Real Survivor: Millennials, Gen X & Late Boomers Aging & LTC
The CBS-TV program “Survivor’s” fall 2016 season 33 is featuring Millennials Vs. Gen X. Most people are aware of the youthful Millennials and everything said and written about this generation. But both these generations, as well as what they call “Late-Boomers” are very tied together with the issue of aging, retirement and Long Term Care.
If you are a member of Generation X (GenXer – those born 1965–1980) or a Late-Boomer (those born 1956–1964) the issue of extended Long Term Health Care better be a topic you are thinking about when addressing your future retirement. You should be saving money in your 401(k), IRA, 403(b) and other accounts so you can enjoy a long successful retirement. Life expectancy continues to rise so your savings must last a very long time. But long life brings health issues and many people fail to safeguard their retirement savings from the cost of extended care.
Many Millennials expect to receive an inheritance from their parents. The facts suggest otherwise. Not only could they receive less than past generations, they may become caregivers as their parents require extended Long Term Care (LTC). Unless their Gen X or Late Boomer parents planned for LTC the burden of caregiving and negative economic impact will fall flat on their laps.
“As we prepare for retirement, recognize that Long Term medical care costs are likely to be an issue. No matter what stage we have reached, now is the time for most of us to begin planning for how we are going to address our own Long Term Care. Adequate planning and a little foresight can make a huge difference in whether we will be prepared,” said John Hoffmire writing in the Desert News. Hoffmire is the Director of the Center on Business and Poverty at the Wisconsin School of Business at UW-Madison.
He indicates that many Americans think Medicare or health insurance will pay for LTC costs. However most LTC is custodial in nature and custodial care is not covered by any health insurance or Medicare (health insurance for those 65 and older). Custodial care is the type of extended care most of us will require due to extended illnesses, accidents or the impact of aging. This includes help with what is called ‘activities of daily living’. These are things which we all take for granted; eating, dressing, bathing, etc.
If you are a GenXer or Late-Boomer the biggest risk to your retirement income and your Millennial’s inheritance are the high costs and burdens of Long Term Health Care. The government programs that exist are often of little assistance when it comes to paying for extended care at home, assisted living, nursing homes and other forms of Long Term Care. Medicarecovers nursing-home stays for a very limited period of time and only if you require skilled care and are deemed to be improving. Medicaid, the medical welfare program, requires that you spend almost all of your own money before it pays for LTC.
Since the Deficit Reduction Act of 2005 became law you can no longer simply transfer assets to family members in order to qualify for Medicaid. Although that same law allows states to set up Long Term Care Partnership Programs which provide dollar-for-dollar asset protection or what is referred to as ‘asset disregard’ IF you have a qualified Long Term Care Insurance policy. It allows you to protect part of your estate equal to the amount of money paid out by your LTC policy. Most states have plans in place. This link shows which states have LTC partnership Plans in place and which ones are reciprocal in the event you move from one state to another: http://www.nyspltc.org/reciprocitymap.htm. For more information on Medicare and Medicaid, visit www.Medicare.gov.
Adult children, including Millennials, will find it very difficult to be a caregiver. A recent article on the AARP website gives the example of ‘Becky’. Becky is like so many other daughters today and in the future who will attempt to struggle with being a spouse, a mom, having a career and being a caregiver. The physical, emotional and even financial burdens on them are huge. Caregiving is also not an equitable event either. In the vast number of families, one of the siblings (generally a daughter) bears the brunt of the sacrifices. This impacts the relationships between your daughters and sons and their spouses. Fights about “who is doing their fair share” split families. In addition, decisions on how to spend a parent’s savings for paid caregiving or facilities many times becomes a balance of what is best for the parent needing care and thoughts about what amount may be left over for inheritance creates a very non-loving environment for the family.
“This is why affordable Long Term Care Insurance has become an important part of many people’s retirement planning,” said Matt McCann, a nationally known expert on LTC planning. “The time to plan is well before retirement when your health tends to be better and premiums much more affordable. GenXers and Late Boomers should act on this key part of retirement planning. While safeguarding future retirement income and assets is a major concern for many people, easing the burden on family and the peace-of-mind that provides is a big part of the equation,” McCann said.
A recent AARP study says 88% of middle-income caregivers said it was much harder to care for a parent then they expected. Caregivers reported much higher levels of stress, depression and health issues of their own.
Long Term Care Insurance can provide you with many options. Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI), says customers see LTC insurance as “nursing home avoidance insurance”. He indicates what many of us already know. Most people will feel more comfortable in their own home and Long Term Care insurance provides the tax-free resources to pay for quality care while easing the burden on adult children. It is choice and independence that many people say they want as they approach retirement. LTC insurance is a way to give you that control and peace-of-mind.
Most experts suggest discussing your options with an insurance agent who specializes in this type of policy. Premiums and underwriting requirements can vary dramatically. Slome suggests consumers work with a specialist in Long Term Care.
“It really takes experience and some time to develop a real expertise in the field,” he said.
Many type of Long Term Care plans are available including Partnership plans, shared benefit plans for spouses, single premium plans with death benefits and annuities with LTC benefits. This gives consumers many affordable options to fit their situation. In addition, very affordable short-term plans are now available in many states which will at least give you some choice and protection at affordable cost.
The AALTCI can help you find a specialist or do an internet search on ‘Long Term Care Specialist’. Keep in mind very few real specialists exist. The most experienced LTC specialists are licensed in most states and can discuss your situation on the phone and via ‘screen sharing’ where you can sit at your computer and see the specialist’s computer screen while you ask questions and learn your options.
This ‘Survivor’ game of safeguarding your future retirement is one you should take seriously. You can enjoy the TV game and see how the Millennials do against their older GenXers. The question is, if you are a GenXer or Late-Boomer, are you wise enough to act before your choices are few and you get voted off the island of successful retirement.
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