The death of friends, including lovers and family, will be a powerful and debilitating force. As we age, the names listed in our personal phone books will slowly be crossed out. To sense the extent of the problem, we can imagine a party to which a large number of long-time friends are invited. Now picture the same guest list when we are 65: One out of four, 25% of our male friends, will have died. By the time we are 85, only one out of five men who were our friends at age 35 will still be alive, and only two out of five women.When we travel to a city where we once had many friends, it will be painful to try to reconnect with them. Too often the person on the other end of the phone will say, "He died in March, didn't you hear?"To clearly understand how death will rob us of our friends as we age, consider that a person who had 200 friends, close associates and relatives in his/her life-circle at age 35 will -- at age 75 -- be losing to death one male friend every two months and one female friend every four months. Ten years later, when that person is 85, the rate of loss will have doubled, with a male friend dying every month and a female friend dying every other month. The death rate difference between males and females means that those of us still alive at age 85 will have twice as many women friends as men, assuming we started with an equal number of each in our earlier days.
- First, in the larger context of the inevitability of human aging and death, each of us must find a way to live out our final years with dignity and, hopefully, a little joy. Cross-generational friendships are simply one commonsensical and traditional way to do this.
- Second, and probably more importantly, making good friends with anyone -- young or old -- is never a one-way street. You can't force someone to become or stay your friend. Bridges of affection are built and maintained between people only to the degree that there is both a mutual attraction and sharing, which usually means that each person has something to offer the other. Younger people, for example, are often attracted to the knowledge and experience of a person who has resided on this planet a little longer. And older people are commonly drawn to the energy, fresh ideas, and vivacity of people who are many years younger.
- Consider policies from good-sized, reputable companies rated AAA by Standard & Poor's or Moody's, or A+ by Best Insurance Reports. Many small companies that issue long-term care policies are poorly funded and at risk of cashing in their chips before you do, so make sure you've picked a solid insurer.
- Be sure that the daily benefit the policy pays enough to provide decent care when combined with your Social Security and other income. For many people, this will cost at least $120-$150 per day. Also, look for a policy where the benefit amount increases with inflation. Given fast-rising costs in this area, many experts consider a 5% annual inflation escalator to be on the low side.
- Realize that many policies limit the length of coverage to about three years, unless you choose to pay outsized premiums for unlimited coverage. Be sure you know what you're buying. Unfortunately, lots of people buy policies that cover a relatively few number of years -- precisely the period they would do better to self-insure.
- Try to make sure you know how much premiums will cost in future years before you buy your plan. Or, put another way, decide on one of the relatively few policies that will absolutely guarantee the amount of your yearly premium. Beware of policies that will only say rates will not change with age or health -- many companies simply raise rates for all policy holders, claiming that the increase is to cover higher than expected costs.
- Understand that policies have widely varying non-coverage periods. For example, a more expensive policy may provide that you only need be in a nursing home for 20 days before coverage kicks in; a less expensive one may require 100 days or more before the policy pays benefits. For most people, the 100-day or longer period may be worth considering if the cost is sufficiently lower.
- Carefully read fine print regarding home health care. For people with serious medical conditions requiring round-the-clock care, home-based care can be as expensive as a nursing home. Some policies that are advertised as providing home health care simply limit the amount of care provided to an unrealistically low level, and even how much services can cost, effectively guaranteeing that an inadequate level of care will be provided by people with limited skills.
- Just being elderly and infirm isn't enough to qualify for long-term insurance benefits, which helps explain why the majority of people living in elder communities and assisted living facilities aren't eligible for any benefits. In short, make sure you understand what medical condition will trigger the payment of benefits. Most policies won't pay unless you meet one of two main criteria: Either you're unable to perform two (or -- with the poorer policies -- three) activities of daily living, such as eating, bathing, using the toilet, moving about, and maintaining continence; or you have serious mental or cognitive impairment, such as that caused by Alzheimer's, dementia, or other disease.
- Check the periodic ratings published by Consumer Reports magazine, which take into consideration many important issues. Back issues of the magazine, along with a comprehensive subject matter index, are available at many public libraries.
Still, you might be thinking, "What about buying long-term care insurance?" I'll discuss that one in my next post.
- go to a lawyer who will feed your info into a computer and print out a nice new one for you to sign in front of witnesses, usually charging between $300-$1,000 for their services
- adopt a self-help approach by using software such as Quicken WillMaker, or
- go online and use one of several reliable online wills at a cost of about $70. Since this is a Nolo blog you'll probably guess that I think that Nolo's Online Will is the most legally comprehensive and easiest to use -- but hey, you don't have to take my word for it.
Since many of us have no hope of ever saving the megabucks needed to produce this yearly cornucopia, the main effect of these messages is to make us anxious. Fortunately, these "you'll need at least $1,000,000 to retire happily" articles more accurately reflect the biases of the investment industry than they do the spending patterns of real retirees. As a result, they greatly exaggerate the amount you'll really need to spend post-retirement.
Start figuring out how much you'll really need to spend after retirement by understanding that retirement planning is best done with a dash of black humor. That's because, no matter what the investment industry claims, it's impossible to predict with anything approaching accuracy how much you or anyone else really needs to save. For example, unless you are currently in the last stages of a terminal illness or plan to poison yourself next Friday, you can't know how long you will live or how healthy your mind and body will be in your retirement years, both essential facts to accurately determine how much money you'll need.