The Wall Street Journal ran an article on Feburary 22, 2006 discussing long term care costs. As the article notes, it’s especially important for women.
Many women spend their declining years taking care of their spouses and loved ones. By the time they are in need of assistance, there is no one left to help them out. Their longevity becomes a financial liability. She ends up in a long-term care facility on Medicare or Medicaid to pay for the bills.
The compelling figure is that 11% of seniors will rack up between $100K-$250K in expenses. An additional 5% will pay over $250K .
What’s a girl to do? There’s really only two things outlined in the article.
1) Buy a long term care insurance policy. Most are for 3 years, which the article points out will only delay impoverishment. The sidebar in the article says 8% of the folks who buy this type of insurance exhaust the policy, i.e. stay longer than 3 years in a facility.
I have to tell you a sad story here. While I was working for the nursing home facility (field installing servers), I met a lot of different folks. One day I was accosted by this nice bouncy and friendly resident. She was full of questions. Turns out this sassy granny in her jogging suit wasn’t a resident. She was visiting her husband. He’d been in there for 10 years after a debilitating stroke. 10 years is a long time.
2) Longevity insurance. It’s a lump sum payment you make after age 55 which will give you guaranteed income later in life. But the catch is if you get sick before you reach the age when the payouts start. You’ll be screwed in the meantime if you haven’t saved enough.
So what to do? SAVE NOW. Above all else, save money now.
There are a few things I saw that gave me some comfort about nursing homes. One is that the staff, or at least most of the staff really cares about their residents. It’s a job, but it’s not without emotions. The second thing is that the nursing home administrators will work with a family to get them covered to stay in the facility. Even if that means helping people apply for Medicaid. The other sidebar in the article says that 6% of seniors who go into the home paying their own way will end up on Medicaid.
The last thing is that even young people can end up in nursing homes. I remember one bitter young man, a smoker. He was wheelchair bound and living in the facility until his legs healed up enough for him to go home and care for himself. He had had a catastrophic accident of some sort and didn’t have anyone at home to help him, so the state put him into a home.
So many of us are maybe one or two financial disasters away from the poorhouse. Start saving now, little by little. Plan now for the future before it arrives.
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Thanks for the post. I agree wholeheartedly. When Madame X asked the question ‘What makes you feel poor?’, I wrote that I feel poor when I think about having to take care of my parents if they get sick. They didn’t have the foresight to purchase long term care insurance when it was still affordable. They were too busy taking care of other people. And although they’ve saved up a bit of money for retirement, they’re in that not-so-sweet spot of having too much to qualify for medicaid but not enough to pay out of pocket if they need long term care. It keeps me humble. No matter how much I save, I know that it won’t necessarily be enough. It doesn’t prevent me from enjoying life, but it definitely influences my spending habits.