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Yahoo
30-05-2025
- Business
- Yahoo
'It's A Huge Problem,' Experts Urge Gen Xers And Millennials To Plan For Long-Term Care
The U.S. Department of Health and Human Services says that around 57% of Americans will need long-term care at some point Most households have grossly underestimated the potential cost of that long-term care, and aren't aware that they will have to pay out of pocket for much of it The total cost of long-term care can be significant, extending beyond $100,000 Long-term care costs can be significant, extending well beyond $100,000, but experts tell CNBC that most households aren't prepared to handle the expense. "People don't plan for it in advance," certified financial planner Carolyn McClanahan told the network. "It's a huge problem." A 2022 report by the U.S. Department of Health and Human Services and the Urban Institute says that 57% of Americans turning 65 will develop a disability that is serious enough to require long-term care. The average cost of this long-term care is $122,400, the report said. Don't Miss: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — On average, families will pay for 37% of the total cost of this long-term care out of pocket, with the rest covered by insurance and public programs. "It's pretty clear [workers] don't have that amount of savings in retirement, that amount of savings in their checking or savings accounts, and the majority don't have long-term care insurance," Employee Benefit Research Institute strategist Bridget Bearden told CNBC. "So where is the money going to come from?" Costs for long-term care vary widely, depending on where you live. However, data collected by Genworth and CareScout put the national average for a home health aide at $6,483 per month and $5,900 for a spot in an assisted living facility. Trending: Maximize saving for your retirement and cut down on taxes: . Still, many people grossly underestimate how much long-term care could potentially cost them. A recent Employee Benefit Research Institute report found that "a significant proportion of future caregivers had not estimated LTC costs," and those who had expected them to remain under $50,000. Additionally, the report found that 43% of future caregivers expected Medicare to cover the costs of long-term care, and 29% expected Medicaid to foot the bill. Experts told CNBC that estimates like these are not realistic. Health insurance generally doesn't cover long-term care services, and Medicare only covers select aspects, they say. McClanahan told CNBC that Medicare typically covers skilled care for up to 100 days, which covers things like rehab or medicine administration, but will not cover the custodial care required for daily activities like bathing and for Medicaid, the largest payer of long-term care costs, not everyone will qualify. Most people who are eligible for these benefits come from low-income households. "You basically have to be destitute" for Medicaid to kick in, she said. "The challenge with long-term care costs is they're unpredictable," McClanahan told CNBC. "You don't always know when you'll get sick and need care." She advises Gen Xers and Millennials to begin planning for potential long-term care needs now. "When you think through it in advance, it keeps the decisions way more level-headed," she said. Read Next:'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'It's A Huge Problem,' Experts Urge Gen Xers And Millennials To Plan For Long-Term Care originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
23-05-2025
- Business
- Yahoo
60% of Workers Today Worry About Reduced Social Security Benefits. Here's How Likely They Are
Losing out on Social Security is a worrisome thing if you're counting on those benefits for retirement. While Social Security cuts aren't set in stone, they're something everyone should prepare for. Having outside income could ease the blow of benefit cuts, and you have options in that regard. The $23,760 Social Security bonus most retirees completely overlook › An ideal retirement, financially speaking, is generally one where you have multiple income streams at your disposal. Yet many Americans reach retirement age without money saved and without an income source to fall back on other than Social Security. The average retired worker on Social Security collects about $2,000 a month today. That should tell you that living on Social Security alone is far from ideal. Making matters worse is that there's a possibility Social Security will have to cut benefits down the line. It's something that understandably has many workers today worried. In the coming years, Social Security expects to owe more money in benefits than it collects in revenue, thanks to a shrinking workforce. Social Security can use the money in its trust funds to keep up with benefits for a good number of years. But once those trust funds are emptied, benefit cuts will be on the table. It's not surprising, then, that 60% of workers today worry about some type of change that might reduce their Social Security income in retirement, according to a recent survey by the Employee Benefit Research Institute. The problem is, it's hard to know how worried workers should really be. On the one hand, it's fair to assume that lawmakers will do everything in their power to avoid Social Security cuts, as that would likely spur a massive poverty crisis among older Americans. On the other hand, there may be limits to what lawmakers can do to prevent benefits from being broadly reduced. So it's best to assume that Social Security will be cutting benefits, even if that doesn't end up being the case. Your best line of defense against Social Security cuts is having other income to fall back on in retirement. In that regard, you have options. First, saving consistently could help you build up a nice nest egg, especially if you give your money ample time to grow. If you contribute $500 a month to a 401(k) or IRA over a 30-year period and earn an 8% return during that time, which is a bit below the stock market's average, you could end up with about $680,000. There's also the option to work part-time in retirement, whether at a traditional job or a freelance one. In addition to providing you with money, a job might serve the very important purpose of giving you something to do with your time. You may also be able to generate income creatively in retirement, such as by renting out a room in your home. The key is to make sure you have access to money outside of Social Security in case benefit cuts happen. Another way to protect yourself? Plan to delay Social Security. For each year you wait past full retirement age, your benefits grow 8%, up until you turn 70. If you delay Social Security and benefits are cut, you'll be starting off with a larger monthly paycheck to begin with. That could help soften the effect of any reduction that arrives. If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known could help ensure a boost in your retirement income. One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these Motley Fool has a disclosure policy. 60% of Workers Today Worry About Reduced Social Security Benefits. Here's How Likely They Are was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
USA Today
22-05-2025
- Business
- USA Today
Are Social Security taxes going to rise? 39% of workers worry about it
Are Social Security taxes going to rise? 39% of workers worry about it Show Caption Hide Caption Retirement worries grow as seniors face Trump tariffs, stock selloff Retired educator and part-time yoga instructor Vicki Knight says she feels stretched thin. "I'm semi-retired." The Marietta, Georgia, resident says her Social Security income is not enough to live on and that a recent stock market selloff fueled by tariff uncertainty has complicated her plans. At this point, you may have heard the rumor that Social Security is on the verge of going broke. But thankfully, that's completely false. Social Security can't go broke because it gets the bulk of its revenue from payroll taxes. So, as long as people continue to hold down jobs and pay into the program, it can continue to get funded. That said, Social Security is facing a serious revenue shortfall as baby boomers stage a mass exodus from the U.S. labor force in the coming years, and an inadequate number of replacement workers come in. Social Security can use the money in its trust funds to keep up with benefit payments as needed. But once those trust funds are emptied, Social Security may have to cut benefits. And it's not like that scenario is decades away. We could be roughly 10 years from seeing Social Security slash benefits broadly if lawmakers don't manage to intervene. Thankfully, lawmakers do have solutions they can employ with the goal of preventing a broad reduction in Social Security benefits. But one popular solution could come with a world of backlash. Age for Social Security benefits: What's retirement age for full Social Security benefits? It's not the same for everyone. Could lawmakers increase Social Security taxes? There are a number of different steps lawmakers could take to boost revenue for Social Security. One is to move full retirement age up by a year or two so that workers have to wait longer to collect their monthly benefits without a reduction. Another option is to raise Social Security taxes. But that's not something workers want. And not surprisingly, they're very concerned about lawmakers going down that road. In a recent survey by the Employee Benefit Research Institute, 39% of workers said they're worried about increased taxes for Social Security. That's understandable, given that many Americans feel tax-burdened to begin with. What increases in Social Security taxes could look like Lawmakers have a couple of choices for raising Social Security taxes. First, they could increase the Social Security tax rate. Or, they could raise the Social Security wage cap. Currently, workers pay a 12.4% tax rate for Social Security purposes. Of that, half comes out of their paychecks, and their employers pay the rest. People who are self-employed, however, must cover the entire 12.4% Social Security tax. It's possible for lawmakers to opt to raise that tax rate to a number that's higher than 12.4%. If so, it would pretty much burden every member of the workforce with heftier taxes. Meanwhile, Social Security's wage cap currently sits at $176,100, which means workers with higher incomes don't pay into the program beyond that earnings threshold. If lawmakers were to raise the wage cap, higher earners would pay Social Security taxes on more of their income. And if lawmakers were to eliminate the wage cap completely, higher earners would pay into Social Security on every dollar they earn. It might seem like raising or getting rid of the wage cap is the better solution, since it would only impact higher earners. But this option introduces a conundrum that lawmakers might struggle to manage. Social Security pays a maximum monthly benefit based on the wage cap. It wouldn't be equitable to raise the wage cap without also increasing the program's maximum benefit. But in that case, it's unclear how much revenue the program would net. Either way, lawmakers do need to do something to prevent Social Security cuts. Whether that means raising Social Security taxes is still up in the air. But it's a change that workers may unfortunately have to brace for. The Motley Fool has a disclosure policy. The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY. The $ 22,924 Social Security bonus most retirees completely overlook Offer from the Motley Fool: If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets"could help ensure a boost in your retirement income. One easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. JoinStock Advisorto learn more about these strategies. View the "Social Security secrets" »
Business Mayor
17-05-2025
- Health
- Business Mayor
Long-term care costs can be a 'huge problem,' experts say. Here's why
Kate_sept2004 | E+ | Getty Images Long-term care can be costly, extending well beyond $100,000. Yet, financial advisors say many households aren't prepared to manage the expense. 'People don't plan for it in advance,' said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida. 'It's a huge problem.' Over half, 57%, of Americans who turn 65 today will develop a disability serious enough to require long-term care, according to a 2022 report published by the U.S. Department of Health and Human Services and the Urban Institute. Such disabilities might include cognitive or nervous system disorders like dementia, Alzheimer's or Parkinson's disease, or complications from a stroke, for example. The average future cost of long-term care for someone turning 65 today is about $122,400, the HHS-Urban report said. But some people need care for many years, pushing lifetime costs well into the hundreds of thousands of dollars — a sum 'out of reach for many Americans,' report authors Richard Johnson and Judith Dey wrote. The number of people who need care is expected to swell as the U.S. population ages amid increasing longevity. 'It's pretty clear [workers] don't have that amount of savings in retirement, that amount of savings in their checking or savings accounts, and the majority don't have long-term care insurance,' said Bridget Bearden, a research and development strategist at the Employee Benefit Research Institute. 'So where is the money going to come from?' she added. Long-term care costs can exceed $100,000 While most people who need long-term care 'spend relatively little,' 15% will spend at least $100,000 out of pocket for future care, according to the HHS-Urban report. Expense can differ greatly from state to state, and depending on the type of service. Nationally, it costs about $6,300 a month for a home health aide and $9,700 for a private room in a nursing home for the typical person, according to 2023 data from Genworth, an insurer. Here's a look at other stories impacting the financial advisor business. It seems many households are unaware of the potential costs, either for themselves or their loved ones. For example, 73% of workers say there's at least one adult for whom they may need to provide long-term care in the future, according to a new poll by the Employee Benefit Research Institute. However, just 29% of these future caregivers — who may wind up footing at least part of the future bill —had estimated the future cost of care, EBRI found. Of those who did, 37% thought the price tag would fall below $25,000 a year, the group said. The EBRI survey polled 2,445 employees from ages 20 to 74 years old in late 2024. Many types of insurance often don't cover costs Maskot | Maskot | Getty Images There's a good chance much of the funding for long-term care will come out-of-pocket, experts said. Health insurance generally doesn't cover long-term care services, and Medicare doesn't cover most expenses, experts said. For example, Medicare may partially cover 'skilled' care for the first 100 days, said McClanahan, the founder of Life Planning Partners and a member of CNBC's Financial Advisor Council. This may be when a patient requires a nurse to help with rehab or administer medicine, for example, she said. Where is the money going to come from? Bridget Bearden research and development strategist at the Employee Benefit Research Institute But Medicare doesn't cover 'custodial' care, when someone needs help with daily activities like bathing, dressing, using the bathroom and eating, McClanahan said. These basic everyday tasks constitute the majority of long-term care needs, according to the HHS-Urban report. Medicaid is the largest payer of long-term care costs today, Bearden said. Not everyone qualifies, though: Many people who get Medicaid benefits are from lower-income households, EBRI's Bearden said. To receive benefits for long-term care, households may first have to exhaust a big chunk of their financial assets. 'You basically have to be destitute,' McClanahan said. Republicans in Washington are weighing cuts to Medicaid as part of a large tax-cut package. If successful, it'd likely be harder for Americans to get Medicaid benefits for long-term care, experts said. Long-term care insurance considerations The Good Brigade | Digitalvision | Getty Images Few households have insurance policies that specifically hedge against long-term care risk: About 7.5 million Americans had some form of long-term care insurance coverage in 2020, according to the Congressional Research Service. By comparison, more than 4 million baby boomers are expected to retire per year from 2024 to 2027. Washington state has a public long-term care insurance program for residents, and other states like California, Massachusetts, Minnesota, New York and Pennsylvania are exploring their own. Long-term care insurance policies make most sense for people who have a high risk of needing care for a lengthy duration, McClanahan said. That may include those who have a high risk of dementia or have longevity in their family history, she said. McClanahan recommends opting for a hybrid insurance policy that combines life insurance and a long-term care benefit; traditional stand-alone policies only meant for long-term care are generally expensive, she said. Be wary of how the policy pays benefits, too, she said. For example, 'reimbursement' policies require the insured to choose from a list of preferred providers and submit receipts for reimbursement, McClanahan said. For some, especially seniors, that may be difficult without assistance, she said. With 'indemnity' policies, which McClanahan recommends, insurers generally write benefit checks as soon as the insured qualifies for assistance, and they can spend the money how they see fit. However, the benefit amount is often lower than reimbursement policies, she said. How to be proactive about long-term care planning 'The challenge with long-term care costs is they're unpredictable,' McClanahan said. 'You don't always know when you'll get sick and need care.' The biggest mistake McClanahan sees people make relative to long-term care: They don't think about long-term care needs and logistics, or discuss them with family members, long before needing care. For example, that may entail considering the following questions, McClanahan said: Do I have family members that will help provide care? Would they offer financial assistance? Do I want to self-insure? What are the financial logistics? For example, who will help pay your bills and make insurance claims? Do I have good advance healthcare directives in place? For example, as I get sicker will I let family continue to keep me alive (which adds to long-term care expenses), or will I move to comfort care and hospice? Do I want to age in place? (This is often a cheaper option if you don't need 24-hour care, McClanahan said.) If I want to age in place, is my home set up for that? (For example, are there many stairs? Is there a tiny bathroom in which it's tough to maneuver a walker?) Can I make my home aging-friendly, if it's not already? Would I be willing to move to a new home or perhaps another state with a lower cost of long-term care? Do I live in a rural area where it may be harder to access long-term care? Being proactive can help families save money in the long term, since reactive decisions are often 'way more expensive,' McClanahan said. 'When you think through it in advance it keeps the decisions way more level-headed,' she said.
CNBC
17-05-2025
- Health
- CNBC
Long-term care costs can be a 'huge problem,' experts say. Here's why
Long-term care can be costly, extending well beyond $100,000. Yet, financial advisors say many households aren't prepared to manage the expense. "People don't plan for it in advance," said Carolyn McClanahan, a physician and certified financial planner based in Jacksonville, Florida. "It's a huge problem." Over half, 57%, of Americans who turn 65 today will develop a disability serious enough to require long-term care, according to a 2022 report published by the U.S. Department of Health and Human Services and the Urban Institute. Such disabilities might include cognitive or nervous system disorders like dementia, Alzheimer's or Parkinson's disease, or complications from a stroke, for example. The average future cost of long-term care for someone turning 65 today is about $122,400, the HHS-Urban report said. But some people need care for many years, pushing lifetime costs well into the hundreds of thousands of dollars — a sum "out of reach for many Americans," report authors Richard Johnson and Judith Dey wrote. The number of people who need care is expected to swell as the U.S. population ages amid increasing longevity. "It's pretty clear [workers] don't have that amount of savings in retirement, that amount of savings in their checking or savings accounts, and the majority don't have long-term care insurance," said Bridget Bearden, a research and development strategist at the Employee Benefit Research Institute. "So where is the money going to come from?" she added. While most people who need long-term care "spend relatively little," 15% will spend at least $100,000 out of pocket for future care, according to the HHS-Urban report. Expense can differ greatly from state to state, and depending on the type of service. Nationally, it costs about $6,300 a month for a home health aide and $9,700 for a private room in a nursing home for the typical person, according to 2023 data from Genworth, an insurer. Here's a look at other stories impacting the financial advisor business. It seems many households are unaware of the potential costs, either for themselves or their loved ones. For example, 73% of workers say there's at least one adult for whom they may need to provide long-term care in the future, according to a new poll by the Employee Benefit Research Institute. However, just 29% of these future caregivers — who may wind up footing at least part of the future bill —had estimated the future cost of care, EBRI found. Of those who did, 37% thought the price tag would fall below $25,000 a year, the group said. The EBRI survey polled 2,445 employees from ages 20 to 74 years old in late 2024. There's a good chance much of the funding for long-term care will come out-of-pocket, experts said. Health insurance generally doesn't cover long-term care services, and Medicare doesn't cover most expenses, experts said. For example, Medicare may partially cover "skilled" care for the first 100 days, said McClanahan, the founder of Life Planning Partners and a member of CNBC's Financial Advisor Council. This may be when a patient requires a nurse to help with rehab or administer medicine, for example, she said. But Medicare doesn't cover "custodial" care, when someone needs help with daily activities like bathing, dressing, using the bathroom and eating, McClanahan said. These basic everyday tasks constitute the majority of long-term care needs, according to the HHS-Urban report. Medicaid is the largest payer of long-term care costs today, Bearden said. Not everyone qualifies, though: Many people who get Medicaid benefits are from lower-income households, EBRI's Bearden said. To receive benefits for long-term care, households may first have to exhaust a big chunk of their financial assets. "You basically have to be destitute," McClanahan said. Republicans in Washington are weighing cuts to Medicaid as part of a large tax-cut package. If successful, it'd likely be harder for Americans to get Medicaid benefits for long-term care, experts said. Few households have insurance policies that specifically hedge against long-term care risk: About 7.5 million Americans had some form of long-term care insurance coverage in 2020, according to the Congressional Research Service. By comparison, more than 4 million baby boomers are expected to retire per year from 2024 to 2027. Washington state has a public long-term care insurance program for residents, and other states like California, Massachusetts, Minnesota, New York and Pennsylvania are exploring their own. Long-term care insurance policies make most sense for people who have a high risk of needing care for a lengthy duration, McClanahan said. That may include those who have a high risk of dementia or have longevity in their family history, she said. McClanahan recommends opting for a hybrid insurance policy that combines life insurance and a long-term care benefit; traditional stand-alone policies only meant for long-term care are generally expensive, she said. Be wary of how the policy pays benefits, too, she said. For example, "reimbursement" policies require the insured to choose from a list of preferred providers and submit receipts for reimbursement, McClanahan said. For some, especially seniors, that may be difficult without assistance, she said. With "indemnity" policies, which McClanahan recommends, insurers generally write benefit checks as soon as the insured qualifies for assistance, and they can spend the money how they see fit. However, the benefit amount is often lower than reimbursement policies, she said. "The challenge with long-term care costs is they're unpredictable," McClanahan said. "You don't always know when you'll get sick and need care." The biggest mistake McClanahan sees people make relative to long-term care: They don't think about long-term care needs and logistics, or discuss them with family members, long before needing care. For example, that may entail considering the following questions, McClanahan said: Being proactive can help families save money in the long term, since reactive decisions are often "way more expensive," McClanahan said. "When you think through it in advance it keeps the decisions way more level-headed," she said.
