End-of-Life Care Not to Blame for Increased Costs

In this information age, there certainly seems to be a large amount of misinformation.  One of the more persistent myths, is that the high cost of end-of-life care for the elderly represents a financial threat to the health care system.  According to a recently released study by the International Longevity Center-USA, "Myths of the High Medical Cost of Old Age and Dying," it is simply not true that the aging of Americans and over aggressive care at the end of life are major causes of increasing health care costs in the United States.

According to the report, studies that have looked at the causes of increased health care spending conclude that as little a 5 percent of the increase may be attributed to the aging of the population, the other 90 to 95 percent resulting from other causes.

Many have predicted that the already high cost of caring for seniors will skyrocket in the next tewenty years as the oldest baby boomers start reaching age 85. The new report suggests that this is not necessarily true, particularly if better health care can reduce the prevalence of chronic disability as it has in the past. For example, the incidence of chronic disability among seniors decreased  by 6.5 points over the period between 1982 and 1999.  The mere fact that full recovery from stroke and heart failure is now so prevalent, suggests that mere extrapolation from the past regarding disability or related health care cost is likely to lead to wrong conclusions.

"Today Show" Tells Story of Divorce Resulting from Long Term Care

An emotional segment on a recent Today Show episode featured a wife who divorced her husband after 44 years of marriage in order to protect assets from a a long term illness. Suggesting the divorce, and also appearing on the show, was Massachusetts attorney Hyman Darling, a member of the National Association of Elder Law Attorneys (NAELA).

The husband of "Roberta" (not her real name) was diagnosed with dementia after the couple had been married more than 40 years. When she became unable to care for him at home, Roberta moved her husband to a nursing home and began paying bills of between $7,500 and $8,000 a month. After she had gone through $75,000, her husband's neurologist suggested that she find "a really good lawyer."

Roberta found Darling, an elder law attorney with the firm of Bacon & Wilson, P.C., based in Springfield, Massachusetts. Darling suggested to her that, as a last resort, she could terminate her marriage. This would preserve her remaining assets and allow her husband to quickly qualify for Medicaid coverage of his nursing home care.

Value of Annuities Behind Fed Efforts to Boost Retirement Savings

In January, the Obama administration announced an initiative to promote the availability of annuities in qualified retirement, 401(k), and similar plans. Only 22% of such plans now offer annuities among the options available to plan participants.   While the initiative is not long on details, it is gaining support among senior advisors and advocates.  Making annuities an option in qualified retirement planning would permit more workers to turn some of their nest egg into guaranteed income for life.  The opportunity to insure a lifetime of income is an attribute unique to annuities, and is an attribute uniquely suited for retirement planning.

Simultaneously, a Senate bill that would require your 401(k) to inform you of the projected monthly income you could expect at retirement based on current savings.  Causing investors to focus on the income they can expect from their retirement planning, rather than upon their account balances, is a welcome turn of events.  Investors often pay too much attention to the balances in their retirement plan portfolio, without careful attention to whether that portfolio will sustain them after retirement.  Simply, income is a more relevant basis upon which to plan for retirement.  That is the approach Social Security takes with its annual statements.

The confluence of these events suggests that the government is finally acknowledging the value of income retirement planning, and the value of annuities in securing that income.  As Americans grapple with the challenge of potentially outliving their retirement savings, lifetime income annuities are among the most cost-effective and least risky asset class for generating guaranteed retirement income for life according to numerous studies, perhaps the most prestigious being one co-sponsored by the Wharton Financial Institutions Center at the University of Pennsylvania and New York Life Insurance Company.

Planner's Corner- Beware of Ghostwritten Articles

You've probably received the solicitation, and been tempted to purchase the beautiful book or glossy magazine, with your picture and name on the cover.  The solicitation promises instant credibility, because no client would know that you had nothing to do with writing the book, or that the magazine article is purchased.  These "ghostwritten" marketing efforts promise much, are extremely high quality, and as a result, are tempting.

Beware!  The Financial Industry Regulatory Authority (FINRA) warns that sales representatives for member firms should take care when using ghostwritten books and articles in marketing their services.   A rule established by the National Association of Securities Dealers (NASD)  "prohibits false, misleading or exaggerated communications with the public and the omission of material facts or qualifications that would cause a communication to be misleading," FINRA officials write in Regulatory Notice 08-27.   Many of the ghostwritten books, pamphlets and newspaper advice articles may violate that rule and other rules established by the NASD and FINRA's other predecessor organization, the regulatory arm of the New York Stock Exchange, the notice states.

Avoiding Census Fraud

With the U.S. Census process beginning, the Better Business Bureau (BBB) advises that people be cooperative, but cautious, so as not to become victims of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data.

The big question is - how do you tell the difference between a U.S. Census worker and a con artist? The BBB offers the following advice:

• If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.