Imagine working and saving your entire life only to find your income cut in half when you finally retire. You are forced to downsize, not able to enjoy the bucket list you had developed over the years, and living under the pressure of not spending one extra dollar - for any reason. Worse, imagine your wife alone in this situation, still healthy and with many years ahead of her. Her options? To live this limited lifestyle or go back to work at sixty-eight years of age.
We would never intentionally do this to our loved ones, but it can happen even when you provide the greatest diligence and attentiveness. It can result from deferment or through pure lack of knowledge, and it can occur through arrogance. Let me explain:
If you knew about an impending issue that could cause difficulty, but didn’t how to avoid it - then made it your mission to learn how and implement this strategy, the result would be diligence. If you knew, but did not know how to avoid the situation and chose not to learn now, the result would be deferment. If you did not know what you did not know, and never had anyone approach you about a thing, the result would be lack of knowledge. And lastly, if you knew, but believed it would never happen to you, the result would be arrogance.
What am I talking about here? The fact – not the idea or chance - that a whopping 70% of Baby Boomers will need long-term healthcare. 1
This is a true story of an amazing woman who watched her husband suffer for years while simultaneously watching their life’s savings consumed by the cost of his care. She was healthy, but eventually could not physically give him the care he needed. She endured relentless physical, emotional, mental and financial strain all at once. And the aftermath of those years has not been a lot easier. She has been forced to make decisions that none of us would want to make. She has been faced with redesigning her entire life simply because her husband became ill and they were unprepared for the escalating costs associated with long-term healthcare.
Her story is not the only story like this - there are simply too many stories to tell. As we speak, our little firm in Eastland, Texas, is helping six families face all the issues that come with having a family member in need of long-term healthcare. It is emotional. It takes a mental toll on the family. But for some of these families, they are not facing the physical and financial strain associated with it. They did it right. They were diligent. Maybe they didn’t know what they didn’t know and they didn’t know how to, but they didn’t let arrogance get in the way of protecting the ones they loved the most. They planned for this, even when they may have even thought it would never happen to them. They were not willing to risk what it could do to their spouse or kids if a plan wasn’t in place.
As you read a few paragraphs ago, seven out of ten baby boomers will need long-term healthcare.If Vegas had these odds, I might decide to retire to the Black Jack table. No one wants to think about their body breaking down or their mind drifting away. I don’t want think about it, but it is a real risk—a huge risk. People are living longer. It doesn’t mean we are living longer and healthier. Our lives are being extended by the advancements in medical research, but the health of our bodies and minds aren’t keeping up as well.
Another perspective: What happened to the housing market when the Baby Boomers were able to buy a house? We wouldn’t even have that thing called an iPhone if wasn’t for the Boomers? Where the Boomers are, booms happen. The cost of healthcare has become astronomical. The national median cost of nursing home care is between 7,400 and 8,300 dollars a month right now.2 And unfortunately, the aging boom is just starting. The oldest baby boomer is seventy-three years old. What do you think is going to happen to these prices?
This is not a Vegas game. This is not something you take lightly or say, “It won’t happen to me.” It is not something you wait to take care of later. “They don’t make things like they used to” is now a common theme in the insurance industry when they talk about long-term care. Carriers are seeing these same risks and their products are changing in response. Benefits that were a standard are going away, costs are going up, and underwriting keeps getting tougher. I fear there may be no industry for a hedge against long-term care at some point. Get it while the getting is still good. Chose diligence to protect the ones you love the most.
- 2019 U.S. Department of Health and Human Services
- 2018 Genworth Cost of Care Survey