risk associated with outliving their money, Americans now also have to anticipate the loss of independence due to a major illness in their later years.

Some of the statistics we see make it clear that long term care (LTC) and health issues threaten to derail even well-executed retirement savings plans:

  • About 70% of people over age 65 will require some type of long-term care services during their lifetime.
  • Approximately 44% of people reaching age 65 are expected to enter a nursing home at least once in their lifetime.
  • Of those who do enter a nursing home, about 53% will stay for a year or more.
  • People use at-home or facility long-term care for an average of three years.

These are eye-opening numbers, but people – especially those still working and drawing a paycheck – tend to ignore the issues associated with morbidity risk, especially the issues surrounding financial preparations for long term care. People tend to focus on the present and hope for the best in retirement or count on self-insuring, which exacerbates financial problems when steady paychecks stop arriving.

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