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.
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Pittsburgh, PA (PRWEB) January 31, 2006 –
Even more affluent Americans are concerned that health care and long-term care costs will wipe out a major portion of their money, according to survey findings of nearly 1,500 U.S. adults released by The PNC Financial Services Group, Inc. (NYSE: PNC)(http://www.pnc.com).
“As President Bush addresses spiraling health care costs this evening, he may be surprised to find that one in three Americans in our survey said, health care costs will ultimately consume a major portion of my financial assets,’” said Thomas Melcher, a managing director of PNC’s wealth management unit.
According to the PNC survey, nearly four in 10 Americans with $1 million or more in investable assets, including one quarter of those over age 65, said paying for their family’s health care is a top financial concern.
“Death has always been the great equalizer, but that adage can now be updated. Spiraling health care costs are equally indiscriminate. Regardless of income or assets, these costs can devastate anyone,” added Melcher. “That risk places affordable health care as the top financial concern for many families—even our nation’s wealthiest.”
The findings released 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.
Long-term health care and medical treatment costs 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.
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 families. PNC’s survey found that asset protection preparations lag even in wealthy households. Survey results included:
More than two-thirds (69 percent) of respondents do not have a comprehensive financial plan.
Three out of four (75 percent) have completed a will, but four in 10 (39 percent) have no health care proxy, which specifies medical treatment if one is incapacitated.
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 for all Americans,” Melcher said. “Without proper financial planning, many people end up leaving a bankrupt legacy to the next generation.”
“We will all get older and need some level of medical care in the future,” he added. “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. Other asset-protection solutions include estate plans, grantor trusts and life insurance. The grantor trust minimizes transfer tax costs from generation to generation, making its administration a simpler, more tax-friendly alternative, while life insurance eliminates the need to pay costly premiums (as compared to long-term health insurance).
The wealth and values survey was commissioned by PNC to identify attitudes about wealth among high net worth individuals and how it affects their lives and their needs in managing wealth. Harris Interactive conducted the survey online 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. (http://www.hnw.com), a leading provider of wealth marketing software and solutions to financial services companies and intermediaries seeking to capture and serve the high net worth market.
Harris Interactive Inc. (http://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® and for its pioneering leadership in the online market research industry.
The PNC Financial Services Group, Inc. 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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