This month is Long Term Care Awareness Month. Taking a moment to think about your - and your family's - possible future long term care needs is critical for us all since average life expectancy is now at 78 and rising. And, if you're already 55 or more, life expectancy has soared to around 84. This longer life can be cause for celebration or concern - especially concerns for your health and money. Two-thirds of people over age 65 will need some kind of long term care, and many of us aren't prepared for it. In fact, most of us haven't even thought about it. Perhaps I can help.
To better understand increasing longevity and its challenges, my company, Age Wave, one of the nation's thought leaders on retirement issues and Harris Interactive recently partnered with Genworth Financial to conduct the landmark study "Our Family, Our Future: The Heart of Long Term Care Planning." We polled more than 2,000 adults nationwide, gaining broad insights into how an individual's long term care needs could impact family members' lives, marriages, work commitments and financial stability. A complete report is available at this link. Some of the key findings from this eye-opening study follow.
Live Long, and -- Hopefully -- Live Well
Americans now say they would like to live to age 92 ... as long as they remain healthy. Respondents overwhelmingly reported that how long they want to live depends on how effectively they can maintain good health and independence. However, only 35 percent even considered the possibility of needing long term care if their good health is interrupted. Yet almost two-thirds (66 percent) of us will need long term care at some point in our lives.
The #1 Retirement Worry
Uninsured medical expenses are the top financial worry among men and women age 55 and over. People told us they worry most about these expenses' unpredictability and potential for high costs. The study also revealed that many Americans are confused about what long term care actually is, and they're surprised to learn that Medicare and/or traditional health insurance do not cover most long term care needs.
Why Plan for Long Term Care?
According the study's respondents, "not being a burden on my family" was the most important reason to plan ahead for long term care. Being "able to afford quality care in the setting I choose" was the next-highest priority, and "protecting my spouse's/loved ones' quality of life and future security" was next. When asked what aspect of "being a burden" worries them most, people told us that extended care can impose financial pressures on family members and also interfere with their lifestyles. Ironically, financial and caregiving challenges nearly always do fall on family members' shoulders when people fail to plan thoughtfully for their own potential long term care needs.
Caregiving is Everybody's Business
Currently, an estimated 66 million Americans serve as family caregivers, and 80 percent of all long term care support is unpaid. Spouses, adult children, siblings and grandchildren provide it. The impact of caregiving can be unexpected: while only 40 percent of caregivers anticipate that they will contribute financially to a family member's care, the reality is that 83 percent do. Beyond the out-of-pocket finances, we found that these responsibilities caused nearly half of caregivers to miss work, change shifts or even miss career advancement opportunities.
The #1 Age-Related Fear
We found that Alzheimer's is the disease people fear most in later life -- more than cancer, heart disease, stroke or diabetes. Today, one in eight, or 5.1 million Americans over age 65 have Alzheimer's. As Americans age, it is projected that our Alzheimer's rates could triple unless we see medical breakthroughs to prevent or treat it -- and I certainly hope we will! See this recent op-ed piece that I co-wrote with Supreme Court Justice (ret.) Sandra Day O'Connor and Nobel Laureate Dr. Stanley Prusiner for a more complete examination of this issue. And track the progress of USAgainstAlzheimers, a new bi-partisan political advocacy network committed to stopping Alzheimer's by 2020.
The Coming 'Caregiver Crunch'
Smaller families, the superior longevity of women, repeated housing relocations and the rising number of middle-aged women in the workforce will soon create a mass shortage of family caregivers: a "caregiver crunch." More than ever before, we all need to craft a game plan for how we'll handle potential long term care needs.
Talking and Planning for Your Peace of Mind
There are three core topics in family conversations about long term care: (1) what care options are most preferred (e.g. if you needed some help, would you prefer to be cared for at home, in an assisted living facility or in a nursing home?); (2) potential roles and responsibilities of different family members' (and possibly, help from a professional care coordinator, aid or nurse), should it ever be necessary to manage care; and (3) how to pay for any required long term care (with your or a family members' savings, through Medicaid or with a long term care insurance policy?). Alarmingly, we found that over 90 percent of all Americans have NOT discussed all three of these issues with their spouses, adult children and/or parents.
An Untapped Resource
Financial professionals can be valuable allies when you consider options to protect against long term care's financial and emotional costs. In fact, 78 percent of the study's respondents said they would find it helpful to talk to a financial professional about long term care. But only 16 percent have done so. Perhaps it's time to get that conversation started. To help get you ready, I have found these websites very useful: www.longtermcare.gov, www.caringtalk.com, and www.ResearchLTC.com.
My Own Personal Decisions
Six years ago, my wife Maddy and I stopped to weigh what might happen to our family if one of us ever needed long term care. We felt that purchasing the insurance would carry a cost; however, we concluded that there were far higher potential financial and emotional costs to avoid for ourselves and our children. We realized that if either of us ever needed some help, we wouldn't want to burden our children and take them away from their own families or careers to look after us. My parents bought their long term care policies in their 70s; we decided to buy ours in our early 50s when the rates were lower and we were far likelier to qualify. We also took advantage of special discounts for couples and tax advantages for small business owners. We think of our long term care policy as "peace of mind insurance."
Conversations about long term care planning can be difficult, but they're essential to maintain your family's financial and emotional stability. There are many different approaches to handling an extended care event and more and more community resources are now available to help you out. Regardless of which approach is best for you, give it some serious thought ahead of time. You'll give yourself far greater choices and control if you talk about it now. Don't wait for an emergency to ignite your decision making.
In fact, please share this article/blog with your loved ones and use it as a catalyst for productive family discussions.
I'd welcome all your thoughts, ideas and questions about these themes.
Ken Dychtwald, Ph.D., is a psychologist, gerontologist and author of sixteen books on aging, health, life transitions and retirement-related issues. They include Age Wave, The Power Years, and his new book, A New Purpose: Redefining Money, Family, Work, Retirement, and Success (with Daniel J. Kadlec). The founding CEO of Age Wave, he lives with his family in the Bay Area.
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Great point that financial professionals can be an important ally. For the upcoming December issue of the Journal for Financial Planning I have written an article which discusses tools financial planners can use to protect clients with Alzheimer's and other forms of dementia.
It is so important, as you say, to have those important conversations about long term care before there is a problem. A person's last few years should be spent in a comfortable and respectful way, allowing family and friends to benefit from a loved one's company. A failure to plan, however, can be emotionally and financially devastating for patients and their caregivers. Proactive planning can significantly improve quality of life for people and for their caregivers.
You set a good example for others by having had a conversation about long term care with your family while you are still young and healthy!
Steve Starnes, CFP®
Financial Planner
The Monitor Group
This article also makes me think of the opportunity costs that adult children incur by leaving a career, or just cutting back on their professional obligations, as a result of having caregiving responsibilities to their senior parents or other family members (this is especially true since many of these younger individuals likely will be able to work into their 70s, or even beyond.)
Our own research at Home Instead Senior Care corroborates this finding that being an "employee-caregiver" can bring with it professional challenges. For one, over the years, thousands of visitors to our "caregiverstress.com" Web site have indicated that in about 55 percent of cases, caregiving was taking some type of toll on their jobs. And a just-concluded study we did showed that more than 80 percent of caregivers surveyed had lost wages as a result of making caregiving-related job changes.
One good potential solution: a little caregiving help could very well mitigate this situation for many of these working caregivers.
It also seems to me that it’s time for the country to start engaging in a serious discussion about how workplaces can become more accommodating to those staff members who are caring for seniors—in much the same way that in recent decades, American companies have become far more “child-care friendly.”
Paul Hogan
Chairman
Home Instead Senior Care
All the best,
Ken
This article also makes me think of the opportunity costs that adult children incur by leaving a career, or just cutting back on their professional obligations, as a result of having caregiving responsibilities to their senior parents or other family members (this is especially true since many of these younger individuals likely will be able to work into their 70s, or even beyond.)
Our own research at Home Instead Senior Care corroborates this finding that being an “employee-caregiver” can bring with it professional challenges. For one, over the years, thousands of visitors to our “caregiverstress.com” Web site have indicated that in about 55 percent of cases, caregiving was taking some type of toll on their jobs. And a just-concluded study we did showed that more than 80 percent of caregivers surveyed had lost wages as a result of making caregiving-related job changes.
One good potential solution: a little caregiving help could very well mitigate this situation for many of these working caregivers.
It also seems to me that it’s time for the country to start engaging in a serious discussion about how workplaces can become more accommodating to those staff members who are caring for seniors—in much the same way that in recent decades, American companies have become far more “child-care friendly.”
Paul Hogan
Chairman
Home Instead Senior Care
If you do get a policy consider:
1- the monthly costs of LTC in your area. If your policy doesn't cover it all, you pay the difference. If you need to apply for Medicaid, how will that work? For my Dad it didn't work.
2-is there a delay before the policy begins to pay? My Dad had to pay the first 90 days himself before the policy kicked in.
3-consider a waiver of premium provision.
When my Dad needed a nursing home the $5800/mo for the nursing home exceeded his LTC benefit ($3000/mo, and most importantly NO WAIVER OF PREMIUM). With $1200/mo SS, he came up short, but that's where Medicaid comes in. He got Medicaid, but since Medicaid lacked a provision to allow $90/month from his SS to pay his policy, we had to let it lapse. The $90/mo would have saved Medicaid $3000/mo. I tried 3x to find a way, but finally gave up since there was no benefit for my Dad, just the cost of the ongoing premiums. Pretty screwy policy there, can't believe they didn't run into this before.
LTC Insurance is of particular interest to me in my role at the National Family Caregivers Association. One of the stress factors that family caregivers face is the question of who will take care of the family caregiver once their loved one is gone or if the family caregiver needs assistance concurrently with the loved one for whom they care. Another stress factor is that many family caregivers' finances are already constrained, so adding a LTC premium to the budget is a difficult choice.
Ken is right - this is an important discussion and one thatI hope will continue.
Lisa Winstel
COO
National Family Caregivers Association
thefamilycaregiver.org
All the best,
Ken
With bank deposit, money market, and CD rates at record lows, this is a question that most of us have thought about. So, are there better options? We believe there just may be. We’ve uncovered one such alternative (example below), and others may exist. One thing is absolutely true, if you don’t look for anything better, you’ll continue to get the same results!
Based on $30,000 deposit/premium
Bank CD's
Interest rate .85%
Payment on death to Beneficiaries $30,000 plus interest earned/due
Tax free income for Long Term Care N/A
Early cancellation penalties 30 - 90 days of interest
Walk Away Value after 16 years $34,368
NEW Alternative
Interest rate 4%
Payment on death to Beneficiaries $50,981 Tax Free
Tax free income for Long Term Care $152,943 ($2,124 monthly for 72 months)
Early cancellation penalties 100% Return of Premium from Day 1
Walk Away Value after 16 years $34,551
This alternative provides day one benefits, including a $50,981 payment to beneficiaries and $152,943 of tax free long term care payments to protect your other important assets. You also have 100% access to your premium not to mention a guaranteed interest rate. Why settle for just a small return when you can receive these other needed benefits while maintaining flexibility and access to your money?
Contact our office so we may discuss what options would be best for your situation.
800-524-6445
www.chamberlinfinancialgroup.com
Scene: Sheriff standing on a podium rounding up a posse...
"...and that's why YOU, and YOU, and YOU are riding with me tonight! Am I right? Well?? What do you say?"
Old geezer carries a bicycle onto the podium:
"I say this: Ladies and gentlemen, boys and girls...MEET the future! The horse is dead..."
Sheriff: "Just what do you think you're doing?"
Old geezer: "Well, you had the crowd here, that's half my job, so I thought I'd do a little selling."
The big difference is, it was funny in the movie.
This is NO place to shill your financial planning group.
Great article on long-term care--this is the first time I've heard that people now want to live to age 92.
I wholeheartedly agree on the financial reasons people should plan, especially given your findings that Americans aged 55+ are worried about medical expenses--and that many of them don't know what LTC is or how it typically is paid for (or, in the cases of Medicare and most health insurance, how it's NOT typically paid for.) So it staggers me to think you've found that while 78 percent of people feel they would benefit from speaking to a financial advisor, only 16 percent have done so.
Actually, though, these figures track with the results of similar research we've done at Home Instead Senior Care. This study showed that in the U.S., half of seniors and about three-quarters of adult children have not planned for (or even thought about) financing or arranging senior care.
So at Home Instead Senior Care, we think the country is ready for a major public-education program letting adults of all ages know that RIGHT NOW, they need to start planning and saving for their later years. Your thoughts?
Paul R. Hogan
Chairman
Home Instead Senior Care
I like to share this article that discusses important things you'll need to consider when choosing long-term care: http://goo.gl/WMWeC
Thanks for your note. I'm struck by the fact that we plan for our vacations, our kids plan for their college experience, we plan for birthday parties - but as we saw in the "Our Family, Our Future" study, almost no one plans for handling what might come up as we and our loved ones grow older. I'm not naive - and I know that these can be deep discussions, but discuss these topics we must! And....I'd encourage people to use this blog as a catalyst for a good and caring family discussion.
All the best,
Ken
When I moved from New Jersey to California exactly 40 years ago, it never occurred to me that one day my parents would be in their late 80s and in need of care. Similarly, I imagine that our children will pursue their work and loves without factoring what shape Maddy and I might be in decades from now. And so, even though it may require some serious thought now - planning to be able to either care for yourself or to have the funding and/or resources to receive excellent eldercare, should it ever be needed, makes solid sense.
all the best,
Ken
IMHO Long Term Care insurance is fraudulent. One of the obvious misleading claims made is payment for Hospice care. It is stipulated that if there is any other payer, then no. Since Medicare covers Hospice care, this so called "benefit" is never collected.
Ask people in the Long Term Care industry (Not insurers) what they think of LTC insurance, and how often it actually pays off. I think you will find you are much better off putting that money in a savings account for when the time comes, and then you will not have to go begging to an insurance adjuster who is trained to say one word in a thousand different ways, that word being NO!
No peace of mind in LTC insurance!
Most my clients have 0 day elimination for home care, so they arrive home from rehab with equipment and home modifications in place, and their safety is assured. I hate long elimination periods--you need to watch out for "service day" contracts that require you receive paid services for any day to count. (Get a neighbor in for an hour and spend $10 to count that day!) Calendar day eliminations are better. Look for a specialist who has seen many claims and knows what to watch out for in plan design. As one of my clients said, "Your program made my wife’s last days infinitely more comfortable, and for that I am eternally grateful." Long-term care insurance, when designed well from a good company, works wonders.
It is not an attempt to "weed out" people, but rather a client's choice to balance premium against an up-front "deductible".
Unfortunately most people only look at premium when making this decision and not at the extra cost and stress of having to pay for care during that period at claim time.
Here's something to watch out for: Many older policies only count days toward the waiting period when you actually pay for outside, professional care. Which means that if you only hire home care help 3 days a week, it could take 8-months to accumulate the 100 days. If this is how your dad's policy works, you might want to hire a little help every day. Note that even 1-hour of care in a day will count for the full day. However, many home care agencies have minimums. I have helped clients negotiate with home care providers for shorter minimum visits during the waiting period so that these days can be counted as quckly as possible.
Newer policies either give a credit (a full week's credit - 7 days if you only get 1 day of service in the week). OR they simply count days of disability, not care services.
www.ComfortLTC.com