The Challenge to Saving for Retirement: National Summit on Retirement Savings
The National Summit on Retirement Savings was established as part of the Savings Are Vital to Everyone's Retirement Act (SAVER) of 1997 to examine the state of retirement savings and explore ways to educate Americans about the need to create a secure financial future. The event is the first of three, with additional summits scheduled for 2001 and 2005.
While the Summit has examined a number of challenges facing America's retirees, perhaps the largest challenge set before them today is the lack of planning for the costs associated with aging. Imagine a typical American family. The parents have worked all their lives and managed to set some savings aside for retirement to enjoy their golden years. Yet, in the midst of that perceived financial security, tragedy strikes. A loved one is stricken with a debilitating illness and requires the kind of medical attention that only a long term care facility can provide. With the average annual cost of a nursing home over $41,000, and the average stay in such a facility at 2.3 years, a lifetime of savings could be wiped out in a matter of months.
Few Americans today are taking adequate steps to prepare financially for the long term health care needs they may face in the future. The 1998 Retirement Confidence Survey (RCS) found that 44 percent of Americans saving for retirement are very confident that they are investing their resources wisely. However, a 1995 Gallup Poll revealed that 76 percent of Americans believe they will never need a nursing home, home-based care or any other long term care service. But the fact is that two out of every five Americans will need long term care at some point in their lives, and millions will be financially unprepared to meet the costs of such care.
Social Security provides the primary source of income today for more than two-thirds of all retired Americans. Clearly, Social Security and Medicare are two essential national support systems for our nation's elderly. The third is long term care and, contrary to popular belief, Medicare does not provide long term care services for the nation's elderly. Rather, Medicaid, a federal-state welfare program, is the primary provider of nursing home care for more than two-thirds of our nation's residents.
The future of American retirees' financial well-being depends upon their ability to educate themselves on the very real likelihood that they will need long term health care. The American Health Care Association agrees with the core tenets of the Retirement Summit: Individuals must begin planning for retirement now and take full advantage of the numerous opportunities to overcome the barriers to properly saving. Any sound financial foundation, however, must include plans to meet a loved one's growing health care needs.