Departments, Family & Parenting

Portfolio

Courtesy of Jason Cartier, Financial Advisor Ibis Financial Group

We know that Americans are in denial about their finances. Federal data show they spend like there’s no tomorrow. Our middle class is among the most affluent in history, but many people in the middle class are living paycheck- to-paycheck with futures, mortgaged to pay for increasingly expensive amusements.

Despite their spending habits, many Americans-especially women-are tormented by the notion that they will outlive their money. A Securian Financial Group poll of 400 women ages 30 to 64 were asked about their financial sense of wellbeing. The company also asked about their perceptions of the financial impact of long-term care (not the insurance, but the actual care). The overall theme of their responses can be described in one word: fearful. Even respondents with annual household incomes of $100,000 or more struggle with the fear that long-term care could wipe them out financially.

These fears grow out of the ongoing public discussion about the extent to which Americans are now responsible for their own financial futures. When we sit down with our advisors, we seldom talk about how we can accumulate wealth—how we can afford to keep ourselves as healthy and physically comfortable as possible every day of our lives. Not just the first 75 or 80 years, but if we live to 110.

Many discussions about finance are with men and long-term care may not be a top-of-mind topic for most men. Men don’t live as long as women, care giving is the central focus of much of women’s lives as they raise children, nurse elderly relatives and, as the couple ages, maybe even take care of their more fragile husbands.

Women need to talk about long-term care in the financial planning discussion. The Securian research shows this is a universal concern among women, even among those in $100K+ annual income households. Only about ten percent (43) of the respondents in the Securian study fall in the income category so the sample size is small. However, you will see the percentages are large enough to make the results compelling.

FINANCIAL HOUSES OUT OF ORDER

While women in the $100K+ income category are more sanguine about their finances than women with smaller incomes, that’s not saying much. When asked whether they consider themselves financially well off, only 42 percent in the affluent category answered in the affirmative. This is a much higher percentage than for the whole group (17.2%) but considering that current U.S. median household income is around $46,0001, it’s a surprise to learn that people who make more than twice that do not consider themselves well off. In fact, an astounding one in five (20.3%) women in the $100K+ category agreed “an unexpected expense of $1,000 would put me in financial hardship.”

That means their margin of personal financial error is less than one percent. No wonder they’re anxious.

Where is their money going? You’d like to think it’s going into their retirement plans. However, nearly 40 percent of the high-income group (39.2%) says, “After meeting my current financial obligations, I have very little put away for retirement.” Additionally, more than one-third (33.8%) of the women in this group do not agree with the statement, “I have my financial house in order for my future.”

It appears that some of these respondents are trying to put the brakes on their spending. Nearly one fourth (24.3%) say they generally are on a tight budget and nearly two-thirds (63.5%) say they are “very cautious” when spending money. Nonetheless, financial concerns are top-ofmind. More than half (55.4%) of the $100K+ group say they are concerned their money will not last through retirement. Clearly, these women are agonizing over their financial futures. And we haven’t even talked yet about their sense of financial responsibility for their parents’ long-term care.

LONG-TERM CARE AS A WOMEN’S ISSUE

Caring for elderly parents seems to fall to daughters and daughters-in-law. Studies show that 59 to 75 percent of family caregivers are women. Additionally, because they live longer, the majority of nursing home residents (70%) are women. But women are less likely than men to have the financial wherewithal to pay for long-term care. Because they take time away from their careers to take care of family members and because they generally are paid less, women’s average lifetime income is lower than men’s. Research from the National Center on Women and Aging shows family care-givers lose and average of $566,443 over a lifetime in reduced salary and retirement benefits.

The Securian study shows that the majority (60.2%) of the 400 women polled agree that “because parents cared for their children when they were young, grown children should take care of their parents,” implying a personal willingness to care for their parents. However, they are not sure the money is there to pay for any care beyond what they personally would provide.

One-third of the 183 women whose parents both are still living are concerned about the quality of care their parents will receive because of limited finances. More than one-third (35.9%) is concerned for their parents because of their own limited finances.

THE SOLUTION IS NOT OBVIOUS TO CONSUMERS

Long-term care insurance may be a solution to this problem, however only 60 percent (57.8% of the 400 respondents) agree, “Long-term care insurance is a necessity in today’s world.” But it’s not clear that they know what long-term care insurance is. Over one fourth (28.5%) say they don’t know whether their parents do have long-term care insurance. The “good” news is that only a small minority assumes the federal government will pay for their parents’ care. Five percent believe their parents do not need long-term care coverage because Medicaid will cover their expenses should they become disabled as they age. A similarly small percentage (5.2%) holds the same belief about their eventual long-term care expenses.

A NAGGING CONCERN

It’s not a surprise then that the cost of long-term care is a nagging concern for women. Among respondents of all ages and incomes, 41 percent said their biggest fear is becoming a financial burden to their families. Even in the highest income category, more than one-fourth (27%) expressed this fear.

People who have dealt with elderly parents’ medical crises and subsequent care know it takes a far greater toll on their personal and professional lives than they ever anticipated, part of this is due to a lack of planning. Of the women whose parents required care before they passed away (91), a whopping 84 percent said the decision about where care would be provided was not made until the care was needed.

SEEK HELP FROM A FINANCIAL ADVISOR

A financial advisor can help you prepare for the likelihood that someday, one or both of you will need some form of long-term care. By raising the long-term care issue, you are raising a topic that Securian’s research shows is top-of-mind with most women because they tend to be the family caregivers.

A financial advisor who focuses on long-term care has the compassion and the ability to connect with their clients’ innermost fears and can help relieve the anxiety of an uncertain future.

With heightened awareness and careful planning, they may be able to help you afford a comfortable and secure old age without posing a financial burden to the people who love you most. V

Jason Cartier is a Financial Advisor with Ibis Financial Group located at 3300 PGA Boulevard,Suite 970, Palm Beach Gardens, FL 33410. He can be reached at 561.910.2471 or at jcartier@ibisfingroup.com. Ibis Financial Group is headquartered in Boca Raton and has an additional office in Orlando. For more information, please visit www.ibisfingroup.com.

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1Securian Financial Inc., Conducted by Gestalt, 2008.

2 Arno, P.S. (2002, Feb). The economic value of informal caregiving, U.S., 2000.

3 The MetLife Juggling Act Study, National Alliance for Caregiving and the National Center on Women and Aging, November 1999.