As we continue our discussion on the three aspects of Longevity Planning: Lifespan – the role of living long; Healthspan – how we’ll be here long; today we’ll begin to address Wealthspan, the financial focus of this new longevity. While all three of these aspects work in tandem, the financial ramifications of this new longevity has never been more important.

In my previous blog on Healthspan, we addressed the fact that aging is changing — people are living longer than ever. While this may sound like great news, the real question is, are we financially prepared to live long? While there’s a definite health and wealth connection – meaning, the healthier we are, the wealthier we are, do we really understand the financial reality of this longevity? Add in the additional costs of ongoing healthcare breakthroughs and the increasing cost of care, this can go from good news to bad news in a hurry!

Healthcare costs continue to be a big concern among the majority of Americans today. In fact, a recent Harris Poll reported that it was actually the number one financial fear (even among the affluent) – replacing outliving their money by a 3:1 ratio!  This is likely the result of a huge uptick in a number of age-related diseases and conditions – many for which there is no cure, where the care is extraordinarily expensive, and much — if not the majority is not covered by Medicare.

Alzheimer’s disease is the most common and feared form of age-related dementia and involves the parts of the brain that control thought, memory, and language.  Additionally, it is progressive in nature and the type of care and assistance it requires – particularly in the later stages, takes an extraordinary toll emotionally, physically, and particularly financially to families who make the gallant effort to provide the care.

According to 2018 data from the Alzheimer’s Association, $277 Billion was spent in care (compared to $259 Billion in 2017), in which 2/3 of people affected are women, and an estimated 40% increase in the next 10 years. The cost to Medicare and Medicaid was $186 Billion ($175 Billion in 2017) and the remaining $90 Billion ($84 Billion in 2107) came out of the pockets of American families. With a 50% chance of some form of dementia over the age of 85 (the fastest growing segment of the U.S. population), clearly this is a growing concern among Americans … and for good reason.

In fact, when we look at the top long life worries among consumers today, 72% are concerned about a serious health problem – 82% of which fear memory loss; 60% are fearful of being a burden on their family; and 47% are afraid of running out of enough money to live comfortably.  And if more people knew the financial reality that much of Alzheimer’s and other forms of dementia care is not covered by Medicare, this 47% would likely double.

Unfortunately, while a growing number of Americans are becoming more aware of these age-related health conditions, the majority of people still underestimate both the cost and the chance.  According to 2018 research from the Alzheimer’s Association and Health and Human Services, 70% of people over the age of 65 will need some form of LTC (long term care) – yet 70% don’t believe it will be them.  As a result, their very fear often comes to fruition — 80% of care is provided by the family.  In fact it’s estimated more than 65 million family caregivers are providing care to loved ones today – a care value saving to Medicare of $375 Billion per year.

Perhaps if this wasn’t such a topic of taboo that people don’t want to talk about – kind of like the 70% not believing it will ever happen to them, we could be more effective in helping people prepare for this possibility versus the downward spiraling domino effect that is generally the result when they don’t.