Baby Boomers and the Long-Term Care Scenario


baby-boomersCurrently, there are about 70 million individuals born between 1946 and 1964—the baby boomers. Baby boomers have a generational influence that has shaped the society in many ways. Now that they’re aging and approaching retirement, it is expected that they will dramatically impact the state of long-term care in the country.

Longer Life Span

Baby boomers live longer than their parents, typically by two years. Since they are expected to live longer, they are likely to spend more time in a frailer state. Because of this, most of them will require long-term care, may it be due to the infirmity of old age or because of more serious conditions such as dementia.

Independence in Retirement

Baby boomers don’t want to be a burden to their families and loved ones when they retire. They want to remain independent even as they face their elderly years and intend to stay in the comforts of their home for as long as they can. This can result to an increase in demand for in-home care as more members of this generation ages.

Apart from maintaining independence, baby boomers have a high tendency of facing their senior years alone. According to the National Academy of Social Insurance, 10 percent of baby boomers born between the years of 1956 and 1964 are single and never married. On the other hand, majority of those who married will likely be divorced or widowed between the ages of 55 and 64. Add the fact that most of them have no children. In 1989, 26 percent of couples between the ages of 25 and 34 are reported to be childless whereas in 1959, this rate is only at 12 percent.

Yes, baby boomers want to remain independent. However, a number of them have no choice but to face their golden years alone and to rely on paid care services. Given the figures above, long-term care is no doubt a pressing concern for this age group.

Wrong Mindset and the Rising Care Costs

Given that long-term care is a pressing issue among baby boomers, they should devise a course of action. However, this generation has wrong notions and may have underestimated the effects of long-term care if they face it unprepared.

In a study done by Fidelity Benefits Consulting, a 65-year old couple will spend $220,000 for out-of-pocket medical expenses before their death. On top of that, it is estimated that each spouse will spend $50,000 for care. Roughly, a couple needs to sock away at least $300,000 to cover for their medical and care needs in the future. However, it’s important to note that care costs are increasing. Therefore, these figures may be higher down the road.

Long-term care costs are on a steady incline. In 2030, the annual cost of nursing home stay is expected to be at $265,000, according to Harris Interactive Nationwide Financial Services. Meanwhile, the cost of homemaker services has hiked up by 4.11 percent in just a span of one year, as per Genworth’s Cost of Care Survey for 2014. If unprepared for future care needs, a baby boomer’s nest egg could be easily depleted.

Meanwhile, baby boomers are expecting their families to take care of them should they need care. At first glance, this may seem to be a cost-effective option. However, it can have a huge impact over a household’s budget. For 2012, the hours that unpaid family caregivers have put in have a cash value of $216.5 billion.

Baby boomers expect Medicare and Medicaid to shoulder a huge portion of their care expenses. However, Medicare generally doesn’t cover long-term care. It can cover nursing home stay but only for a maximum of 100 days and if you’re under a medical condition that disables you from doing basic activities. Medicaid, meanwhile, can cover for your long-term care needs only if you met their low asset criteria. Yes, these programs can help you with your care requirements, but nothing beats a good financial strategy against long term care expenses.

Baby Boomers’ Influence on Long-Term Care Insurance

Long-term care insurance is a fool-proof way to get covered against care expenses. It shields your wealth from being easily depleted because of towering care costs. However, baby boomers are changing the insurance business scene too.

With the huge number of individuals in the aging population, insurance companies are experiencing an influx of people wanting to apply for long-term care insurance. However, since care costs and life spans are on a continuous incline, some companies have miscalculated and have left the long-term care business. Meanwhile, those who are still in the field are setting higher standards for insurance applicants.

This goes to show that planning for long-term care should be done early. If you happen to choose long-term care insurance to pay for your care expenses, you need to purchase when you are still young and healthy, ideally during your 50s. Remember that age and health are determinants of your eligibility and how much the policy will cost. If your buy early, chances are you’ll easily qualify and get a reasonable rate.

The Best Action Plan for Baby Boomers

Most baby boomers have a plan for their retirement, but 57 percent of them have not incorporated long-term care in it. If you belong to this generation, you better start considering your possible care requirements and how you will pay for them. A good strategy to take is to apply for long-term care insurance as soon as possible.

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