Thursday, January 13, 2011

Prepare: Caring for the elderly post-SHTF

There's a lot of talk these days in the US media about Social Security, medicare, the retiring boom of baby boomers (now senior boomers, I guess) and the expected growing cost to the national budget. I listened to a polician lately who said that entitlement cuts, namely SS, Medicare and Medicaid, were coming simply because there was not enough revenue and too much debt.

In the old days (circa 1970's - 1990's), "seasoned citizens" could look forward to selling the family home and moving into a senior community complete with golf, swimming, indoor activities, quasi-independent living and onsite medical care. They would finance this with a lifetime of savings, investments, possibly private pensions and a monthly social security check. Medical care would be paid for with Medicare and ancilliary insurance. Life was good.

Nearly all of those options are in danger or gone. Investments were wiped out in the financial crisis. Savings were not enough to make up the shortfall. Homes could not be sold in a down market and they were worth less than expected. Retirement homes and communities raised rates or closed altogether.

And now, Social Security and Medicare are in danger. End result? Many of us can expect the possibility that our elderly parents may come to live with us in their golden years rather than puttering around the links and shuffleboard court.

In my family, its already a reality. Mother is living with sister and FIL and MIL are moving in with BIL. Fortunately, both have adequate savings and investments to meet their needs, but not enough to go full bore in a retirement home. They are saving for that in the event catastrophic illness, ___ forbid, happens.

Before we go to the sepia toned idea of multiple generations living together under one roof, let's consider what that actually means.

First, check with some oldsters who actually lived that way many moons ago. My grandmother recounted to me thirty plus years ago before she died, of having an elderly aunt living with them in the old country around the turn of the century. The old woman had cancer which spread to other parts of her body. She literally "fell apart" over the years while confined to bed.

My other grandmother stayed at home in my mother's family house with aunt and uncle and over time, it resembled a mini-hospital with one room containing a full blown hospital bed, oxygen tank, wheel chair and other medical equipment.

There is nothing wrong with this and everyone agrees that they would rather have mom or dad at home and cared for regardless of the extra room needed.

Another point that comes up online and which is probably going to be a sore spot with some, is the truth about our elderly's abilities.

There are some who see the elder as fonts of homespun wisdom and skills long lost in today's modern world. Gramps knows how to trap, shoot, fish, build a cabin, and plow rocks into crops. Grannie knows how to quilt, make lye soap, make diapers out of sailcloth and dry, jerk and can a bear carcass in an afternoon.

While there may be some oldsters who have these skills, there are far more who were never exposed to such rustic activity and have no idea how to accomplish any of them. Demographics and statistics are on my side.

First, a 75 year old person today would have been born in 1935. They most likely were, according to census data, raised in a city or suburban environment. They became an adult in 1953 and spent their adult life in a world of television, space travel, jets, long distance telephone calls and microwaved food.

Hardly the Daniel Boone we like to imagine. Further, this same person grew up in a world with lifetime employment, company insurance, pensions, gold watches and government backed retirement plans.

While some may have opted for more austere professions and lives, most lived in cookie cutter urban homes, drove to work daily and vacationed in safe, family friendly destinations.

Again, we would be mistaken to think that Mom and Dad have the pioneer skills at the drop of hat which they can refer to and teach the "younguns" - simply put, it does not exist.

So, get ready for Mom and Dad, auntie, grandma, etc to move in. It could happen at any time.

Second, expect there to be more work taking care of them over time. They are family, so it won't be a chore, but just be prepared.

Finally, not all old people are a walking Carla Emery encyclopedia of country knowledge. Many will be as in the dark as most of the general population and worse, may have a harder time adapting.

Love and respect your elders. But please accept them as they are.


Anonymous said...

It is interesting the article only mentioned the entitlements: SS, Medicare and Medicaid. Why not all the forms of welfare? SS is not in serious trouble and is projected to go broke in 2033. Medicare is inadequately funded but to the extent it is funded it is funded with a dedicated tax. Medicaid and all the other forms of welfare are funded from the general fund. You have to wonder why those who are anxious to cut SS and Medicare never mention welfare.

JD said...

Good question. Numbers speak louder than words.

2010 Social Security - 677.95 billion
2010 Medicare - 453 billion

2010 Health and Human Services - 78.8 billion (that includes section 8 housing too).

2010 Agriculture - 26 billion - most of it is agricultural subsidies, but about 15 billion is food stamps (which is considered welfare).

There's probably a few billion here and there for other "welfare" programs. The above "welfare" totals less than 100 billion. SS and Medicare are over 1.1 trillion.

Medicaid 2010 - 290 billion.

You can cut "welfare" (which will probably happen) but as you can see from the real numbers, it is less than a third the size of the SS/Medicare budgeted amount on a good day.

As for "fully funded through 2030" that is because money from social security was borrowed by the general fund (as has been done for years) and a treasury bond was put in its place. That treasury bond has to be paid back, with interest by the general fund (taxpayer revenue) in the future.

There is no safe with trillions of dollars for SS in DC or anywhere else. The money comes in, is reallocated elsewhere and an IOU put in its place.

All budget items will be on the table soon including SS, Medicare, defense, all of it. Simply put, there aint much left to tax without grinding our economy to a halt.

Yes, there will also be some mandatory taxe hikes coming as well such as raising the taxable ceiling limit on wages (about 115,000.00 now) for SS contributions.

I think folks who are receiving their SS benefits right now will be okay for the next ten-twenty years. Boomers can expect about 80%of their monthly payment if there was no financial problems. Folks coming after the Boomers will probably be told to expect 40% or less of what their annual report says now. My opinion.

Thanks for reading and commenting.

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