Friday, September 07, 2007

We kinda knew there would be a hitch...

In a frank and moving essay (at least for us 50-somethings) Lillian Rubin, writing in Dissent, captures the reality of preparing for retirement only to find the previous generation has first claim on your life.
“I always expected to inherit some money because my parents have been reasonably well off for most of my life. Not rich, but comfortable and careful with money,” explains a sixty-two-year-old college professor. “But now, I doubt it. My father had Alzheimer’s and spent his last years, nine of them, in a nursing home. I don’t think anyone who hasn’t been through it really understands how terrible that is. I don’t mean just the financial burden, which, by the way, was over three-quarters of a million, but the human cost. Seeing someone you love turn into a thing, not a person, and there’s no way out, it’s just terrible, one of the worst experiences in life.”

He stops talking, visibly moved, struggles to contain his emotions, then brightens. “My mother, bless her, is eighty-two and doing great. She moved into one of those assisted-living places a year or so ago, and before she was there a month, she was already practically running the place. It’s great; it keeps her busy. But it’s very expensive. Even with the money she got from selling their house, if she lives another eight to ten years, which right now seems likely, she’ll use up her money, and my sister and I will have to find a way to pay the bills.
“That’s a big twist, isn’t it? You go from knowing you’ll inherit money from your parents to wondering how you’re going to support them. I don’t begrudge her, don’t misunderstand me.” He hesitates, smiles, then in a voice that mimics an Old West cowboy twang, “Ah’m just tellin’ you the facts, ma’am, just the facts.” [More]
This article is worth reading to the end, regardless of your age. The relentless addition of years to our lives means more years of relative dependence - we are simply outliving our OEM equipment. These additional years are to use the economic euphemism almost always "less than fully funded", especially with the end of defined-benefit retirement programs and the looming possibility of Social Security shortfalls.

In fact, the one program growing to match the longer lifespans - Medicare - is in a way exacerbating the core problem by extending lives even further. Hardly a bad thing.

We think.

The experiences of Boomers caring for our very old parents as described above is doubtless reshaping our own planning. This will reverberate downstream, I believe, particularly in asset-heavy family businesses like farming.

I'm looking for clues to these attitude shifts, and would welcome your own thoughts or concerns. For example, I think Boomers will have an even more difficult time releasing control of assets since the prospect of long, long term disability late in life will require seemingly immense assets.
The average cost of long term care in nursing homes, assisted living facilities and in the home increased over the past year, with assisted living and in-home costs rising more sharply than nursing home care, according to Genworth Financial's annual "Cost of Care" survey. And, in the face of rising costs for all categories of long term care, Genworth found 65 percent of Americans surveyed in a new national poll admit to having made no long term care plans for themselves or a spouse.

The average annual cost for a private one-bedroom unit in an assisted living facility rose 7 percent from the 2005 survey, to $32,294, while the combined average hourly rate for a home health aide for in-home long term care spiked 13 percent to $25.32 per hour. The average annual cost for a private room in a nursing home rose modestly by 2 percent over last year to $70,912. [More]

Given we are a singularly selfish generation to begin with, this excuse will feed right into our historic self-absorption and provide the justification to keep our hands on every penny until we die.

Secondly, I am working to devise a scheme to prevent myself from entering the whirlpool of medical care. Hey, I know it's futile, but there's gotta be a better way to draw the line on life-extending medical care earlier than the now-common do-not-resuscitate orders. I have no idea how that's going to play out.

Furthermore, we need to devise a new or at least updated social contract with succeeding generations. Their retirement will be severely impacted by my longevity. Some trade-offs - economic or otherwise need to be made.

Long-term care insurance (LCTI) has been hard to justify, but perhaps deserves a second look, as the numbers have now changed and odds increased for both men and women to spend some time in a nursing or assisted living facility. I genially despise most all insurance, but do recognize this black swan is becoming more likely every day for me.

The constant philosophical struggle to balance life and wealth is not getting any easier. Guidance from our religious and social traditions may only carry us so far compared to the new horizons technology (medicine) extending before us today.

In the end we are faced with a pretty stark question: How much life can we afford?


Anonymous said...

John, I'm 35 and don't plan on retiring at 65. My Mom retired at 60 from a municipal job my Stepdad is 61 and plans to work another four years or so in the medical field. I want them to spend all they want as long as it does not affect the farmland Mom owns. Their other investments are theirs. I don't see how people today can just expect to quit at 60 or 65 and never do anything productive again. I think we need that experience and enthusiam in the work place.

John Phipps said...


I kinda remember 35 and a similar attitude. It can change, trust me, but more of us are working longer because we find it enjoyable and meaningful. And many of us because we need.

The question the article linked to asks, is what happens if they do need to liquidate the farm to provide for a long and expensive end-of-life?

There is the issue that keeps me awake.