Long term care planning is absolutely necessary for Americans today. Because of recent developments and challenges thrown their way, so many individuals are at a high risk of facing long term care costs without the proper resources. From the lack of retirement savings to the escalating amounts of debt, so many Americans are transitioning into the later years severely unprepared. What makes matters more alarming is that 10,000 Baby Boomers are retiring on a daily basis and this is estimated to last until 2020. With that mind, it is easy to see how we have a big catastrophe on our hands.
Yes, having a set plan is essential for all Americans, but it becomes even more vital for the female population. Because of various factors and considerations, women are in a tougher position when it comes to long term care. For the care provider to the care recipient, women are faced with a multitude of problems that cannot and should not be ignored. Long term care planning for women is absolutely crucial for various reasons which we will get into in a bit. In fact, many might even say that when it comes to aging, women often get the short end of the stick. Let us take a look at the various reasons why this is such.
Reason 1: Women Live Longer than Men
Longevity certainly has its benefits: longer years to spend with children and grandchildren or even pursuing a long forgotten passion. It allows individuals more time to make a difference in the world and leave a legacy to proud of. For the most part, having more years is an advantage that many strive to have. However, it is proving to be a substantial obstacle for many of the individuals planning for long term care, especially the women from all generations.
Why? You may ask.
One significant reason for this is that longer years could also mean more sick years. Treatment for chronic illnesses and disabilities that typically occur during old age can cost a great deal of money. On top of that, aging care or long term care services can quickly drain any person’s savings, especially without proper coverage. As women typically outlive their partners, these surviving spouses have to maneuver long term care more carefully because they now have to face these challenges alone and often with limited resources. Moreover, a couple’s nest egg often goes to the husband’s care, as he often gets ill first. When it is the wife’s turn to need long term care, she is often left with assets and resources that are substantially depleted.
Reason 2: Women Are the Go-To Caregivers of the Family
Women are the typical family caregivers, especially for those in the older generations. When a family member becomes ill, the first person expected to provide the care is a woman in the family. She may be the daughter, wife, or the mother. In fact, studies show that 60% caregivers in the United States are women. Typically, she is a woman aged 49.2 years old, caring for an older, female relative who is 69 years old. And when a person takes on the task of caregiving to a family member, there are bound to be some consequences. This becomes especially true for those caregiving to individuals with higher demands of care because of their condition.
According to research, 1 in 5 caregivers experiences high levels of physical strain and financial problems. 2 in 5 caregivers deal with emotional stress, and 3 in 5 confessed to experiencing at least one impact or change to their employment situation. When this happens, their source of income gets affected.
On top of that, caregivers are also dedication so much of their own money to fund the care needs of their loved ones. In a study conducted by AARP, they discovered that family caregivers spend an average of $6,954 a year on out of pocket costs related to caregiving. This amount is roughly 20% of their income. With limited resources and a burgeoning amount of expenses to cover, women are often left to look to other means for support.
Reason 3: Women Typically Require More Long Term Care Insurance Coverage
Because they live longer and are exposed to various well as the situations and stresses that can impact health, women tend to need more long term care services than men. In fact, more than 70% of nursing home residents are women with the average age of admission is 80 years old. Women also make up two-thirds of the individuals receiving care at home. Because they need long term care services longer, women often have to pay extra when it comes to coverage.
However, it is also important to note that women benefit greatly from long term care insurance policies. In fact, two-thirds of claims paid annually are to women. Moreover, data shows that the largest claim made in 2013 exceeded 1$.8 million, and it was paid to a woman.
Reason 4: Women Typically Have Lower Retirement Income
At present, so many Americans are struggling with the idea of retirement. Many envisioned themselves leaving the workforce at the age of 65, and yet not all of them get to do so in reality. Because of the rapidly increasing cost of living and health care costs, a great number of Americans find themselves carrying around substantial amounts of debt. Because of this, many are reluctant to leave the workforce and their steady sources of income.
According to the study conducted last year by The Insured Retirement Institute, approximately 35 million of the 76 million Baby Boomers have absolutely no retirement savings.
Moreover, it is important to note that compared to the 80% of professionals who anticipate that older adults will need support in managing finances as they grow older, only 19% of older adults actually think so. According to the study, the top concerns of older adults are maintaining physical and mental health, memory loss while the professionals’ top concerns for the generations before them are financial security and access to affordable housing.
Now, considering the number of individuals retiring on a daily basis, anyone can see that this may be a catastrophe brewing. Without proper planning, this creates a cycle of older adults relying on their children for support. This then puts the children in a compromising position as many of them are also supporting their own families.
Reason 5: Women are More Susceptible to Poverty
The unfortunate reality is that despite these challenges, women still earn less than men throughout the lifespan. In fact, as cited in a post by MarketWatch, older women are 80% more likely to be impoverished than men. Some of the various reasons are also listed above. However, one that was only briefly touched upon in our article is that women often spend time of out of the workforce for various reasons. Some dedicate this time to childrearing while others are compelled to leave their jobs for caregiving. When this happens, women may find it hard to regain footing in the labor market. And not only that, women still lag behind men when it comes to ages, despite the growing protests.
Moreover, divorce also plays a big role in a woman’s retirement. Research shows that divorced women are likely to still be working full-time jobs between the ages of 50 and 74. On top of that, the glaring truth is that 22% of divorced, older women over the age of 80 are poor, compared to the 15% of women who are widowed.
Taking the Next Step in Finding Security and Stability
Yes, these issues may seem impossible to handle. However, with the right tools and guidance, these situations may be managed and turned for the better. Women may seem to have it the worst, and in some situations they surely do. This is why proper planning and doing it early is necessary.
One way to do so effectively is to secure long term care insurance before the chaos sets in. Secure a safety net while the situation is still controlled. Do not wait until the very last minute and risk being disqualified for a policy. Yes, these policies can cost a pretty penny, but they are a great deal less than the repercussions of retiring unprepared. Long term care costs are high now, but there is no telling what they will be in the next few decades. This is a crisis waiting to happen, and individuals must be steadfast in preparing themselves and their families against the consequences.
Your financial adviser will be able to assist you with selecting a policy that is best suited for your needs.
About Samantha Stein
Samantha Stein is an online content manager for ALTCP.org. Her works focus on long-term care information that covers long-term care insurance, financial planning, elder care, and retirement. In line with the organization’s goal, Samantha creates content that helps raise awareness on the importance of having a comprehensive long-term care plan, not just for the good of the individual, but for the safety of the entire family.
These articles are historical and based on information that was current at the time of initial print. They contain information that may have or has changed. Information including staff and business names may have changed and we now offer access to securities through LPL Financial. Investment markets have changed and retirement plan rules have changed, in addition to other content that may have changed. Varra Financial Associates has transferred its assets to LPL Financial.
The opinions voiced in this article are for general information only. To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual's goals, time horizon, and tolerance for risk.