An unprecedented surge of retirement-age Americans is quickly approaching, as the number of people turning 65 every day will increase to more than 12,000 in 2024, according to the Alliance for Lifetime Income. 

Despite this anticipated growth in the country’s retirement-age population, very few are insured for the costs of long-term living, and most don’t understand the basics of long-term care insurance, according to new data from the Nationwide Retirement Institute. 

Nationwide, in collaboration with LIMRA, surveyed 1,439 adults aged 24 or over between April 25 and May 12, 2023, to understand consumers’ attitudes and perceptions of long-term care protection. 

Unlike traditional health insurance, this type of insurance is designed to cover long-term services and support, including personal and custodial care in a variety of settings, such as one’s home, a community organization or other facility, according to the Department of Health.  

Someone turning 65 today has almost a 70% chance of needing long-term care in their remaining years, according to the Administration for Community Living. Women, on average, need care longer (3.7 years) than men (2.2 years). 

Lack of Education 

While 18% of adults surveyed said they currently own long-term care insurance, including 27% of Millennials, industry data from LIMRA shows only 3.1% of Americans have purchased long-term care insurance, and most of those are older consumers. 

This discrepancy is possibly due to a lack of education around long-term care insurance. For instance, more than half of respondents (51%) in the Nationwide survey confused long-term care insurance with long-term disability insurance, and almost a third (29%) confused it with health insurance.  

When asked about this confusion, survey respondents reported being misled, misunderstanding their policy or mistakenly assuming it was covered by other insurance products, according to Nationwide.  

“Many Americans—mostly Millennials—mistakenly believe they have long-term care coverage, usually in their company’s benefit package, when in fact they do not,” Holly Snyder, president of Nationwide’s life insurance, said in a press release. “Though this misconception is understandable, it puts them in danger of discovering that they don’t have coverage much later on when they really need it.” 

The most common reason for people not purchasing long-term care insurance was it being “too expensive.” Baby Boomers and women were significantly more likely to indicate expense as the reason they don’t currently own long-term care insurance, Nationwide found. More than a quarter of respondents also worry that paying for long-term care will diminish their children’s inheritance.  

Based on a 2022 AALTCI Annual Price Index survey, the average annual long-term care premium is $2,200 for men and $3,700 for women, with a median cost of $2,500. Additionally, as people age, the cost of coverage increases. The average cost estimate for long-term care insurance for a Millennial is $1,500, compared to $2,000 for Gen X and $3,000 for Boomers.  

For those who said they have long-term care insurance, 57% said they purchased the policy to avoid being a financial burden to friends and family, and many said they would feel less like a burden if they could pay family members to take care of them.  

When asked what benefits or features would make respondents reconsider long-term care insurance, many placed a high value on the ability to buy a policy that has guaranteed premiums that will never increase, as well as guaranteed benefits that will stay the same as long as they continue to pay the premiums.  

Some Millennial respondents (26%) said they would like the ability to transfer money from their 401(k) plan or an annuity to purchase coverage.  

Information Sources Differ Among Generations 

Baby Boomers are significantly more likely to seek advice from financial professionals when it comes to selecting a financial product like long-term care insurance, while Millennials tend to lean toward media influencers, blogs and forums. In fact, Nationwide found that more than half of Millennials that have considered buying long-term care insurance in the last 24 months received information about policies via social media.  

Overall, respondents were more likely to speak with their spouse and friends about long-term care costs than they were to speak to a financial professional. Only 7% said they would speak with their employer about these costs.   

More than one in four adults (27%) across all age groups have not discussed long-term care costs with anyone. That said, 30% would discuss long-term care costs with a financial professional in the future, according to the survey.  

Nationwide urges financial professionals, and plan sponsors, to encourage discussions around long-term care costs in retirement even if an individual believes they are covered.