Experts say plan early for help in golden years

Ask any baby boomer how much money they need to get them through the golden years, and they will probably say they don’t know for sure. That’s because most baby boomers in their 50s are sandwiched between paying for kids to go to college and placing their own parents in assisted-living centers or nursing homes.

“They get the idea in their head when they start looking for their parents,´ said Denise Thorton, director of marketing and community relations at Balfour Retirement Community in Louisville. The maxim heard most often from those working in the elder-care industry is the earlier retirement planning begins, the more options there are later in life.

“In terms of baby boomers, we don’t get many looking at their retirement and looking for themselves. Usually, it’s those who are 72 years old to 80 years old who are looking,” Thorton said.

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The costs of assisted-living centers and nursing homes are going up 5 percent each year, Thorton said. Assisted living is a combination of residential housing, personalized services and health care. Assisted living provides seniors with services, while not making them totally dependent on nursing professionals.

Most assisted-living facilities provide some or all of the following: three meals a day in a common area, house-cleaning services, transportation, limited assistance with bathing and dressing, 24-hour security, health and exercise programs, medication management, linen services and social activities.

Continuum-care facilities combine assisted-living and nursing-care services. They are usually a campus where seniors move from one level to another when their needs change.

Although trends show baby boomers are no hurry to plan their assisted-living retirements, plenty of information and seminars are available on the topic. “We provide space to any organization that is senior related,´ said John Riggle, director of Boulder Senior Services. “We did a financial seminar recently. Another one coming up is for women and financial matters.” This seminar helps women deal with check books, wills, trusts, estate planning and retirement insurance.

Riggle said he finds much more interest among elderly women to plan for retirement and assisted living than men because a lot of them haven’t spent much time in control of the family’s financial matters. If the woman’s spouse either becomes incapacitated or dies, they often are not prepared.

Today, the most obvious financial planning most Americans do for their retirement is their life savings in 401(k) plans. But additional financial planning may be necessary in the event of unexpected medical bills or home-nursing care. Long-term care insurance is quickly becoming the backup nest egg to 401(k) plans.

“We’re strongly encouraging younger people, especially in their 40s, to look into long-term care insurance,” Riggle said. “It’s like most anything else, the younger you are the cheaper and easier it is to get,´ said Dallas Powell of Dallas Powell & Associates in Longmont, an independent brokerage that sells long-term care insurance policies.

“Today, the average age of people getting long-term care insurance is mid-60s,” Powell said. Most financial planners believe people should be planning for their later years in their mid-years. In fact, people who invest money in 401(k) plans in their 20s and 30s often find that their investments will mature to large savings by the time they hit their 60s.

Most retirement saving, however, occurs in the 40s and 50s when most people have paid off their mortgages and other large expenses. National surveys indicate that baby boomers in their 40s and 50s are not doing enough to prepare for their retirement. “Nobody wants to go into a nursing home that I know of,” Riggle said. “It will do damage to your assets fast.”

According to a recent survey by the National Center for Women and Retirement Research, two-thirds of baby boomers have less than $50,000 in retirement plans. The average cost of staying at a nursing home today is around $4,500 a month, Riggle said.

“It has been skyrocketing over the last few months. Despite the fact that both presidential candidates made Medicare and Medicaid an important part of their campaign platforms, the state government and Legislature have been working for the last 15 years to get retirement homes to take Medicaid,” he said.

“Medicare doesn’t pay for long-term care either; it’s for those over 65,” Powell said. “Medicaid is limited to what they’ll pay out for their hospital bed. They’ll have to be broke in order for Medicaid to take over.”

For either Medicare or Medicaid, there is also a limit to what the government will contribute. In fact, the federal government only sets aside a certain amount for Medicaid for states. “In Boulder County, there are not a lot of Medicaid beds,” Thorton said. “It’s too expensive to do new (assisted-living) construction now. One thing that I think there is a shortage of in Boulder is assisted-living Medicaid beds for Alzheimer patients.”

Thorton believes the reason more construction projects aren’t being undertaken to build facilities that will be covered by Medicaid is because the federal government’s reimbursement rate is so low. In the meantime, long-term care insurance is filling a gap in the system for those not covered by Medicare or Medicaid.

“In your 50s is really the time to be getting (long-term insurance care),” Powell said, adding that premiums will double between the ages of 55 and 65. Typically, long-term care insurance policy premiums range between $750 and $900 for those in their 40s, between $1,200 and $1,500 for those in their 50s, and from $2,000 and up for those in their 60s. “It really takes off in your 70s,” Powell said.

There are many items that affect the cost of long-term care insurance policies, including age, marital status, health, the quantity and quality of benefits you plan to receive, waiting periods or deductibles, length of time the policy covers and inflation factors.

“It’s kind of like shopping for a car ? all the bells and whistles add up,” Powell said. “It’s something people don’t really think about until something happens to a family member or someone they care about.”

Rose Gilbride, director of community outreach at The Academy retirement center in Boulder, said, “Even though statistics show one in four of us will be in a nursing home someday, a lot of people still won’t get long-term care insurance.” Besides being an additional expense, another possible reason many people don’t bother is because they believe they will live independently all their lives.

The experts have plenty of advice for those who want to do more research and planning for their retirement. Thorton said “Read all you can now and pay attention to the trends.”

“Do as much pre-planning and funeral planning as possible so it’s not left up to your children,´ said April Reno, the Academy’s marketing director. Reno also said children should know where their parents medical information and wills are kept “because people never know when they will become ill.”