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Losing your life savings to long-term care

Robert Raymond, 85, had a good life, working hard and enjoying his marriage to Claire. But they have exhausted all their savings in caring for her medical needs.
Robert Raymond, 85, had a good life, working hard and enjoying his marriage to Claire. But they have exhausted all their savings in caring for her medical needs. San Diego Union-Tribune

When he was growing up in Queens, N.Y., in the 1930s, Robert Raymond’s family struggled with money. He remembers vowing that he wouldn’t be in the same financial position when he got older.

“We had some Thanksgiving dinners with just franks and beans on the table. I didn’t say this to my parents, but I made a promise to myself that I wouldn’t live like that – but here we are,” said Robert, now 85.

The “we” are himself and his wife of 55 years, Claire, 82.

The “here” is the situation in which he swore never to be.

Like so many older Americans, the Raymonds have seen their life savings swallowed up by long-term care. It took the couple decades to turn their modest salaries into a $100,000 nest egg and just five years to completely deplete it after Claire moved into an assisted living facility.

And while she is getting the care she needs – she was diagnosed with Parkinson’s disease 10 years ago and is disabled and in a wheelchair – her husband was kicked out their apartment for being behind on the rent and had to take temporary shelter in subsidized senior housing in downtown San Diego.

“We didn’t end up this way being careless, blowing all our money at the casino,” Robert said, sitting in a small studio apartment in San Diego stacked with boxes filled with the couple’s possessions. “I’m sure I’m not unique in my age group of people getting old and getting wiped out.”

In fact, the Raymonds’ financial downfall from middle-class retirees to destitute seniors is all too common. Long-term care, whether in the home, at an assisted living community or at a nursing home, is overwhelmingly paid out-of-pocket, from people’s savings. And multiple studies conducted in recent years all come to the same conclusion: America’s rapidly aging population is ill-prepared to pay for what’s coming.

According to a 2014 report by the National Health Policy Forum, based at George Washington University in Washington, D.C., the average annual cost for nursing home care in 2012 was between $81,000 and $90,000, with assisted living facilities averaging $42,000 a year. And long-term care can sometimes stretch over periods of years.

“While some seniors are well-prepared financially for their retirement years, most have limited savings and modest resources in retirement accounts and home equity,” a 2012 Kaiser Family Foundation study found.

“The top 5 percent of Medicare beneficiaries ages 65 and older have retirement savings and financial assets totaling over $1.1 million, but most have considerably less. Median savings (retirement accounts and other financial assets) among seniors was nearly $66,900 in 2010. One-fourth of seniors had savings of less than $11,800. Among the 81 percent of seniors with home equity, the average amount was just over $136,000 in 2010, but half had less than $94,000.”

“Given the fact that this is common, and is going to be more prevalent in the future, we as a society are going to have to decide how to deal with this,” said Tom Warschauer, director of financial planning programs at San Diego State University. “It’s clearly an issue that needs a political solution and it’s not an easy solution because it’s expensive. One solution is Medicare could start to cover to long-term care, but Medicare is going broke already.”

PERFECT STORM

Ironically, the Raymonds, who didn’t have children, were surrounded by money throughout their adult lives, both working at mid-level jobs at various banks in San Diego. They lived modestly and never accumulated significant wealth. They rented instead of owning a home, but always made sure to put some of their paychecks away for retirement. With their $100,000 savings, combined monthly Social Security of about $3,000 a month and his $99.76 monthly pension, the Raymonds felt confident they were on solid footing.

Until a cascading series of illnesses befell Claire and that solid foundation collapsed.

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A few weeks ago, things were looking particularly bleak for Robert Raymond. His landlord finally ran out of patience with being owed $4,000 in back rent and evicted him from his apartment. His car broke down. His dentures cracked. His missed his wife and didn’t even have a phone with which to call her. He was on the brink of homelessness.

Sometimes with bad luck, it rains. It pours. And then there’s an El Nino storm.

“You have to deal with the hand you’re dealt, and we were dealt a pretty rough hand,” he said somberly.

But bad luck doesn’t always mean no luck: There have been people extending a hand to help the Raymonds. Their landlord, for one, knowing of their precarious finances and fixed income, had frozen rent on their two-bedroom apartment at $1,500 long before their ability to pay ran out. And Claire’s assisted living facility lowered her monthly payments from $1,545 to $1,045, so her Social Security could cover the cost.

Robert Raymond certainly didn’t think he’d end up poor again. Today, he thinks back to the vow he made all those years ago and how it was never far from his mind.

Back when he worked at Great American, he’d leave his downtown office and walk to catch the bus to his neighborhood, passing by homeless people hunkering down for the night.

“I’d think to myself, ‘I’m going home to a warm apartment.’ And today I’m still grateful I’m not in that situation.”

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