The National Council on Aging (NCOA) and UMass Boston find that 80% of older Americans, or 47 million people, can’t sustain a financial shock such as needing to pay for long-term care services and supports (LTSS) or the loss of income due to divorce or widowhood.
“It is unacceptable that nearly all older Americans are one crisis away from plunging into poverty after working their entire lives and often saving a nest egg that is then wiped out by the cost of care,” Susan Silberman, PhD, NCOA Senior Director, Research & Evaluation, said in a statement.
Among the key findings:
- 20% of older households (approximately 11 million) have no assets to draw upon to withstand a financial shock.
- 21-80% have modest assets but would still be unable to afford more than two years of nursing home care or four years in an assisted living community.
- The total net value of household assets is $39,500 for those in the 21-40% quintile and $150,000 for those in the 41-60% quintile.
Previous research found that over half of adults aged 65 and older will need LTSS for less than two years, and about one in seven will require care for more than five years. In 2021, the median yearly cost of a private room in a nursing home was $108,405, and that of a home health care aide was $61,776.
Since Medicare does not cover LTSS costs, older adults and their families must shoulder this financial risk or spend down their assets into poverty to qualify for social safety net programs such as Medicaid.
NCOA is advocating for public policy solutions to address this crisis, including improving access to home and community-based services under Medicaid; providing additional assistance to family caregivers, such as tax credits and paid medical leave; and promoting retirement savings among lower and middle-income workers.
“When you think about these potential costs, and then look at the entire picture of what is available to people in terms of their own resources and government assistance, you realize that the most vulnerable here are middle income Americans, who have the most to lose,” Marc Cohen, PhD, MPP, Co-Director of the LeadingAge LTSS Center at UMass Boston, concluded.