Longer, Not Healthier, Lives

JAMA, the Journal of the American Medical Association as reported in the Wall Street Journal today, said that we are living more years with chronic conditions over the past 20 years.  We are living longer, but with more years at the end suffering from chronic conditions such as diabetes, kidney disease and Alxheimer’s.

In the U.S. the average life expectancy is now 78.2 but in good health without short or long term disabilities it is just 68.1 years.  Perhaps this is why LTC insurance companies no longer offer policies paying for more than 10 years of care.

The leading causes of disability are lower-back pain, and other muscle, nerve and joint disorders, according to the article in this morning’s WSJ.  These concerns are showing up at younger and younger ages, which is why people need to plan for how they will deal with their long term care while still healthy enough for insurance to be an option.

There are other ways to deal with this, but insurance is the least expensive way and the best, most complete solution to this problem.  Many other strategies are stopgap solutions (better than nothing) or ways to protect a bit of the assets from the Medicaid spend down.

Many people simply ignore aging and the potential for chronic conditions and believe it will not happen to them.  None of us wants to admit to getting older, or act it.  70 is the new 45 says the mountain biking senior as he or she whizzes past on the bicycle trail.  I say good for them and hope to be doing the same, but I still have my LTC insurance policy for when I can’t do that anymore.

So here is my plea to the financial planners, investment brokers, and attorneys out there advising their clients on preparing for the future.  An extra 1% or 2% is wonderful for the portfolio, the will and trust documents are necessary in planning, but have you actually discussed what happens to all this when long term care is needed?  It’s expensive!  How quickly will $100,000 a year for a nursing home or $45,000 a year for an assisted living facility decimate the entire portfolio, making the interest rate a moot point?  When the last and only asset left is the $2000 Medicaid allows, all the plans of who gets what are also moot when there is nothing left to leave.

Many more of us need to take advantage of the advice that planners and attorneys can provide, than currently do.  Has your advisor really discussed the impact of a bill this large and asked how you plan to pay it?  The costs of long term care have been increasing at 5% to 6% annually over the past 20 years and will probably increase faster with the baby boomers needing care.  Thus in 15 years a nursing home will be $200,000 a year and assisted living $90,000 and in 30 years its $400,000 and $180,000.  Are you ready?

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