Is Long-Term Care A Predictable Need, Or An Unexpected One?

If you are 65 or older, should you expect to need a significant level of long-term care? And can you predict that need?

The short answers are yes. And no. You absolutely should expect to need that care. And, unless you already are very poor, you should plan to pay for at least some of it. But it is impossible for most of us to predict whether we as individuals will need support in old age, how long we’ll need it, where we will get it, and what it will cost.

That would make long-term care both expected and unpredictable. Which does not make it easy for people trying to plan for old age.

A few statistics: at least six in ten older adults will need moderate or significant levels of care before they die and only about 20 percent will need no care at all, according to a study by the Retirement Research Center at Boston College. Other studies vary somewhat but all are in the same ballpark. And my Urban Institute colleagues Richard Johnson and Melissa Favreault estimate that roughly half of all older adults will use paid care at some point over their lifetime.

Here is where it gets tricky: Rich and Melissa estimate that all older adults will need significant care for an average of about 3 years. But if you are one of those who needs care, you’ll need it for an average of about 5 years.

Misleading averages

And the averages can be misleading. For all older adults, roughly 4 in 10 never will need a high level of long-term care and another 10 percent will need it for less than a year. But about one in seven will need care for 2-5 years and more than one of every five older adults will need assistance for five years or more.

It is the same story with costs. On average, long-term care after age 65 will cost about $140,000, according to the Urban research. For about half of older adults, these costs will be zero. But for nearly 20 percent, costs will exceed $250,000—far beyond the resources of most older adults.

And keep in mind, long-term care is far from the only expense you’ll have in old age. If you still are living at home, you’ll have to pay for utilities, food, transportation, repairs, and perhaps rent or a mortgage. And you’ll have significant medical costs: The financial services firm Fidelity estimates a couple age 65 will need to set aside about $300,000 to pay out-of-pocket medical bills even if they have Medicare.

Narrowing the spectrum of risk

Is there any way to narrow this wide spectrum of risk? Sort of. The Boston College study found that on average, married, better educated, and higher-income people are less likely to need high levels of long-term care than people who are unmarried, less educated, and lower-income. Black and Hispanic people are more likely to need high levels of care than White people. On average.

The Urban study found far fewer differences when it looked at race. But both studies found that higher income people were less likely to need significant care than low income people.

The BC study also found that self-reported health between age 65-70 can be a strong predictor of future long-term care needs. Thirty percent of individuals who report their health as “excellent” or “very good” will have no need for support but only five percent of those who say their health is “fair” or “poor” will avoid long-term care.

Managing the uncertainty

How should younger people consumers respond to all this uncertainty?

That’s even harder to say. Almost any financial expert would tell you the way to deal with a high- but not certain risk is to buy insurance. But few Americans are interested in private stand-alone long-term care insurance that many feel is too expensive.

Long-term care insurance would be cheaper if they bought when they were younger, but other priorities such as paying off college loans, getting a mortgage, paying for health insurance, raising children, preparing for their college, and planning for a healthy retirement all intervene.

We could save for it. But most don’t. We could arrange to tap home equity. But that is costly and most won’t. Or we could just try to beat the odds.

That it will prove to be a bad bet for many. Long-term care needs in old age are much closer to inevitable than unlikely. Knowing whether any specific individual will need this care and for how long is little more than a coin-flip. But if you are typical, you are going to need some help in old age.