By Greg Roberts
Recent surveys posed this question to a number of mature persons: “What are your greatest concerns about growing older?” The most often cited responses were: (1) remaining independent at home without outside intervention; (2) remaining in good health and having access to adequate health care; and, (3) maintaining a reasonable standard of living without outliving one’s income.
Sadly, the majority of us have not made any plans for what can be a devastating financial and emotional experience-the need for eldercare. The impact of this event can call for dramatic financial and other sacrifices from our immediate families and others. Simply stated, every working American who is 50 and older needs to make plans for possible long term care expenses before old age catches up with them. Planning in this context does not necessarily mean that one has to purchase long term insurance, since persons who are now 70 and older and don’t have long term care insurance, can still benefit by advance planning.
Terry Savage, a financial columnist for the Chicago Sun-Times wrote in her 2009 book that “the greatest risk to one’s financial plan is ... the devastating cost of long-term care.”
Here are some sobering facts:
The over 85 age group is the fastest growing segment of our population.
Early sudden death is now being prevented by medical advances, which translates into
longer life with impaired health and a greater risk of needing long term care.
46% of persons 85 and older are projected to contract Alzheimer’s or dementia, according to the
Governmental agencies estimate that 6 of 10 Americans will need long term care at some point
in their lives.
Children are now living apart from their parents and this fact limits the care that they
can provide an elderly parent.
With current and projected deficits, the government will not have the ability to provide
for widespread long term care.
In the aggregate, only 16% of long term care expenses are currently paid for by either Medicare
The process of long term care planning has four discrete steps and engaging in this planning proves can add considerable value for every mature person, regardless of their age or station in life:
Understanding the definition of long term care and the various settings in which care may be provided, along with what role the federal and state agencies can provide.
Planning for the cost of long term care. This step may or may not include purchasing a long term care policy, but the time do so is generally before age 60, since premiums escalate fairly dramatically thereafter. The facts are that long term care insurance premiums have risen substantially over the past 5 years as insurance companies now have better empirical data with which to price their policies appropriately. Sadly, the largest increases have impacted females, since women live longer and are more likely to require long term care services. Thankfully, there are tax breaks for both premiums and benefit payments.
The need for, and selection of, long term care professionals.
Creating a personal care plan and selecting a long term care coordinator.
Got a financial planning question for Greg? You may e-mail him at firstname.lastname@example.org
Full disclosure: Greg Roberts is a certified life underwriter and a Certified Financial Planner. He holds an MBA from the Wharton School of Business. He is also the brother of Athens Patch editor Rebecca McCarthy.