Baby Boomers—Preparing for the "Golden Years"
If you are a baby boomer, you are about to enter the next phase of life: retirement. America's largest generation is reshaping the definition of "golden years" by refusing to settle for the old standard of rest and relaxation. Many baby boomers plan to pursue an active lifestyle that includes part-time work, volunteerism, and adventure when they are free from the daily requirements of nine to five. However, will they be financially prepared for the years ahead? With the ongoing responsibility of family, and the potential need for long-term care, will their future be as bright as their past?
The "Sandwich Generation"
It has been suggested that the baby boomer generation is shifting from the "me generation" to the "us generation." The familiar term "sandwich generation" refers to the trend that many people are faced with—an unprecedented challenge of working full-time while providing care and support for both their children and their parents. Rising costs in education and health care leave many wondering how they will manage to finance their familial obligations and still save enough for their own retirement. Americans are living longer lives, which means that soon-to-be-retirees can often expect to live another 20 to 30 years, making retirement one of the longest phases of life. During that time, it is likely that you or your parents may need some type of long-term health care, but don't assume that it will be covered by Medicare or Medicaid. Such thinking can be a costly mistake that can leave you with a depleted bank account and zero assets.
Nobody plans to go to a nursing home, but it's a lot easier to get there than one might think. Long-term care is generally deemed necessary at the loss of one or two of the following abilities: bathing, continence, dressing, eating, toileting, and moving from one location to another. At this point, it is likely that outside assistance will be necessary. Yet, if you think that Medicare will cover these expenses, think again. Medicare will provide 28 hours per week of home health care for up to 21 days. If you have a condition that requires round-the-clock care, you may be able to go to a Medicare-approved skilled nursing facility (SNF). But you may do so only within 30 days of your last hospital stay, which must have been for a duration of three days, not counting the day of discharge, and have a condition that you were treated for during your stay. At this point, the first 20 days of your stay would be 100% covered. After that, your stay will be partially paid for days 21-100, leaving you with a co-pay of around $100/day.
To qualify for Medicaid, the recipient must have little or no income or assets as determined by their marital status and state of residence, and will not have the option of receiving home or community-based assistance, unless so allowed by his or her state. In addition, the federal government mandates estate recovery when the recipient passes away, redeeming the cost of long-term care from the recipient's estate.
Oftentimes, nursing home residents could easily be placed in an assisted living facility (ALF) if they only had the funds. One of the benefits of long-term care insurance is that coverage can be provided as needed: at home; in an assisted living facility; or even through community-based services. In 2002, the government introduced a payroll deduction long-term insurance program available to about 20 million federal employees, and 24 states now offer tax deductions or tax credits to the public on long-term care insurance.
The message the government is sending seems to be clear: With such limited public assistance available, most individuals will be responsible for the future of their own long-term care plans. By proactively researching their options, baby boomers may obtain long-term care insurance for themselves and their loved ones, giving them peace of mind, financial security, and a brighter tomorrow.