Baby Boomers Need to Think About Long Term Care Insurance Differently
Baby Boomers have been changing the landscape of American life ever since we were sitting in front of our parent's Philco TV set sporting Davy Crocket coonskin caps. And as we retire and yes, get old, that trend is set to continue.
There was a time when no-one had to think about Long Term Care. Generations of families lived together on the old homestead. Grandma and Grandpa looked after the kids, and then the kids looked after Grandma and Grandpa. We're not mentioning great-Grandma and Grandpa in this story as less than 1 person in 10 as recently as 1900 actually lived to age 65.
50 years later, 9 out of 10 people were living to 65 and Americans had moved into to the cities and suburbs. Nursing homes, built around a hospital model, became the solution to America's new Long Term Care problem. Currently 2 out of 5 Americans can expect to spend some time in a nursing home.
Still, even today, the majority of Long Term Care is provided informally by family members... mostly spouses and daughters.
As Times Change for Baby Boomers
The Baby Boomer generation is responsible for huge changes in the social and demographic landscape of the country. Higher divorce rates, smaller families (one in four Boomers has no children), greater geographic mobility and the increase of women in the workforce all mean it is less likely that you will find yourself being cared for by your family. Instead, Baby Boomers are going to increasingly need to rely on paid caregivers to maintain their independence.
At the same time, Baby Boomers are much less likely to accept the "institutional" care provided in nursing home-like settings. Even the last 10 years have seen a huge rise the in the number of assisted living facilities and home care services. These "alternative" care services are projected to become the primary means of care within the next decade. And more radical alternatives such assisted living cruise ships and "grey communes" are on the horizon.
Long Term Care Insurance is Needed More Now Than Ever
Whatever the model Boomers choose to receive care, they can expect to pay a lot more for it than seniors do today. As boomers age, the demand for care is set to increase exponentially while the percentage of working age caregivers decreases, causing dramatic price increases. At the same time, Government safety nets like Medicaid will come under increasing strain as the proportion of tax-payers in the economy decreases.
Recognizing the potential crisis, state and federal governments are doing everything they can to encourage the purchase of private Long Term Care insurance. Many states have introduced partnerships plans that provide financial incentives for people to purchase Long Term Care insurance.
For me, like many boomers, the decision to buy insurance was less about prognostications of doom and more about knowing that I'll have a choice. Because, when the time comes that I need care, that cruise ship sounds awfully interesting...