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Even Wealthy Seniors Concerned About Health Care
Costs, Medicare
Most wealthy adults doubt children will benefit from
Medicare
Jan. 23, 2006 - Even wealthy Americans are
concerned that rising heath care costs will eat up their financial
assets, according to survey findings released today. Nearly four in 10
wealthy Americans, including one quarter of senior citizens over age 65,
say affording health care for their families is a top financial concern.
But, the most disturbing finding was that one in three (36 percent) of
respondents said, "health care costs will ultimately consume a major
portion of my financial assets."
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The study was released by The PNC Financial
Services Group, Inc.
"What's unfortunate is that many successful people
spend a lifetime working to build their wealth, sometimes working so
hard that they jeopardize their own health. Then they spend a majority
of their wealth to restore their health," said Thomas Melcher, managing
director and chief investment officer of PNC's wealth management unit
for ultra high net worth clients.
Findings released today by PNC are part of a series
of reports resulting from a nationwide survey of nearly 1,500 wealthy
U.S. adults. Highlights of the findings include:
● Future of Medicare: Four in 10 respondents (42
percent) perceive the potential insolvency of the Medicare system as a
threat or huge threat to their family's wealth. About half (49 percent)
of those between the ages of 45-64 think its demise would be a threat or
huge threat to their family's wealth. Among those with children, more
than half (51 percent) agree their children will not benefit from
Medicare in the future.
● Long-term care costs and medical treatment also
posed a risk for almost four out of 10 questioned (36 percent), with
one-quarter (26 percent) of younger Americans, ages 18-44, with children
under 18 expressing fear that their children would eventually have to
pay for their long- term health care costs. Close to one-quarter (24
percent) of those with living parents worried about their parents' lack
of long-term care insurance.
● Top Five Financial Concerns: More than half of
respondents (52 percent) rated "providing for my health and wellness" as
the No. 1 financial concern. This was followed by "sustaining and
increasing my wealth" (47 percent); "providing for my family's security"
(41 percent); and "having enough money to support my lifestyle (41
percent)." Next was "affording health care costs for my family" (38
percent).
Planning Ahead?
The serious concerns expressed by survey
respondents about the costs of long-term care, medical expenses for
family members and the potential for Medicare insolvency have not
translated into related financial planning for many wealthy Americans.
PNC's survey found that asset protection preparations lag for many
wealthy households. Survey results included:
● More than two-thirds (69 percent) of
respondents do not have a comprehensive financial plan.
● More than one in 10 (13 percent) have not
taken any of the appropriate steps to protect their wealth.
● Three out of four (75 percent) have completed a
will, but four in 10 (39 percent) have no health care proxy, which
specifies an individual to implement a living will and make health care
decisions when its statement of preferences do not apply.
● While most have a will, less than half (45
percent) have established a trust to transfer wealth to heirs and only
26 percent have named a professional trustee.
● Seven out of 10 (69 percent) have not purchased
long-term care insurance for themselves or a spouse. Among those who
have not purchased long term care insurance, thirty-six percent felt it
was unwise to spend money on a premium they may never use, 22 percent
said it was cost-prohibitive and 21 percent said they never thought
about it.
"The cost of health care is rising much faster than
inflation, and the effect on family assets should be factored
prominently into retirement planning and wealth preservation
activities," Melcher said. "Without proper financial planning, many
people end up leaving a bankrupt legacy to the next generation.
"A truly comprehensive financial plan should take
everything into account, including health care, but that is often not
the case," Melcher added. "Many people focus on lifestyle issues and
financial growth strategies but want to avoid the fact that we will all
get older and need some level of medical care in the future. And the
level of need can be a financial drain for the individual, as well as
the family, if they are ill-prepared due to the lack of advance
planning."
Melcher said the health care proxy is a critical
need for anyone to establish treatment desires.
He also said that a Health Savings Account offers a
tax-advantaged way to set aside money for health care costs. From an
asset protection perspective, Melcher said there are numerous options,
ranging from an estate plan, life insurance, irrevocable life insurance
trust and Delaware Asset Protection Trusts, for example.
About the survey in information sources
The wealth and values survey was commissioned by
PNC to identify attitudes about wealth among high net worth individuals,
how it affects their lives and their needs in managing wealth. The
survey was conducted online by Harris Interactive in October and
November 2005 among a nationwide cross section of 1,485 adults (age 18
or over) with annual incomes of $150,000 or above (if employed), at
least $500,000 of investable assets (if employed) or at least $1 million
of investable assets (if retired). The total sample contains four
distinct groups: 795 with assets of $500,000 to $999,999; 465 with
assets of $1 million to $4.9 million; 109 with assets of $5 million to
$9.9 million; and, 116 with assets of $10 million or more. Figures for
age, sex, race, education, region, income, asset level and propensity to
be online were weighted where necessary to bring them into line with the
actual proportions in the population. Overall results have a sampling
error of +/- 2.5 percentage points, and sampling error for various
sub-sample results is higher and varies.
The survey was designed and managed by HNW, Inc.
(www.hnw.com).
Harris Interactive Inc. (www.harrisinteractive.com),
based in Rochester, New York, is the 13th largest and the
fastest-growing market research firm in the world, most widely known for
The Harris Poll.
The PNC Financial Services Group, Inc. (NYSE:PNC)
is one of the nation's largest diversified financial services
organizations providing consumer and business banking; specialized
services for corporations and government entities, including corporate
banking, real estate finance and asset-based lending; wealth management;
asset management and global fund services.
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