October 22, 2020
Cognitive Decline Meets COVID-19 Scams
The federal government warns that older Americans are being targeted by a battery of financial scams, including telemarketers offering to do contact tracing – for a fee – or to reserve a slot for a future vaccine. Others are soliciting donations to charities purportedly helping people in need during the economic slowdown.
COVID-19 makes this a perilous time for people struggling with cognitive decline.
Few can escape a deterioration in their cognitive capacity as they age. It’s just a matter of degree and speed. But the faster it happens, the more damage it can do, the FINRA Investor Education Foundation concluded in a new study.
The study was based on surveys of more than 1,000 older residents in Chicago retirement communities and subsidized housing – average age, 80. The same people were periodically asked questions with varying degrees of difficulty about their general financial knowledge and investments and were asked to compare and calculate percentages.
The older people who either initially had less understanding of financial concepts or experienced a faster decline in their knowledge made poorer financial decisions in exercises that simulated real-world decisions.
This included a vulnerability to scams, which was assessed by asking the older people to agree or disagree with statements like this: “If a telemarketer calls me, I usually listen to what they have to say.” (Not recommended.) And this: “If something sounds too good to be true, it usually is” (Count on it.)
To prevent scams, older people – and their caregivers – need to anticipate the financial damage that cognitive decline can cause. …Learn More
July 28, 2020
Retirement Research Presented Virtually
Like much in life under a pandemic, the research presentations for the Retirement and Disability Research Consortium’s annual meeting are going virtual.
This year’s online meeting will also be scaled down from the traditional two days to one: Thursday, Aug. 6.
The purpose of the meeting, which is usually held in Washington, D.C., is for academics from universities and think tanks to describe their latest research to colleagues, policy experts, financial professionals, and the press. Topics this year will include taxes in retirement, federal disability insurance, housing, health, and labor markets. The U.S. Social Security Administration has funded the research and is sponsoring the meeting.
The agenda and information about registration are available online, and participants can register anytime. Questions for the researchers can be submitted during the presentations via a moderator.
One fresh idea being explored this year is taxes in retirement. Taxes are central to whether retirees have enough money to cover their essential expenses, but households that are approaching retirement age may not factor the need to pay federal and state taxes into their planning. Despite the importance of this issue, only a handful of existing studies have tried to estimate the tax burden. This paper fills the gap.
One session will feature a pair of papers looking at whether cognitive decline has a detrimental effect on older Americans’ finances. One will explore whether dementia leads to financial problems overall, and the other will focus exclusively on debt.
Researchers will also try to resolve a conundrum in the disability field: why are applications for federal benefits declining at the same time that Americans’ health is deteriorating? One hypothesis is that jobs are becoming less physically demanding. A second disability study will produce a publicly available database for researchers who want to examine the local factors affecting applications.
The agenda lists all of the papers that will be presented. Learn More
June 2, 2020
Home Care Reform’s Outcome a Surprise
Medicaid pays for care for six out of 10 nursing home residents.
To reduce the program’s costs, the Affordable Care Act (ACA) encouraged states to expand the care that people over 65 can receive in their homes or through community organizations. The hope was that they would delay or – even better for them – avoid moving into a nursing home if they had easier access to medical and support services.
Many states historically did not use Medicaid funding to pay for home care. The ACA’s Balancing Incentive Payments Program required the 15 states that chose to participate in the reform, including Nevada, Texas, Florida, Illinois, and New York, to increase spending on home and community care to half of their total Medicaid budgets for long-term care. By the end of the program, the states had met their goals of more balanced spending on home care versus nursing home care.
But four years after the reform went into effect in 2011, the states’ nursing home population had not changed, compared with the states that did not expand their services, according to a University of Wisconsin study for the Retirement and Disability Research Consortium. The researchers said one possible reason the reform didn’t reduce nursing home residence was that people who were never candidates for this care were the ones taking advantage of the alternative forms of care.
The analysis did find other unintended consequences of the shift in Medicaid funds to home and community care. First, somewhat more older people moved out of a family member’s house and were able to live on their own.
Second, as more people moved into their own place, costs may have increased for a different federal program: Supplemental Security Income (SSI) for low-income people. The increase had to do with how this program calculates financial assistance. SSI’s monthly benefits are based on an individual’s income. When retirees decide to live on their own, the housing, meals and other supports the family once provided are no longer counted as income. The drop in a retiree’s income means a bigger SSI check.
On the other hand, the Medicaid reform may have financial benefits for caregiving families, the researchers said.
The greater availability of home and community care for seniors – whether they live with family or on their own – frees up time for their family members to earn more money at paying jobs. …
December 10, 2019
Nursing Homes: Why They Cost So Much
One of retirees’ biggest fears is that they will have to go into a nursing home. This fear isn’t just psychological – it’s also financial.
Roughly half of older Americans will find themselves in a nursing home at some point, according to a 2015 estimate. These stays usually last months, but sometimes years, and the costs add up quickly for those who have to pay for them out of their own pockets.
At an average price of at least $225 per day for a semi-private room, a nursing home stay can put a big dent in retirees’ savings.
A new study in the journal Medical Care Research and Review on how much seniors pay out-of-pocket for facilities in eight states – California, Florida, Georgia, New York, Ohio, Oregon, Texas, and Vermont – found that prices across the board are rising at about two times the general inflation rate.
Some of the fastest price increases are in California and Oregon – 5 percent to 6 percent a year. There is also a large disparity between high- and low-cost states: the price tag for a typical New York nursing home is more than double the cost in Texas.
Yet little is understood about what’s behind the disparities. In this study, conducted for the Retirement Research Consortium, the researchers begin to uncover some of the things that determine whether an individual happens to live in a high-cost state.
One factor affecting the prices is the competitiveness of each nursing home market, which works in ways one would expect. When a small number of operators dominate in local markets, they can charge more. The results also suggest that prices are higher in markets where limited competition is combined with a high demand for beds.
Another important factor is who owns the nursing homes, and each state has a different mix of private and non-profit chains and smaller operators. For-profit companies own about 70 percent of U.S. nursing homes. More than half of the for-profit facilities are chains, and these chains charge the lowest prices.
The non-profit chains are the most expensive. Their prices, adjusted for staffing levels, location and other facility-level factors, are about 6.6 percent more than the for-profit chains – or about $4,160 more annually – the study found. …Learn More
August 8, 2019
For Family, Caregiving is a Choice
Francey Jesson’s life took a dramatic turn in 2014 when she lost her job at Santa Fe, New Mexico’s airport after a dispute with the city. In 2015, she relocated to Sarasota, Florida to be close to her family. One day, her mother, who has dementia, started crying over the telephone.
Jesson had always known she would be her mother’s caregiver, and that time had arrived. She and her brother combined resources and bought a house in Sarasota, and Jesson and her mother moved in.
“It wasn’t difficult to decide. What was difficult was everything that came with it,” she said.
One reason for the rocky adjustment was that Jesson, who is single, had been preparing herself mentally to take care of her mother’s physical needs in old age. But Kay Jesson, at 88, is in pretty good health. She requires full-time care because she has cerebral vascular dementia, the roots of which can be traced back to a stroke more than 15 years ago.
She is still able to function and has not lost her social skills. Her muscle memory is also intact, allowing her to chop onions while her daughter cooks dinner. But she forgets to turn off the water in the bathtub, mixes up her pills, can’t remember who her great-grandchildren are, and is unable to distinguish fresh food from rotting food in the refrigerator.
She’s also developed a childlike impatience and constantly interrupts her daughter, who works from home for her brother’s online company. “When she’s hungry, she’s hungry,” Francey Jesson said about her mother.
“Nothing ever stops for me. I can’t sit in a room and not be interrupted,” she said. “Sometimes I just want to watch TV for an hour.”
One way she copes is to approach caregiving with a combination of love and bemusement. She uses “therapeutic fibbing” to protect her mother’s feelings, for example, telling her that a friend who died has moved instead to Kansas so she doesn’t grieve over and over again. Francey Jesson also resorts to humor in a blog she writes about her day-to-day experiences. In one article, “Debating with Dementia,” she recounted a conversation about the best way to repair some bathroom floor tile: …Learn More
April 30, 2019
Medical Costs Slam a Minority of Seniors
As retirees’ health declines, their medical costs go up. These costs include both everyday healthcare expenses and long-term care costs.
The everyday expenses that Medicare does not cover – Part B and Part D premiums, copayments, eyeglasses, and dental care – consume about 20 percent of the incomes of households ages 75 and over. While not exactly good news, 20 percent is “perhaps manageable” for most, concluded researchers at the Center for Retirement Research in a summary of various studies in this area.
The real problem comes for the unlucky minority – about 5 percent of seniors – who spend more than half of their income out of their own pockets for healthcare.
Turning to long-term care, these services are less frequently required but can be very costly. For example, while many nursing home stays are relatively short, a lengthy stay is a potentially crippling expense. One common trigger for a long-term stay is dementia.
The retirees facing the greatest financial risk from health care expenses tend to be those who earned enough to buy a house and put money away in their employer’s retirement plan. They have more to lose if their wealth is eaten up by exorbitant medical costs. The poor, in contrast, are covered by Medicaid, which often pays for Medicare premiums and long-term care. …Learn More
April 16, 2019
Dementia is a Threat to Managing Money
The perils of aging generally escalate around 75, and they are becoming more pervasive as more Americans live to very old ages.
One of these perils – declining cognitive ability – often creates financial problems. A new study that summarized the research on this side of the retirement equation identified the financial fallout from dementia.
Currently, dementia afflicts roughly a quarter of seniors in their early 80s. And geriatricians and demographers have predicted for years that dementia will become a serious societal problem in the future as the tsunami of baby boomers reach older ages.
The first sign of deteriorating financial skills might be forgetting to pay a bill. But when severe dementia sets in, the vast majority completely lose their ability to manage their finances and risk making big mistakes, such as losing money in a fraudulent investment scheme.
Another concern is retirees’ growing reliance on 401(k)s for more of their income. Increasingly, they are grappling with the complicated question of how much money to withdraw each year from their 401(k) accounts – this is difficult for anyone but virtually impossible for people with dementia.
Fortunately, most of them get assistance managing their finances. But the seniors who don’t get help face potentially grave repercussions, such as having difficulty affording food, housing and medical care.
Managing money is not the only financial risk posed by dementia. A more serious issue is the potential need for a lengthy stay in a nursing home, which will be addressed in a future blog post. …Learn More