As America's population ages, and long-term care costs continue to rise amid sticky inflation, some Americans are paying a sharp financial price to provide and pay for long-term care for themselves and their loved ones, according to the annual Nationwide Retirement Institute® Long-Term Care survey, released today. 

This survey of 1,334 U.S. adults aged 28 or older with household incomes $75,000 or higher found that many are in the difficult position of balancing caregiving and their long-term financial wellbeing, often leading them to make significant financial sacrifices.

Among the key findings:

• When considering how they will afford to provide care for loved ones, over half (56%) said they are willing to take a loan from their retirement account to be a caregiver for someone in their family, straining their long-term finances

• Nearly half (42%) believe being a caregiver will likely use up the money they had planned for their children

• Caregivers have substantial out-of-pocket non-reimbursed expenses associated with caregiving, such as co-pays, prescription drugs, gas money, transportation, and more. On average, these individuals spend $338 per month on caregiving expenses

• Nearly half (43%) are afraid that caregiving expenses will keep them from ever retiring

• Fifteen percent of Americans had to transition to part-time work to be a caregiver or take a lower paying job that is more flexible in order to be a caregiver

While it is clear that the caregiving role can place a significant financial strain on individuals and families, only 17% of adults say they have discussed long-term care planning with their financial professional. Of those who have a financial professional but have not talked with them about long-term care costs, 30% report that their financial professional has not brought it up as a planning topic.

"Long-term care planning is complicated and emotional, and has a huge impact on financial wellbeing," said Holly Snyder, president of Nationwide's Life Insurance business. "Our data shows that Americans would benefit from taking a more proactive approach to financial planning to ensure they are equipped to meet the needs of their loved ones and themselves as they age. The most important step financial professionals can take is to proactively communicate with their clients, ensure they understand the costs, and develop a long-term care plan that accounts for their own long-term care needs as well as those of their loved ones."

Many Americans have misconceptions about the cost of long-term care insurance

Unfortunately, many Americans are underutilizing the safeguards in place to help manage long-term care costs, such as long-term care insurance. In fact, just one in five said that they have purchased long-term care insurance. Of those who have not purchased the insurance, nearly half (49%) cited cost as a reason for not prioritizing it.

All too often, people overestimate the cost of long-term care insurance. When presented with a description of a sample long-term care insurance policy, 20% guessed it was $500+ per month, nearly four times the actual cost of $130 per month. After they were told that the policy cost $130 per month, 40% said they were willing to consider purchasing a similar one for themselves.

"Because most people assume long-term care insurance isn't affordable, they don't purchase a policy, which can leave them saddled with hefty long-term care costs later in life," Snyder added. "It is great to see that so many said they would consider purchasing a policy after seeing an estimate. This misperception is a costly mistake that can easily be avoided with the right insurance partner and a proactive financial professional."

Future long-term care is looking bright with the help of AI

Although long-term care costs and caregiver expenses are a financial burden for many of these Americans, advancements in AI, AI helper tools, or robots could change the way people receive their long-term care and reduce the financial strains placed on caregiving and aging.

While almost one third (32%) do not believe they will be able to afford to receive long-term care in their home, over half (54%) expect that AI and robotics will be affordable for people like them to help with aspects of daily living later in life.

Americans anticipate AI to assist in more ways than only easing financial strain. Over one third (37%) believe AI will provide their in-home long-term care, relieving stress from family and loved ones. Additionally, more than half of Americans (53%) expect AI will make their job easier – either by alerting them if the person they are caring for suffers a medical emergency (47%) or helping them manage their medication and appointments (36%).

In fact, one in three Americans (33%) expect AI to extend their life an average of 6 years. And a third of caregivers (36%) expect AI to extend the life of the person they provide care an average of 7 years.

To encourage discussions around long-term care costs in retirement, Nationwide's Health Care/LTC Cost Assessment tool uses proprietary health risk analysis and updated actuarial cost data to provide a meaningful, personalized cost estimate to help financial professionals and clients plan for future medical and long-term care expenses.

To learn more about the 2024 Nationwide Retirement Institute Long-term Care survey, visit www.nationwide.com/ltcinsights. Financial professionals can learn more at www.nationwidefinancial.com/ltcinsights.

Methodology

The research was conducted online in the United States by The Harris Poll on behalf of Nationwide among 1,334 adults ages 28+ with household income of $75K+. The survey was conducted March 12 – April 2, 2024.

Data are weighted where necessary by age by gender, race/ethnicity, region, education, marital status, household size, household income, and political party affiliation to bring them in line with their actual proportions in the population. Respondents for this survey were selected from among those who have agreed to participate in our surveys.

The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 3.8 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest.

All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.