Welcome to my first blog entry. Each week in this space, I’ll offer insight into various personal financial topics and business news that you may find interesting and helpful.
Recently, there was an article in the Washington Post that caught my eye (http://www.washingtonpost.com/wp-dyn/content/article/2009/07/01/AR2009070103861.html). It’s the story of Larry Haubner, a 107 year old man who appears to be living a content and full life at an assisted living center.
So what’s the problem?
Well, Larry has managed to outlive his money not once, but twice and may even accomplish that feat a third time! For many, the thought of even living to that age is unheard of. But outliving your money, for many, is something to be avoided – just ask any current retiree.
So what insight does this offer us?
We cannot predict how long we will live.
What is known is that as medical technology and overall quality of life improves, life expectancy is getting longer. Today, the average 65 year old male has a life expectancy of 82 and the average 65 year old female can look forward to age 85. Remember, these are averages - so many people will live longer. On the other hand, my wife is praying I get hit by a bus tomorrow.
We cannot predict our health.
Even though Larry is obviously healthy, the costs of an assisted living facility are high and will only go up. If his health was worse, the costs would be even higher after medication, medical procedures, and more skilled care are factored in.
Medicare and Medicaid don’t cover as much as you think.
This is a common misconception. And even if the programs paid, they don’t always allow freedom of choice. Both programs usually require picking medical providers from a pre-approved list – your choice of doctor or facility may not be on that list!
Therefore, saving – and saving smartly – is extremely important.
If this was you, would you want to rely upon the generosity of strangers? Are you saving enough? Are you saving in the most effective and efficient manner? How do you know?
This might not be you. But is it your parents?
It’s common these days for people to support children as well as elderly parents simultaneously – think ‘in-law apartment’. My neighbor’s father moved in with them last year and had an addition built. And for many, this typically means big expenses for the adult children – either actual expenses or reduced income because of the time spent caring for the elderly parents.
Ultimately in this case, it’s not about what happens if you die – it’s what happens if you don’t!
Of course, you can easily avoid this issue by dying early but I personally don’t know many people who voluntarily want that.
The other option is to manage your finances to minimize this risk. The first two factors are largely out of our control, but the other three are certainly things we can do something about.
What are you doing today so you can enjoy life at age 107?
