Like many conclusions I have come to, this one comes from a conversation with someone I know, love, and trust. In this case, I was talking with my mother about Long Term Care & Long Term Care Insurance.
A little background before I go deeper into this tangent: my dad passed away a few years ago after a bout with dementia that eventually took his life. My mother served as his primary caretaker until she was unable and my dad was eventually moved to a care facility. My mom and I were discussing her options for later in life and I found myself perplexed at the current choices available to her and most people her age.
As a financial advisor, I have been discussing end of life planning, as well as Long Term Care with clients for 15 years or so and every time we (the client and myself in a collaborative effort) have come to a conclusion, I have never felt good about it. Whether the client has the funds to “self fund” long term care; that is, take on the risk themselves and either they will have the assets to cover a short – long duration stay in a Nursing Home or they do not have sufficient assets – they have decided to go it without the backing of a Long Term Care Insurance Policy (the specifics of which I am not going to get into at this moment in order to focus on what I think is potentially a larger issue).
I immediately feel as though the client has a gaping hole in their overall retirement plan. If one or both clients in the case of a married couple need an extended and full-time Long Term Care, they will rapidly deplete their lifetime savings (you can research the cost of full time long term care on your own, or if you have had experience with paying for such a thing, you know exactly what the costs can be).
However, I have presented Long Term Care Insurance to clients and have seen them make the decision to purchase a LTCi policy to help manage the risk. If the client needs part time LTC, at home care, assisted living, or full time LTC – the policy will cover the costs based on the specifics of their policy…but these policies can be quite to very expensive. It’s difficult to look at a client’s lifetime of savings and say they should spend a bunch of it simply to protect from the fear of the Nursing Home. Clients have very legitimately spent an entire lifetime of saving these particular funds for retirement and I much prefer to see them spend it on traveling, pampering their grandkids, or heck, just passing it along to their own children. As I see it, their choices have been boiled down to: (1) Buy insurance and give their life savings to an Insurance Company or (2) do not buy LTCi and give it to the Nursing Home. These are not fair choices for anyone.
I digress…back to the conversation with my mother. She asks “what is the least expensive way to pay for nursing home care?”
Boy, that is a hard question, one that I have still after 15 years of this very same conversation.
Luck plays a bigger part of this equation than I am personally comfortable with calculating. “Health” is generally defined as “the absence of disease” though there is an element of Luck.
To the extent that Luck plays in your Health, Greg Glassman (founder and CEO of CrossFit, Inc.) says it “can only be bad.” What he means is that Luck, as it pertains to health is either:
Kinetic (“tire through the windshield”)
Genetic (“your parents fault”)
or Parasitic (“germs”)
So if I tell you the likelihood of your needing some sort of skilled nursing home care or therefore LTCi – does that help you know what decision to make? I don’t personally think so. The statistic can aid in your decision making…to whatever degree you place value in stats but it’s really up to luck and the unknown.
So here I am helping people make decisions about protecting their lifesavings and their legacy money based on Luck and the Unknown. But maybe I’m focusing on the wrong things?
I cannot control rising Nursing Home costs nor I can I control flaws in actuarial calculations that determine insurance premiums. It dawns on me in this conversation with my mom, what I can control…well, at least (hope to) influence; it’s the health part of this complex equation.
I can influence to some degree (not control) my own health. Things like smoking, drinking, poor eating habits, and exercise are all things within my control. If I make good decisions with these, will it lower my chances of needing Long Term Care? At worst, I think “maybe.”
Let’s focus on the exercise aspect because I think we all know that drinking alcohol and smoking should be things we consider obvious.
The 6 Activities of Daily Living (routine activities people do everyday without assistance & performance of these ADLs is important in determining what type of long term care and health coverage a person needs as he or she ages) are:
Continence (I.e. Bladder Function)
I’m going to focus on the last 2 (Continence & Toileting):
Transferring, getting in and out of bed for example, without assistance. I think exercise and specifically functional movements like dips, pushups, and burpees (yes burpees!) are all movements that can be practiced to help ward off one’s potential inability to “Transfer” themselves in and out of bed on one’s own.
Toileting: now this is different than our friend #4 “Continence” – which referees to bladder control. If you lose your ability to maintain bowl function, no amount of pushups and burpees are going to help. BUT, “toileting” refers to sitting down and getting up from the toilet. What functional movement does that resemble? A squat! Not just a “squat,” I mean a “below parallel squat” – one in which your hips go below your knees. Yes, the kind that your doctor, my well intentioned chiropractor and many health professionals have warned us specifically NOT TO DO!
The squat, when done correctly is as essential as placing one foot in front of the other in order to move forward. Mastering this basic movement of human functionality has a direct benefit to your quality of life No Matter Your Age. Ask any kid how to do a squat and they will show you a perfect ‘ass to grass’ squat; their hips descend back and down, their chests are upright and the torso is vertical. Their knees may cave inward a little but otherwise, their squats are perfect. Along the way something happens that we stop doing these foundational movements…and they may end up costing us a lot of money!
So that was the answer I gave my mom on the ‘cheapest way’ to pay for Long Term Care: “Squat.”
Three times a day x as many repetitions as you can comfortably perform with good mechanics. Practice sitting down and standing up. It’s the only thing I can say with any degree of confidence that will help you maintain independence as you age and you find your self in a juxtaposition between giving your hard earned money to either (1) An Insurance Company and (2) the dreaded Nursing Home.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual