Long-Term Care Costs Put More Retirees at Risk

The latest update of the National Retirement Risk Index (NRRI) found that adding the impact of long-term care expenses means even more Americans will be at financial risk in their retirement.

The index measures the number of people who may not be financially prepared for retirement. The Center for Retirement Research (CRR) at Boston College, which publishes the NRRI with Nationwide, said the addition of long-term care bumps the index from 61% a year ago to about 64%.

According to a news release, the NRRI baseline reading without the health-care impact was 44%, and the 61% figure includes only general health-care expenses.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

After adding the expected cost of long-term care insurance and out-of-pocket health care spending in retirement, the target replacement rate jumps to 98%, compared to the original NRRI replacement rate of 76% and the basic health NRRI replacement rate at 92%.

According to the CRR: “As with past NRRI analyses, these latest findings raise major concerns about the retirement security of Baby Boomers and succeeding generations.”

The CRR said long-term care plays a critical role in the retirement of many Americans so it needs to be considered in the overall retirement readiness calculations.

“Long-term care is an important expenditure risk for the elderly,” the CRR said. “People tend to lose some of their ability to function as they get older, and these losses can become severe late in life. To compensate, older people need assistance with basic activities of daily living (such as bathing, eating, dressing, and using the toilet) and with tasks necessary for independent living (such as shopping, cooking, and housework).”

The NRRI is updated twice annually. The latest report is available here.

PIMCO Launches Long-Term Credit Fund

PIMCO launched the PIMCO Long-Term Credit Fund, an actively managed portfolio that aims to take advantage of opportunities in long-dated investment grade corporate bonds.

The PIMCO Long-Term Credit Fund is designed to offer investors a way to benefit from the attractive yields available on longer-dated corporate debt, PIMCO said. It also offers a liability-driven investing (LDI) tool for pension plans, insurance companies, and other investors that are engaged in efforts to better match their assets to their long-term obligations, according to the company.

The fund is managed by Mark Kiesel, managing director and global head of PIMCO’s corporate bond portfolio management group. The ticker symbol for institutional shares of the PIMCO Long-Term Credit Fund is PTCIX.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.


 

For more information, call 800.927.4648.

 

«