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“Live Long and Prosper”
By Dr. David Edward Marcinko; MBA, CMP™
By Thomas A. Muldowney; MSFS, CLU, CFP®, CMP™
By Hope Rachel Hetico; RN, MHA, CMP™
The words of Mr. Spock!
Recently, during my promotional speaking tour for the summer of 2009, I had the occasion to visit a few nursing and related homes for the elderly, sick, infirmed and aged. This harkened warm thoughts back to my time at Temple University in Philadelphia, PA as a young medical student. So, as a health economist and former certified financial planner, I recruited some folks and did some research on the domestic aging population to refresh my understanding of the facts and figures; especially in light of the current healthcare reform political debates [DEM].
Just the Facts
According to the U.S. Bureau of the Census, there were almost 49 million people in the United States who were over age 60 in 2001. There are approximately 4 million people over the age of 85 living in the US and there are over 60,000 people older than age 100 estimated as of July 1st 2004. For every100 middle aged persons in the United States there are at present about 114 persons over the age of 65. This statistic will change as we move forward through time. In the year 2025, there will be about 253 people over age 65 for every 100 middle-aged people.
Enter the Baby Boomers
Beginning on January 1, 2006 at midnight and every 12 seconds thereafter for fifteen years, a baby boomer will have a birthday and cross over the age threshold of age 60. In the next 30 years, the 60+ age group will more than double, becoming 25% of the total population, and will have to be supported by a proportionately smaller workforce. Research published in June 2005 by AARP (based on data from 2002) estimates that: ‘‘In 2002, roughly $140 billion was spent on nursing home and home health care, with 24% of these costs being paid out of pocket” (O’Brien and Elias, 2004).
Aging Boomers
As the baby boom generation ages, the care needs will expand precipitously. Add to this, scientific and technological improvements in healthcare. These very same people will need more expensive healthcare and more expensive custodial care, and they will need it for an even longer period of time. Who will pay for this expanded need is not so clear. What is clear is that it will take money and lots of it to make these payments.
Money Preservation Variables
There are only three variables associated with the accumulation or preservation of money: ‘‘time, money and rate of return.’’ Time is reduced to the following two questions ‘‘How long until I will need my money?’’ and ‘‘How long will I live?’’ an uncertainty to be sure. Rate of return is either a function of the financial markets or the successful maintenance of a Long Term Care Insurance [LTCI] plan. Because of the volatility in the financial markets, the ‘‘money’’ question is equally as uncertain. In order to accumulate sufficient assets; an aging physician must ’tradeoff’ many other alternatives such as ’lifestyle.’
Assessment
What is certain is this—financial planning is important. More important is the implementation.
Conclusion
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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- FINANCE: Financial Planning for Physicians and Advisors
- INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
- Dictionary of Health Economics and Finance
- Dictionary of Health Information Technology and Security
- Dictionary of Health Insurance and Managed Care
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Filed under: Ethics, Financial Planning, Health Economics, Insurance Matters, Research & Development, Retirement and Benefits, Touring with Marcinko | Tagged: AARP, baby boomers, Bureau of the Census, CLU, custodial care, david marcinko, hope hetico, insurance, long term care insurance, LTCI, nursing homes, Thomas A. Muldowney |
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BLS Follow-Up
The average American who lives to the ripe old age of 100 will spend $3.5 million in his or her lifetime, according to an analysis of data from the Bureau of Labor Statistics.
A good chunk of that, more than $1.5 million, will have been racked up by your 50th birthday. The following 30 or so years — the average 50-year-old today can expect to live until 81 — will run an additional $1.4 million.
And, the lucky few who make it to 100 will need an extra $630,000.
Dr. David Edward Marcinko MBA CMP™
http://www.CertifiedMedicalPlanner.org
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When Accident Happens …
A few months ago, a senior client of mine slipped and fell in his basement. He broke his hip and couldn’t get up to call help. He was only found lying in the basement by his tenant two days later.
His life was saved, but he is permanently wheelchair bound and he will need nursing care that costs over $150k per year. This expense alone will run down his personal wealth in a matter of a few years.
As his financial advisor, what could I have done for him?
Three years ago when he was just retired from work, he approached me for retirement planning. Upon hearing that he was living by himself and his children were far way, I was adamant that he bought long-term care insurance. It was costly, over $500 per month in premium. He was very reluctant to “waste” money on insurance, but I was adamant.
I had my reason: folks over 65 year old have a 50% chance of needing long-term care at some point of their lives. The typical duration of need is about 3 years, but it could be more than 10 years in the worst case. Long-term care is expensive now and is getting more so every year. Unless you are a multi-millionaire, you could lose all of your retirement money to long-term care easily.
For seniors, a major cause for the need of long-term care is slip and fall at home. I was even trying to talk him into selling his townhouse that has two flights of stairs. That was a long shot, but about buying long-term care insurance, I just would not relent.
I wasn’t happy my client was badly hurt in the slip and fall accident, but you bet I was relieved and vindicated that he had listened to my advice and bought the long-term care insurance. Now all his nursing care and assisted living expenses are covered, and his retirement money has not suffered a bit.
When I reflect upon this incident, I can’t help but feel proud of what I do: to foresee the unforeseen, to watch over all my clients’ financial needs, to enable them to live a great life doing what they do best and enjoy most.
Michael Zhuang
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