Most Americans Are Blind To How Much Their Retirement Actually Costs, New Study Finds

The majority of Americans have significant blind-spots when it comes to financial planning for their sunset years and communicating their retirement arrangements to their family members, newly released research shows.

Eighty percent of families have not had in-depth discussions about age-related and long-term healthcare costs, pointing to a significant preparedness gap for American adults’ retirement and financial considerations, data from Lincoln Financial’s Consumer Sentiment Tracker published Monday shows.

“Many families recognize that aging can bring new healthcare and caregiving needs, but those conversations often don’t happen until they’re forced by a health event or family crisis,” Jared Nepa, senior vice president and head of Insurance Solutions Distribution at Lincoln Financial said in the retirement plan company’s Monday press release.

“The challenge is that important decisions about care preferences, caregiving responsibilities and potential costs become much harder when they’re made under pressure,” Nepa added. “Having these conversations early can help families feel more informed and prepared.”

Lincoln’s research also suggests that many families have few discussions around retirement income, life insurance and the state of their inheritance.

Nearly all older parents and many adult children feel responsible for starting discussions but do not because they want to avoid making their children worry or report complex family dynamics, the study found.

However, Gen X parents who have not talked about these scenarios with their children are more likely to feel stressed, worried, and unprepared compared to Baby Boomer parents, according to the study. Despite not having conversations about the state of their loved one’s estate, more respondents expect that their parents have financial plans in place than is actually the case.

For example, 55 percent of adult children believe their parents had financial plans in place for long-term healthcare affordability costs, but only 38 percent of older parents actually had such plans in place, the study found. Sixty percent of adult children also believe their parents have a life insurance plan, but 44 percent of older parent respondents reported they had such a policy.

This study comes at a time when the cost of long-term retirement care has greatly outpaced Americans’ incomes in recent years, according to AARP.