I encourage all my clients to have as much Long Term Care (LTC) insurance as they can afford. I think the conventional wisdom of , “they are wealthy enough to self-insure”, is stupid. My perspective is that if you are wealthy enough NOT to self self-insure, don’t. It’s smarter to fix your costs and transfer the risks to an insurance company, especially since LTC premiums are typically asset protected by law and that “return of premium” riders allow you to cash the whole thing in and walk away if you want to in the future. I sure wish we could buy car insurance this way. LTC expert Raymond Lavine shares some numbers and perspective below – Ike Devji
By Raymond Lavine
These are questions I ask my clients to internalize the issues involved with what care-giving and long-term care means.
I ask them: Who will be the caregiver? Will you be able to be the care giver? Do your children live near you? How would you define your family relationships? If you have siblings how do you relate to each other? Are you all living busy lives? Will their be consequences in your lives and theirs if they have to take care of you today?
If you project ahead 20 to 30 years, how would you take care of one another if you needed care? How would you pay for it? Who would be involved?
Here is a study of those issues. People like to know the numbers: It is projected presently that $3 trillion is currently being lost in income and accumulated retirement assets because children are being caregivers to their parents. What will the amount be when the caregivers need care-giving services?
Whether you have modest assets or are affluent – consider owning Long-Term Care Insurance whether you need comprehensive coverage or if affluent to own a sufficient amount for a catestrophic event where caregiver or facility services are 6 or 7 figures per month. Nearly 10 million adult children over the age of 50 are caregiver for their aging parents. Family caregivers are themselves aging as well as providing care at a time when they also need to be planning and saving for their own retirement.
Baby Boomers Caring for Their Parents is produced by the MetLife Mature Market Institute in partnership with the National Alliance for Caregiving and the Center for Long Term Care Research and Policy at New York Medical College. The study analyzes data from the 2008 panel of the National Health and Retirement Study (HRS) combined with estimates to determine the extent to which older adult children provide care to their parents, the roles gender and work play in that care-giving, and the potential cost to the caregiver in lost wages and future retirement income as a result of their support.
Web site to download the study: http://www.metlife.com/mmi/research/caregiving-cost-working-caregivers.html?WT.ac=PRO_Pro2_NewMMI_5-18421_T4297-MM-mmi&oc_id=PRO_Pro2_NewMMI_5-18421_T4297-MM-mmi#key%20findings
Findings:
• The percentage of adult children providing personal care and/or financial
assistance to a parent has more than tripled over the past 15 years. Currently,
a quarter of adult children, mainly Baby Boomers, provide these types of care
to a parent.
• The total estimated aggregate lost wages, pension, and Social Security benefits of these caregivers of parents is nearly $3 trillion.
• For women, the total individual amount of lost wages due to leaving the labor force early because of caregiving responsibilities equals $142,693. The estimated impact of caregiving on lost Social Security benefits is $131,351. A cautious estimated impact on pensions is approximately $50,000. The cost in total impact of caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044.
• For men, the total individual amount of lost wages due to leaving the labor force early because of caregiving responsibilities equals $89,107. The estimated impact of caregiving on lost Social Security benefits is $144,609. An additional estimate of the impact on pensions at $50,000, the total impact equals $283,716 for men, or $303,880 for the average male or female caregiver 50+ who cares for a parent.
• Working and non-working adult children are almost equally as likely to provide care to parents in need.
• Overall, caregiving sons and daughters provide comparable care in many respects, but daughters are more likely to provide basic care and sons are more likely to provide financial assistance.
• Adult children 50+ who work and provide care to a parent are more likely to have fair or poor health than those who do not provide care to their parents. The long-term financial impact of caregiving for aging parents on care-givers themselves, especially those who must curtail their working careers, is important, since it may will jeopardize their future financial security. There is also evidence that caregivers experience considerable health issues as a result of their focus on caring for others. The need for flexibility in the work- place and in having working caregivers with company sponsored long-term care plans is likely to increase in importance as more working caregivers approach their own retirement while still caring for an aging parent.
My thanks to: Raymond Lavine at Lavine Long Term Care Insurance, LLC for his analysis and guest commentary. Reach him with questions at 888.222.1789 e-mail: lavineltcins@gmail.com www.lavineltcinsurance.com