Cents and Sensibility
Cents and Sensibility
A lot of people already have heard or read about the "aging of America." Whether you've heard about it or not, the fact is that people are living longer today than ever before. In 1994, about one in eight Americans was age 65 and older. By 2030, one in five Americans will be 65 and older, according to the U.S. Bureau of Census. As this age group grows, so will the number of people who require nursing-home care. Long-term care insurance
one less thing to worry aboutPlacing a family member in a nursing home is a difficult, heartbreaking ordeal, and it not only affects the individual but the entire family.
Take, for example, the Hudson family. A year ago, they faced a situation many families encounter today: Their 78-year-old mother, Betty, had suffered a debilitating stroke and required around-the-clock attention.
For weeks, Betty's two sons, Mark and Don, and her daughter, Cathy, discussed their mother's need for nursing-home care. Mark and Dan disagreed about whether a nursing home was really necessary. Cathy was tired of trying to keep the peace and had withdrawn from the situation altogether.
What none of the three siblings had been able to admit was that they were uncertain about how they would manage the additional costs of a nursing home for their mother. Their father, who had died 10 years earlier, had left enough money for Betty to live comfortably but not enough to cover an extended nursing-home stay. The burden of the expense would be on their shoulders.
The Hudsons are just one example of the ever-growing number of families that face this situation every day. Fortunately, a visit to the family attorney revealed that an insurance policy, taken out by their father for himself and Betty a few years before he died, would pay all nursing-home costs and some home-care expenses for Betty as long as she needed them.
No one likes to think about a potential nursing home stay, but few can afford not to. One study by the U.S. Department of Health and Human Services showed that people age 65 face at least a 40 percent lifetime risk of entering a nursing home. In addition to the emotional toll such a situation can wreak on a family, the cost of this type of care poses a threat to nearly every family's financial security.
What complicates matters further is that many people believe Medicare or Medicaid will cover the cost of long-term care. The reality is that Medicare covers less than 20 percent of such costs, and Medicaid covers them only if you have virtually exhausted your life savings.
Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com