Having to pay for long-term care puts millions more Americans at financial risk, according to a new study by my friends at the Center for Retirement Research at Boston College. Nearly two of every three of us will be unable to maintain our pre-retirement standard of living once we include the cost of long-term care insurance or the need to tap home equity to finance the personal care we may need in old age.     

Both health care and long-term care have a powerful impact on our financial security after retirement, the study finds. The Center’s National Retirement Risk Index shows that at least 44 percent of us will be unable to maintain our standard of living in retirement, even without the savings we’d need to pay for medical care and long-term supports and services, such as home health aides or nursing homes. Figure in health costs, and the percentage of those at risk increases to six in ten. Include long-term care, and it’s 64 percent.

Interestingly, it isn’t the Baby Boomers who will take the biggest hit. Instead, it will be Gen-Xers (those born between 1965 and 1974). Nearly three-quarters of them will have to cut back in order to pay for their care in frail old age.

The report also suggests that the middle class of all ages will be hit especially hard. The poorest third of Americans have financial assets of less than $22,000–barely enough for three months in a nursing home. They will likely end up on Medicaid, the welfare-like government program that already pays for 40 percent of all long-term care costs.

The very wealthy may be able to buy long-term care insurance or, in some cases, take out reverse mortgages. But those in the middle–who CRR defines as having financial assets of between $22,000 and $200,000–are most at risk. They could buy long-term care insurance, a decison that will give them much better care choices than if they fall into Medicaid. But to pay the hefty premiums, they will have to cut back other spending.

The CRR report is yet more evidence of how the financial burdens of long-term care not only affect the way we are caring for our parents, but also how it will impact our own futures as we age. Give it a read.