This article is co-authored by Carol Schmidlin and Ann Vanderslice
During your working years, there may have been a nagging little voice inside your head worrying about what would happen to your family if you died before you’re able to send your children to college or marry them off. As you get closer to your retirement and the kids seem well on their way to being self sufficient, the worry changes from a concern for your early demise to the other end of the spectrum – living too long.
The initial concern in living too long is, of course, that you’ll outlive your savings. A subset of that is what your savings get spent on. You must worry about inflation, and the longer you live the greater the compounding effects of inflation. Then there’s the increasing concern of tax rates going up. The greatest risk you face in retirement is neither of these. The greatest risk a retiree age 65 or older faces is the risk that they’ll need long-term care.
The Baby Boomer generation has a very high chance of coming face to face with a long-term care event for themselves or a loved one. About 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetime. Over 40 percent will need care in a nursing home for some period of time. The number one factor that increases your risk of needing long-term care – AGE.
The consequences of an extended illness will be emotionally and financially devastating for many. A story with a real-life example about a couple that did not have the resources to pay for long-term care, which ended in a loving marriage being destroyed may help you get the picture.
This story involves a couple, we’ll call them Joyce and Jim. Joyce is 77 and Jim is 79. They have been married for 49 years and throughout that time, they were rarely separated for more than 24 hours.
On Christmas night, Jim developed a stomach problem and was admitted to the Veterans hospital. During his stay, there was a snowstorm, and Joyce slipped on a patch of ice and broke her hip. The trauma exacerbated what had been her early stages of dementia. She was hospitalized as well, but in a hospital across town. Jim’s stomach problem was resolved, but Joyce’s dementia was a different story. Whether Joyce’s fall caused her dementia to progress is not certain but her condition quickly deteriorated. Her care became a full-time responsibility for Jim, and as Joyce’s condition worsened he could no longer cope on his own.
Jim and his two daughters met with the doctors and social worker. It became more real when the social worker asked if they had long-term care insurance. Neither Joyce nor Jim had a long-term care insurance policy, nor did they have a lot of money. The children hoped an assisted living facility would solve the problem and keep their parents together, but money was an issue. They were asked to pick their top five choices of local facilities and the social worker would try to find a bed.
Money provides options and in this case, there was not much money and very few options. The daughters met with their father that evening and were told their parents had made a promise to each other to never be separated. He acknowledged the pact was a “heart thing” but he believed he would never allow it to be broken. The next morning, the social worker called to say that they had found a bed for Joyce upstate, and just like that, Jim and Joyce’s lives changed forever.
Is 2011 the year you put a plan in place so that should you ever have a long-term care need, you will have the resources to receive the care you want? This spring there will be a long-term care open season for the Federal Long-term Care Program from April 4th through May 27th. During this time there will be abbreviated underwriting, which may allow those with health conditions to qualify for a policy that you wouldn’t otherwise be able to obtain. This is an excellent opportunity to explore the FLTCIP 2.0, along with other plans available through a private insurer.
