The most important financial issue for the next 40 years

LONG TERM CARE INSURANCE

To me, long term care insurance is the most important financial issue of the next 40 years. My first objective is simply to alert you to the issue and to give you something to think about.

I am going to address two potentially significant areas of this topic and attempt to illustrate why I feel they are important.

The first item I want to look at is perhaps obvious, but we need to think about what has happened over the past 50 years and what the implications are for our future.

This starts/begins with truly good news. We are living much longer than we did only 50 years ago. When I was a teenager in the 1960’s we thought of someone age 65 as beginning to get old, someone age 70 as very old, and someone age 75 as probably dead. Forget the change in perspective due to turning 65 today. I defy anyone to consider someone age 65 as old today. The same goes for age 70. Age 75 is where age 65 was 50 years ago, just beginning to age. I had a 70 year old man walk into my office a few years ago – with his mother!  How many of my generation remember their great grandparents? I have a friend who thought she was pregnant; had she been, the baby would have had two great great grandmothers! Virtually everyone in my generation smoked, did not watch what we ate, and had sun tanning contests. If you exclude school gyms, I remember there being 3 gymnasiums in Montreal. I think we have a few more today!

The fastest growing segment of our population is the “over 85’s”. Our “retired” life is becoming almost as long as our “working life”. Further, our definition of “retirement” is different. Very few of us have as our objective to spend our life stretched out on a beach somewhere, enjoying a cocktail. To most of us, that sounds boring. Sure, we will do some of that; but we will stay active as well. We may change what we do; reduce the hours that we work; change our “job” - but we will continue doing things. That is what keeps us young. We walk, we go to the gym, we watch what we eat, and we have significantly cut our smoking. We are living longer and we are enjoying that very much.

However there have been changes in our lives as well. Divorce – which was a taboo in Canada (actually illegal until 1968) – has become common. Families no longer live as close together. I live in Montreal and I have one brother who lives in Perth Ontario and another in South Carolina. “Two income families” are routine today. The largest threat to everything that women have accomplished since the depression is looming ahead of us – either that or a major societal change. I am not getting into the issue of “right” or “wrong” here, but traditionally women have been the caregivers in our society. That may well have been OK when women did little work outside the home, but it sure will cause some issues today. What is the largest cause of employee absenteeism today? Eldercare. Today women spend more time looking after an aging parent or a relative than they do looking after their own children. Caregiving is stressful. On a scale of 1 to 10, most report it as being a 7 or an 8.

OK – this is where we are. I do not believe anyone can realistically deny these changes.

The second item can best be termed “denial”. Canada has had a government funded health system for many years and it is perhaps normal to feel that “The Government will look after us.”

In many cases, Canadians believe – and largely because of Medicare – that the “Government will take care of us.” Sorry, not in this case. Medicare covers only care whose primary objective is “curing you”. Long term care does not “cure”. It has never been part of health care in Canada and realistically never can be. Let’s start from the basics. Taxpayers provide the money which the governments use to provide services. I was born in 1945 and we had 42 taxpayers for every retired person. It would not have been a major problem to collect sufficient taxes in order to pay for the health needs of older Canadians. Today we have just under 3 taxpayers per retiree and that number will soon hit 2. There is no way that our governments will be able to charge sufficient taxes to pay the bills, plus the longer we live the higher the bill gets – and the “over 85” population is exploding.

A study was done in the United States. Parents were asked what they wanted most from retirement: “Independence; not disturbing our children’s lives or careers; not affecting our grandkids’ education.” They then asked the children of those parents the same question: “We will do anything for our parents. They raised us. We will give up careers, promotions, and our children’s’ education – anything for them.” Faced with those two choices, neither is correct. We know that we will do our best for our parents. We love them and we will do all that we can for them.

Let’s end this alert with just a few more numbers:

Health care costs (in Quebec):

• At age 55                      $3,431 per person.
• At age 65                      $6,237 per person.
• At age 75                      $11,224 per person.
• At age 85                      $21,372 per person.

The average cost of home care for Quebec seniors?

·         About $3,500 per month

Quebec spending on homecare:

·         Based on the most recent numbers – about $37 per year

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Chances of needing care during your lifetime if you are now age 65 (like me):

·         33% if you are a male.

·         50% if you are a female

End of stats – back soon with a solution.

Click these for more information on the respective topics :
Long Term Care Insurance
Disability Insurance
Critical Illness Insurance
Life Insurance
Mortgage Insurance