In addition, there is the issue of care quality,
and of the effects of inflation on one's ability to
maintain nursing home "private pay" status.
The above article assumes an inflation rate of 5%,
although the inflation rate for nursing home care
has at times been 16% per year. If that rate
continues, how soon will people spend down all their
assets on nursing home care?
Will you have a choice? Now we come to the
real questions. Can the people who are at
risk, primarily single, elderly women, pay for the
care they would choose? Will they have the
freedom to choose the setting and the type of care
they will want to receive? ; It's pretty clear,
based on income alone, few elderly singles can
finance the cost of nursing home care.
Many elderly females have no pension plan based on
their own work record and contributions, nor are
they likely to inherit pensions from their husbands.
Those who can count on pension benefits based on
their own work record have very modest benefits
because of the relatively low wages during their
Although more women are now covered by pension
plans, the benefits they receive will still be
relative to the lower contributions made on their
behalf, again because of the lower wage base during
their working years. Also, some reports still
predict that only 10 percent of women will indeed
inherit a pension benefit from their husbands.
Will things change in the future? Currently,
over 60 percent of the elderly rely on Social
Security to provide more than one-half of their
retirement income. And roughly one out of four
people over age 65 receive 90 percent or more of
their income from Social Security. What about future
retirees? Will they be as dependent on Social
Security during their remaining years? With the
shift away from true pension plans (defined benefit
plans) to contribution-type plans (401K plans)
funded largely with employee dollars, will the
majority of employees exhibit the discipline
required to create a significant retirement fund?
You tell me...
As of 1990, women who retired on Social Security
received a benefit that was $11 per month less than
the poverty level. Obviously, there is little
hope of their paying for nursing home care if they
are dependent upon their monthly Social Security
checks for a large percentage of their income.
Many of the current and future single, elderly women
will have to look to other sources to pay for their
nursing home care. They will have to rely on
1) public programs (these are being tightened
drastically), 2) family (a serious burden) or 3)
private LTCi (converting an unknown risk into a
manageable premium expense).