This is not a pretty picture - the Queen of De'Nial is having a hard time keeping the lid on.
From McKinsey Quarterly: "By 2015, the United States will have more than 45 million households with people from 51 to 70 years old, compared with about 25 million for the “silent” generation, born from 1925 to 1945. Their real disposable income and consumption will be roughly 40 percent higher, and they will control nearly 60 percent of US net wealth."
That's the good news. But tough stuff happens quickly, while you make other plans. In this case, the recent crash of financial markets dramatically reduced the value of their portfolios (and that of their adult children who are drawing on them to care for their aging and not so well off parents) ... For many older adults, this is a real tragedy. Traditionally one would just "wait out the market", it would recover, and financial instruments would regain their value. This time there is a new twist - for many, because of the profound structural changes in the financial markets and bank failures, it appears that there may not be enough time to recover the value of their assets ... before they die.
In an article in the NY Times: More to Fear..., and recent "Surveys by AARP; the Transamerica Center for Retirement Studies and the Employee Benefit Research Institute have found that more workers nearing retirement age are putting off their plans to retire, curtailing contributions to their 401(k) accounts, and borrowing from their accounts to pay for living expenses, including credit card and mortgage debt." (and that was before the crash)
"The collapse of the housing market has hit older homeowners. According to the Center for Retirement Research, Americans over age 63 pulled $300 billion out of their home equity through refinancing from 2001 to 2006, lowering their net worth."
And now, if you have a reverse mortgage and depend upon the income for living expenses; if the the rapidly declining value of your home falls below the basis value of your mortgage ... you have a major problem.
Which brings us to the point of paying for in home or nursing home care - with these reduced assets. The average nursing home cost is $60,000 a year /$1150 a week. If you have any assets left, you can expect to consume them rapidly, beyond the limited coverage of medicare for rehabilitation - unless you have preplanned trusts that transfer the value of your assets to your children, with the right to live at home.
Speaking of Nursing Home Care: In Florida, 8500 nursing home patients are suing the state in a class action suit, for the failure to provide patient appropriate, much cheaper, and more cost effective in-home care services ... with patients claiming what amounts to false imprisonment in institutional settings by the nursing home industry, that they claim has taken over a large percentage of the available medicare and medicaid funding.
We should pay very close attention to this battle. Transitional nursing home rehabilitative care is often a critical part of an effective plan of care. However, the problem arises when the need for skilled and expensive nursing home care decreases, and these services can be delivered more appropriately, more cost effectively, (and are psychologically more appropriate) at home, in the community, or in an assisted living facility.
This pitched political battle is about the allocation of state and federal resources, to often competing components in the elder health care delivery system, (home health, nursing home, assisted living, hospice, etc) - and what role patient needs driven, "patient appropriate", and positive outcomes play in making these decision ... sounds like the current banking and real estate mortgage industry situation, doesn't it?
It is increasingly clear, once again ... as we found in the early 70's ... that warehousing mental patients for 10's of years; institutionalizing the vast majority of these patients - at 3-10 times the cost of providing community based services - was not only an outrage, but fundamentally the wrong plan of care - IF WHAT YOU WANTED WAS POSITIVE OUTCOMES AND QUALITY OF LIFE ... FOR THE PATIENT.
We need to urge our legislators to get it right - turn off the lobbyists campaign funding faucet PACs - and focus on patient needs and quality of life outcomes. What a concept? Again.