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Wealthy, Healthy ... And Worried? Health Care Costs Pose Huge Threat to American Family Assets, PNC Survey Finds

Posted on: Monday, 23 January 2006, 12:00 CST

PITTSBURGH, Jan. 23 /PRNewswire-FirstCall/ -- Even wealthy Americans are concerned that rising heath care costs will eat up their financial assets, according to survey findings released today by The PNC Financial Services Group, Inc. . One in three (36 percent) of respondents said, "health care costs will ultimately consume a major portion of my financial assets." Nearly four in 10 wealthy Americans, including one quarter of those over age 65, said that affording health care for their families is a top financial concern.

"What's unfortunate is that many successful people spend a lifetime working to build their wealth, sometimes working so hard that they jeopardize their own health. Then they spend a majority of their wealth to restore their health," said Thomas Melcher, managing director and chief investment officer of PNC's wealth management unit for ultra high net worth clients.

Findings released today 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. Among those with children, more than half (51 percent) agree their children will not benefit from Medicare in the future. - Long-term care costs and medical treatment 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. - Top Five Financial Concerns: More than half of respondents (52 percent) rated "providing for my health and wellness" as the No. 1 financial concern. This was followed by "sustaining and increasing my wealth" (47 percent); "providing for my family's security" (41 percent); and "having enough money to support my lifestyle (41 percent)." Next was "affording health care costs for my family" (38 percent). Planning Ahead?

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 wealthy Americans. PNC's survey found that asset protection preparations lag for many wealthy households. Survey results included:

- More than two-thirds (69 percent) of respondents do not have a comprehensive financial plan. - More than one in 10 (13 percent) have not taken any of the appropriate steps to protect their wealth. - Three out of four (75 percent) have completed a will, but four in 10 (39 percent) have no health care proxy, which specifies an individual to implement a living will and make health care decisions when its statement of preferences do not apply. - While most have a will, less than half (45 percent) have established a trust to transfer wealth to heirs and only 26 percent have named a professional trustee. - 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," Melcher said. "Without proper financial planning, many people end up leaving a bankrupt legacy to the next generation.

"A truly comprehensive financial plan should take everything into account, including health care, but that is often not the case," Melcher added. "Many people focus on lifestyle issues and financial growth strategies but want to avoid the fact that we will all get older and need some level of medical care in the future. And 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. From an asset protection perspective, Melcher said there are numerous options, ranging from an estate plan, life insurance, irrevocable life insurance trust and Delaware Asset Protection Trusts, for example.

Survey Methodology

The wealth and values survey was commissioned by PNC to identify attitudes about wealth among high net worth individuals, how it affects their lives and their needs in managing wealth. The survey was conducted online by Harris Interactive 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(R) 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.

This report has been prepared for general informational purposes only and is not intended as specific advice or recommendations. Information has been gathered from third party sources and has not been independently verified or accepted by The PNC Financial Services Group, Inc. The PNC Financial Services Group, Inc. makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. The PNC Financial Services Group, Inc. cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Any reliance upon the information provided in the report is solely and exclusively at your own risk.

First Call Analyst: William H. CallihanFCMN Contact: barbara.bernardini@pncbank.com

The PNC Financial Services Group, Inc.

CONTACT: Patrick McMahon of The PNC Financial Services Group,+1-412-762-2477, or patrick.mcmahon@pnc.com; or Connie Hubbell of The HubbellGroup, Inc., +1-781-878-8882, or hubbell@hubbellgroup.com

Web site: http://www.pnc.com/http://www.hnw.com/http://www.harrisinteractive.com/

Company News On-Call: http://www.prnewswire.com/comp/701257.html

Source: PRNewswire-FirstCall

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