Predicting Risk
Will you need long-term care in the future? What factors influence your chance of using long-term care services?
To develop an effective financial plan to deal with the possibility of long-term care expenses, you first need to understand how likely you are to need long-term care services.
Planning for future costs would be much easier if we had a crystal ball! However, without a crystal ball, we can look at research studies. Research studies can help us understand our risk. These studies aim to predict who will need long-term care services. It’s important to remember that these numbers are predictions – and do not tell what will happen to any specific person.
Research by Kemper and associates shows us that it is difficult to predict whether or not we will need long-term care services:
- 31% of people are not predicted to need ANY services.
- 20% of the people are predicted to use long-term care services for more than five years.
- 79% of women are likely to use long-term care services in their later life, in comparison to only 58% of men.
How long do people use long-term care services? While, 31% of people are not expected to use any services, others are predicted to need services for a varying amount of time:
- 17% for less than one year,
- 12% between one to two years,
- 20% two to five years, and
- 20% more than five years.
What do these figures imply for a strategy to finance the possibility of long-term care services?
First, a small but significant percentage (20% of people 65 and older) of people can expect a lengthy time needing long-term care services. Using services for more than five years can easily cost more than $250,000 at today’s prices. For many people a five year use of services can cost over $500,000. In contrast, a good number of people (approximately one-third) will not require any services.
What type of services do people tend to use?
For those people who use long-term care services, the Kemper et al study predicts a person will need an average of three years of help. Of these three years of services, 1.9 years were predicted to be at-home services.
Also, it was predicted that the average person using services in their later years would utilize 1.1 years of services in facilities. Of this time, the Kemper et al study predicted 0.8 years in nursing home facilities and 0.3 years would be in assisted living facilities.
Research reminds us that not everyone will need long-term care services in later life. However, many people will need help, and this help can be costly. Take time to think about your risk of needing services.
