Issue in Brief 1 IS PRIVATE LONG-TERM CARE INSURANCE THE ANSWER? By Richard W. Johnson and Cori E. Uccello Introduction A N I S S U E IN B R I E F As the population ages, more Americans than ever before will need long-term care. The cost of providing CENTER FOR services is already straining government and family budgets, and costs are expected to soar in a few decades RETIREMENT when the Baby Boomers begin to reach their 80s. One option often touted as a possible solution to the looming crisis is to promote private insurance coverage RESEARCH of long-term care needs. This brief describes private AT BOSTON COLLEGE long-term care insurance and some of the advantages and limitations of coverage. Despite ongoing efforts to MARCH 2005, NUMBER 29 promote private long-term care insurance, widespread coverage faces a number of important hurdles, including affordability, uncertainty about future INSIDE premium increases, and the disincentives created by the Medicaid safety net. INTRODUCTION ....................................... 1 WHAT IS LONG -TERM CARE ? ....................... 1 What Is Long-Term Care? WHO PAYS FOR LONG-TERM CARE ? .............. 2 Long-term care encompasses a wide range of services for people who need assistance on a regular basis HOW DOES PRIVATE LONG-TERM CARE because of chronic illness or physical or mental INSURANCE WORK? .................................. 3 disabilities. Unlike most health services, long-term care is not generally designed to treat an illness or WHO PURCHASES PRIVATE LONG- TERM CARE condition. Although it can include skilled nursing INSURANCE? ......................................... 4 care, it consists primarily of help with basic activities of daily living (such as bathing, eating, dressing, and WHAT ARE THE ADVANTAGES OF PROMOTING using the toilet) and with tasks necessary for PRIVATE INSURANCE? .............................. 4 independent living (such as shopping, cooking, and housework). Although two-fifths of long-term care WHAT ARE THE BARRIERS TO PRIVATE recipients are under the age of 65, this brief focuses on INSURANCE COVERAGE ? ........................... 5 services provided to older Americans.1 Older people with the most serious disabilities HOW ARE POLICYMAKERS PROMOTING PRIVATE generally receive round-the-clock care in nursing INSURANCE? ......................................... 6 homes. Only about 5 percent of Medicare enrollees age 65 and older, or about 1.6 million seniors, resided in CONCLUSION ......................................... 6 nursing homes in 2002.2 However, 44 percent of 65- ENDNOTES ............................................. 7 year-olds can expect to live in a nursing home now or at some point in the future.3 REFERENCES ......................................... 8 * The authors are research associates of the Center for Retirement Research at Boston College. Richard W. Johnson is a principal research associate and Cori E. Uccello is a consultant, both at the Urban Institute. 2 Center for Retirement Research Most long-term care recipients live in their own The nation spent an estimated $135 billion on homes or with their families. About 1.3 million long-term care for the aged in 2004, devoting 68 seniors in the community receive care from paid percent to care in nursing homes and 32 percent to helpers, who provide skilled home care or unskilled home-based care.6 Medicaid paid for 35 percent of care with basic personal activities.4 Another 5.5 all long-term care spending on older Americans, million older Americans in the community receive Medicare covered 25 percent of costs, private health unpaid help from family members. The burden on insurance paid another 4 percent, and care family caregivers of juggling work and other recipients and their families paid out of pocket for responsibilities is likely to grow in the future as 33 percent of costs (see Figure 1). women — who provide most family care — continue For those who qualify, Medicaid covers nursing to spend more time in the labor force. home care, home health services, and non-medical home- and community-based care designed to Who Pays for Long-Term enable persons with disabilities to remain in the community. The program pays for about 39 percent Care? of all care received in nursing homes by the aged and 25 percent of care received at home.7 However, The cost of long-term care services, especially individuals must meet strict income and asset tests nursing home care, can be staggering. In 2004, the to qualify. Eligibility rules are complex and vary by average daily private pay rate for a private room in a state. Some states use the federal thresholds for nursing home was $192, or about $78,100 annually.5 receipt of Supplemental Security Income (SSI) to A semi-private room was nearly as expensive, at determine Medicaid eligibility, which in 2005 are $169 per day, or $61,700 for the year. Home health $579 per month in countable income and $2,000 in aides who provide assistance with personal care countable assets for unmarried people.8 In other activities charged $18 per hour on average in 2004. states, Medicaid pays for long-term care services for At three hours per day, five days per week, annual individuals with incomes up to 300 percent of the home care costs would total more than $14,000. federal SSI threshold. People with too much wealth or income to Figure 1. Medicare and Medicaid Pay for Majority of qualify initially for Medicaid can receive benefits Long-Term Care Expenditures once they have spent nearly all of their resources on long-term care services. According to one estimate, Long-Term Care Expenditures for Aged Americans, by about one-third of nursing home residents Source of Payment, 2004 ineligible for Medicaid when they are admitted deplete enough of their assets to qualify for coverage 100% before they are discharged.9 Most states allow Medicaid applicants to subtract medical and long- 25 term care expenses from income before 41 36 determining eligibility, enabling people with high 8% 0 long-term care bills to get on Medicaid even if their 8 Social Security and pension incomes exceed 4 eligibility thresholds. 6% 0 3 Medicare is the principal payer of skilled home 17 25 health services for older Americans, but coverage of 42 other long-term care services is limited. It does not 4% 0 pay for any non-medical home care, and covers only temporary stays in skilled nursing facilities that follow hospitalizations. Overall, Medicare funded 20% 39 35 42 percent of the paid care older Americans 25 received at home in 2004 and 17 percent of the care they received in nursing homes. 0% Care in Nursing Homes Care in Nursing Care atHome Care at Home Total Total Much of the financial burden of long-term care Homes falls on care recipients and their families. Individuals without private supplemental insurance Medicaid Out-of-Pocket and Other who do not qualify for Medicaid must bear the cost Medicare Private Insurance of Medicare deductibles and co-payments, and the entire cost of services that Medicare does not cover. Source: Congressional Budget Office, Financing Long- Private long-term care insurance, a relatively recent Term Care for the Elderly, 2004. insurance product, funds only 3 percent of nursing Issue in Brief 3 home costs for older adults and 8 percent of home purchased in 2000 also delay benefits for a period health costs. Increasing private insurance coverage of time after the onset of a qualified disability.13 may reduce financial pressures on public programs More than two-thirds of plans that delayed benefits and protect families from the catastrophic financial required policyholders to wait between 90 and 100 consequences of long-term care. days. Only 4 percent stipulated waiting periods longer than 100 days. How Does Private Long-Term Policies limit how much they pay for each day of care and for how long. The average daily benefit Care Insurance Work? for both nursing home and community-based care was about $100 for individual policies purchased in Like traditional medical insurance, private long- 2000.14 Since policyholders often purchase term care insurance is a financial contract whereby coverage decades before they receive benefits, the the insurer agrees to provide covered benefits in growth in nominal long-term care costs can erode exchange for regular premium payments by the the value of the policy over time. Only about 4 in 10 policyholder. The long-term care insurance market new policyholders in 2000 purchased inflation has grown steadily over the past 20 years. First sold protection, although the rate was higher at relatively as nursing home insurance in the 1970s, it now young ages.15 Inflation protection generally takes covers a wide range of services, including home the form of a fixed percentage increase per year, care, adult day care, and assisted living, in addition typically 3 or 5 percent, so some policyholders may to nursing home care. The cumulative number of end up with less coverage than they expected if long-term care insurance policies purchased has prices of long-term care services rise especially increased from fewer than 1 million in 1987 to over rapidly. In addition, rather than providing lifetime 9 million by the end of 2002, but still covers only a benefits, about two-thirds of individual policies pay small share of the population.10 benefits for only a limited number of years, Long-term care insurance can be purchased generally between two and five years.16 through either the individual or group market. Group plans are typically sponsored, but not subsidized, by employers. Individual policies continue to dominate the market, but employer- Soaring long-term care costs sponsored plans are growing rapidly, fueled in part by the creation of the Federal Long-Term Care could strain government and Insurance Program in 2002, which allows federal employees, retirees, and some of their family household budgets. members to purchase coverage through the federal government. About one-third of new policies sold in 2002 were sponsored by employers. By contrast, In addition to charging higher premiums for only 18 percent of policies ever sold by 2002 were more comprehensive plans, insurance companies employer-sponsored plans. generally price policies based on the age and health The cost and adequacy of policies vary by the of the policyholder at the time of issue. Premiums types of services they cover, when they start paying do not generally differ by gender, even though benefits, how much they pay, and for how long. women tend to use more long-term-care services About three-quarters of individual policies than men.17 Some plans offer discounts to married purchased today cover both nursing homes and policyholders, especially when their spouses are also home care.11 In 1990, by contrast, nearly two-thirds covered. of policies sold covered only nursing home care. Most insurers classify applicants into three Policyholders cannot collect benefits until their broad health categories: preferred, standard, and disabilities reach the levels specified in their substandard. Policies are guaranteed renewable, contracts. Nearly all plans now sold use the triggers and rates cannot rise in response to declining specified in the Health Insurance Portability and health. Instead, premiums remain fixed in nominal Accountability Act of 1996 (HIPAA) to qualify for terms over the life of the contract. However, tax breaks.12 These plans require that beneficiaries premiums can rise for an entire class of need substantial assistance with at least two out of policyholders if insurers can demonstrate that their six activities of daily living and that their disabilities costs exceed premium revenue, and rate increases are expected to last 90 or more days, or that they have been common in recent years. need regular supervision because of severe Premiums increase rapidly with age at issue cognitive impairment. (see Figure 2). The average annual premium in About three quarters of all individual plans 4 Center for Retirement Research 2002 for a policy providing up to four years of Figure 3. Few Older People Currently Have Private benefits, with a $150 daily benefit and a 90-day Long-Term Care Insurance waiting period but no inflation protection, was $422 among 40-year-old purchasers. The average Percent of Adults Ages 55 and Older with Private Long- annual premium for the same policy was $564 at age Term Care Insurance, 2002 50, $1,337 at age 65, and $5,330 at age 79. For policies purchased at ages 40 and 50, inflation 16% protection that increases benefits by 5 percent per year, compounded annually, more than doubles the annual premium. For coverage purchased at age 79, inflation protection increases premiums by less than 12% half. Who Purchases Private Long- 8% Term Care Insurance? About 9 percent of adults ages 55 and older (or 5.3 4% million people) had private long-term care insurance coverage in 2002 (see Figure 3).18 Only 7 percent of those ages 55 to 64 had coverage, but 0% 65-74 All coverage rates among the working-age population <20 50+ 75+ 20-24 25-49 55-64 are likely to increase as more employers offer long- term care insurance. Men are just as likely to report Age Household Income coverage as women, even though they are less likely ($thousands) to use long-term care services.19 Source: Authors’ calculations based on the 2002 HRS. Figure 2. Premiums for Long-Term Care Insurance The likelihood of private long-term care coverage Increase Rapidly with Age at Initial Purchase increases with income and wealth, because affluent adults can better afford insurance premiums and Average Annual Premiums by Issue Age, 2002 they would have to deplete their assets to qualify for Medicaid. Only 3 percent of older adults with incomes below $20,000 and 4 percent with financial assets below $20,000 had coverage in $8,000 $7,572 2002, compared with 14 percent of older adults with No Inflation Protection incomes above $50,000 and 18 percent of those $7,000 With Inflation Protection with financial assets above $100,000. More than $6,000 half of policyholders had incomes exceeding $5,330 $50,000 or financial assets exceeding $100,000. $5,000 $4,000 What Are the Advantages of $3,000 $2,346 Promoting Private Insurance? $2,000 Raising private long-term care coverage rates and $1,134 $1,337 $9 80 reducing the current reliance on Medicaid could $1,000 $2 42 $6 54 improve the efficiency and fairness of long-term care financing. Medicaid imposes a 100 percent tax $0 on most assets for those who receive long-term care 40 50 65 79 through the program, penalizing those who save for Issue Age their old age. The savings rate in the United States is notoriously low, and most Americans do not Source: America’s Health Insurance Plans, Long-Term Care Insurance, 2004. accumulate much non-housing wealth outside of Social Security and employer-sponsored pension Note: The policy provides up to 4 years of long-term care plans.20 By requiring policyholders to set aside benefits, with a $150 daily benefit and a 90-day waiting funds in the form of premium payments each year, period. The inflation protection option increases benefits private insurance can raise national savings and by 5 percent per year, compounded annually. thus promote economic growth. Issue in Brief 5 Unlike private long-term care insurance, Medicaid is not designed to protect the assets of What Are the Barriers to those receiving long-term care services. It leaves them with nothing to pass on to their heirs and Private Insurance Coverage? impoverishes those who return to the community Despite the advantages of private long-term care after temporary nursing home stays. Recent insurance, widespread insurance coverage faces a Medicaid reforms have increased the level of income number of substantial obstacles. First, many older and assets that are reserved for spouses, in an effort adults are simply unable to afford long-term care to provide better financial security for the insurance. For example, 12 percent of married community-dwelling husbands and wives of nursing couples and 44 percent of unmarried adults ages 55 home residents. However, these reforms do not to 61 received less than $25,000 in income in appear to have substantially improved the economic 2000.24 Affordability is an even more serious security of spouses remaining in the community.21 problem for those who delay purchasing coverage until older ages, when annual premiums are much higher. At ages 70 to 74, 29 percent of married couples and 62 percent of unmarried adults received Expanding private long-term incomes below $25,000 in 2000. Some studies have found that only 10 to 20 percent of older adults care insurance could help make can afford long-term care coverage.25 Some policyholders are unable to maintain services more affordable. their premium payments and let their policies lapse. Although data on lapse rates are scarce, one study suggests that nearly one in five new policyholders drop their coverage within three years.26 Another disadvantage of the current system is Unexpected rate increases, which can occur when that Medicaid tends to distort the choice between insurers initially price coverage for an entire class home- and institutional-based care. Most older of policyholders below cost, can lead to even higher adults prefer to remain in their own homes, instead lapse rates. Many plans lack nonforfeiture benefits, of moving to nursing homes. But despite recent which provide partial benefits for those who let their improvements, Medicaid rules still make it difficult policies lapse. As a result, some who fail to renew for frail older adults to receive subsidized care at their policies receive nothing in return for their home. Federal law stipulates that special Medicaid premium payments, because most policyholders do initiatives to provide home- and community-based not use long-term care services until very late in life. services to people with disabilities must not increase Those with health problems have special Medicaid spending, forcing states to limit eligibility difficulty purchasing long-term care insurance. for these services and impose other requirements to Private insurers are generally reluctant to write keep costs down. As a result, some Medicaid policies for those in poor health, and as many as 15 enrollees cannot afford to remain in the community percent of applicants are denied coverage because because the monthly stipend that the program allows of health problems.27 When those with health is too small to cover their living expenses. problems are offered insurance, medical The current system also imposes substantial underwriting raises their premiums, making their burdens on state governments. Medicaid is a joint coverage even less affordable. federal-state program, with the federal government A related problem is adverse selection, which paying a majority of the costs. Nonetheless, states can undermine the private insurance market. At a end up financing a sizable portion of Medicaid given premium level, those who expect to use many expenses. Medicaid now consumes more resources services are more likely to purchase coverage than than any other single item in overall state budgets, those who anticipate lower usage. As high-cost including elementary and secondary education.22 users dominate the pool of policyholders, insurers Long-term care services for the aged accounted for need to raise premiums to cover their claims. But 19 percent of all Medicaid spending in 2002, a raising premiums discourages more low-cost users share that is likely to rise in the future as the from purchasing coverage, leading to even higher population ages.23 Increases in private long-term premiums. This cycle can lead to a premium “death care insurance coverage could reduce the strain on spiral,” as it is sometimes called, causing private state Medicaid programs. insurance markets to break down.28 The final, and perhaps most important, obstacle to higher rates of private long-term care insurance 6 Center for Retirement Research is the presence of Medicaid coverage for long-term sold. Under a law passed in 2000, participants in a care needs. Although it is obvious that the Medicaid government-backed reverse mortgage program safety net discourages those with limited financial could avoid the upfront mortgage premium, which resources from purchasing private insurance, it can typically amounts to 2 percent of the value of the also dampen coverage rates for more affluent home, by devoting all proceeds to a qualified long- people.29 Insurance protects the assets of nursing term care policy. This provision of the law has not home residents, but people can not really enjoy their yet been implemented, however.31 wealth while in nursing homes. People who do not value additional income while in nursing homes will Conclusion be unlikely to forego income while healthy by paying long-term care insurance premiums. This Although they have not received as much attention argument is less compelling, however, for people as the financial problems facing Social Security and who expect to be discharged to their homes or for Medicare, future long-term care costs are likely to those who attach importance to leaving bequests to place enormous pressures on government and their heirs. family budgets. The current system of financing care, with its reliance on Medicaid, is neither efficient nor fair. It forces older adults into poverty before paying for any of their care, and thus Widespread long-term care penalizes savings. A system based on private long- term care insurance, which protects private assets insurance coverage faces a and provides a mechanism for saving for old age, variety of obstacles. would in many ways be preferable, but the presence of the Medicaid safety net may frustrate efforts to expand private coverage rates. How Are Policymakers Promoting Private Insurance? Policymakers are pursuing a number of initiatives to promote private long-term care insurance, including the expansion of tax incentives. Taxpayers can now deduct premium expenses for qualified long-term care insurance plans from their federal taxable income, but only if their total medical expenses (including premiums) exceed 7.5 percent of adjusted gross income. And the amount they can deduct is capped. Many states also offer tax incentives for the purchase of long-term care insurance, and a few offer more generous tax breaks than the federal government. During the 2004 presidential campaign, President Bush proposed extending federal income tax deductions to all long- term care policyholders, not just those whose medical expenses exceed the 7.5 percent threshold. To encourage private insurance coverage, four states recently reduced Medicaid’s strict financial eligibility criteria for those with private long-term care insurance. After exhausting their private insurance benefits, policyholders in California, Connecticut, Indiana, and New York can qualify for Medicaid coverage without depleting their savings.30 Linking private long-term care insurance and reverse mortgages may be another way to promote private coverage. Reverse mortgages are home loans that require no repayment until the home is Issue in Brief 7 Endnotes 24 Social Security Administration (2002). 1 Spector et al. (2000). 25 GAO (2000). 2 Federal Interagency Forum (2004). 26 LIMRA International and Society of Actuaries (2004). 3 Spillman and Lubitz (2002). 27 Weiss Ratings, Inc. (2002). 4 These estimates are based on the authors’ tabulations of the 2002 Health and Retirement 28 One possible solution to the adverse selection Study (HRS). problem would be to integrate life annuities with long-term care insurance (Warshawsky, Spillman, 5 MetLife (2004). and Murtaugh 2002). This product would pay an annuity benefit for the life of the policyholder, but 6 CBO (2004). would increase the payment upon the onset of a chronic disability or cognitive impairment. Those 7 CBO (2004). who are likely to use long-term care services tend to have shorter life expectancies than non-users, so the 8 SSI eligibility thresholds for couples in 2005 are relatively low value of their lifetime annuities could $869 per month in countable income and $3,000 offset at least part of the cost of long-term care in countable assets. Countable assets generally services. exclude the value of owner-occupied housing, an automobile used to obtain medical treatment, 29 Brown and Finkelstein (2004); and Pauly certain burial funds, and up to $2,000 in personal (1990). effects. 30 Meiners, McKay, and M ahoney (2002). 9 Wiener, Sullivan, and Skaggs (1996). 31 Ahlstrom, Tumlinson, and Lambrew (2004). 10 AHIP (2004). 11 LifePlans, Inc. (2000). 12 AHIP (2004). 13 LifePlans, Inc. (2000). 14 LifePlans, Inc. (2000). 15 Cohen, Weinrobe, and Miller (2002). 16 LifePlans, Inc. (2000). 17 Finkelstein and McGarry (2003). 18 These estimates are based on the authors’ tabulations of the 2002 HRS. 19 Spillman and Lubitz (2002). 20 Smith (1995). 21 Norton and Kumar (2000). 22 Health Management Associates (2005). 23 O’Brien and Elias (2004). 8 Center for Retirement Research References Meiners, Mark R., Hunter L. McKay, and Kevin J. Mahoney. 2002. “Partnership Insurance: An Ahlstrom, Alexis, Anne Tumlinson, and Jeanne Innovation to Meet Long-Term Care Financing Lambrew. 2004. “Linking Reverse Mortgages and Needs in an Era of Federal Minimalism.” Journal Long-Term Care Insurance.” Washington, D.C.: of Aging & Social Policy 14(3/4): 75-93. The Brookings Institution. MetLife. 2004. “The MetLife Market Survey of America’s Health Insurance Plans (AHIP). 2004. Nursing Home and Home Health Care Costs.” “Long-Term Care Insurance in 2002.” Westport, CT: MetLife Mature Market Institute. Washington, D.C.: America’s Health Insurance Norton, Edward C., and Virender Kumar. 2000. Plans. “The Long-Run Effect of the Medicare Brown, Jeffrey R., and Amy Finkelstein. 2004. “The Catastrophic Coverage Act.” Inquiry 37(2): 173- Interaction of Public and Private Insurance: 87. Medicaid and the Long-Term Care Insurance O’Brien, Ellen, and Risa Elias. 2004. “Medicaid and Market.” NBER Working Paper 10989. Long-Term Care.” Washington, D.C.: Kaiser Cambridge, Mass.: National Bureau of Economic Commission on Medicaid and the Uninsured. Research. Pauly, Mark V. 1990. “The Rational Nonpurchase of Cohen, Marc A., Maurice Weinrobe, and Jessica Long-Term-Care Insurance.” Journal of Political Miller. 2002. “Inflation Protection and Long- Economy 98(1):153-168. Term Care Insurance: Finding the Gold Standard of Adequacy.” AARP Public Policy Institute Report Smith, James P. 1995. “Racial and Ethnic No. 2002-09. Washington, D.C.: AARP. Differences in Wealth in the Health and Retirement Study.” Journal of Human Resources Congressional Budget Office (CBO). 2004. 30(Supp): S158-83. Financing Long-Term Care for the Elderly. Washington, D.C.: Congressional Budget Office. Social Security Administration. 2002. Income of the Population 55 or Older, 2000. Washington, D.C.: Federal Interagency Forum on Aging-Related Social Security Administration. Statistics. 2004. Older Americans 2004: Key Indicators of Well-Being. Washington, DC: U.S. Spector, William D., John A. Fleishman, Liliana E. Government Printing Office. Pezzin, and Brenda C. Spillman. 2000. The Characteristics of Long-Term Care Users. Rockville, Finkelstein, Amy, and Kathleen McGarry. 2003. MD: Agency for Health Care Policy and “Private Information and its Effect on Market Research. Equilibrium: New Evidence from Long-Term Care Insurance.” NBER Working Paper 9957. Spillman, Brenda C., and James Lubitz. 2002. “New Cambridge, Mass.: National Bureau of Economic Estimates of Lifetime Nursing Home Use: Have Research. Patterns of Use Changed?” Medical Care 40(10): 965-975. General Accounting Office. 2000. “Long-Term Care Insurance: Better Information Critical to University of Michigan. 2002. Health and Prospective Purchasers.” Testimony Before the Retirement Study. Special Committee on Aging, U.S. Senate Report Warshawsky, Mark J., Brenda C. Spillman, and No. GAO/T-HEHS-00-196. Washington, D.C.: Christopher M. Murtaugh. 2002. “Integrating General Accounting Office. Life Annuities and Long-Term Care Insurance: Health Management Associates. 2005. “Medicaid Theory, Evidence, Practice, and Policy” In in 2005: Principles and Proposals for Reform.” Innovations in Retirement Financing, edited by Report to the National Governors Association. Olivia S. Mitchell, Zvi Bodie, P. Brett Hammond, Available at http://www.nga.org/cda/files/ and Stephen Zeldes. Philadelphia: University of 0502MEDICAID.pdf. Pennsylvania Press. LifePlans, Inc. 2000. “Who Buys Long-Term Care Weiss Ratings Inc. 2002. “Weiss Ratings’ Consumer Insurance in 2000? A Decade of Study of Buyers Guide to LTC Insurance.” Palm Beach Gardens, and Nonbuyers.” Washington, D.C.: Health FL: Weiss Ratings Inc. Insurance Association of America. Wiener, Joshua M., Catherine M. Sullivan, and Jason LIMRA International and the Society of Actuaries. Skaggs. 1996. “Spending Down to Medicaid: 2004. “Long-Term Care Insurance Persistency New Data on the Role of Medicaid in Paying for Experience.” Windsor, CT: LIMRA International. Nursing Home Care.” AARP Public Policy Institute Report No. 9607. Washington, D.C.: American Association of Retired Persons. Issue in Brief 9 CENTER FOR RETIREMENT R E S E A R C H AT B O S T O N C O L L E G E About the Center Affiliated Institutions The Center for Retirement Research at Boston American Enterprise Institute College, part of a consortium that includes parallel The Brookings Institution centers at the University of Michigan and the Center for Strategic and International Studies National Bureau of Economic Research, was Massachusetts Institute of Technology established in 1998 through a grant from the Social Syracuse University Security Administration. The goals of the Center are Urban Institute to promote research on retirement issues, to transmit new findings to the policy community and Contact Information the public, to help train new scholars, and to Center for Retirement Research broaden access to valuable data sources. Through Boston College these initiatives, the Center hopes to forge a strong Fulton Hall 550 link between the academic and policy communities Chestnut Hill, MA 02467-3808 around an issue of critical importance to the Phone: (617) 552-1762 nation’s future. Fax: (617) 552-0191 E-mail: crr@bc.edu Website: http://www.bc.edu/crr The Center for Retirement Research thanks its research partners for support of this project: CitiStreet, Prudential Financial, AMVESCAP, New York Life Investment Management, AARP, TIAA-CREF Institute, and AXA Financial. © 2005, by Trustees of Boston College, Center for Retirement The research reported herein was supported by the Center’s Research. All rights reserved. Short sections of text, not to Corporate Partnership Program. The opinions and conclusions exceed two paragraphs, may be quoted without explicit expressed are solely those of the authors and should not be permission provided that the authors are identified and full construed as representing the opinions or policy of the credit, including copyright notice, is given to Trustees of Boston Corporate Partners or the Center for Retirement Research at College, Center for Retirement Research. Boston College.