Wild Card blog 4

Today I read an interesting article titled "Will Your Next Egg Last as Long as You Do?", at Marketwatch.com

(1) http://www.marketwatch.com/news/story/Will-Your-Nest-Egg-Last/story.aspx?guid=%7BB7B5A6BD-FB85-48DE-9BB8-2CC5A556053E%7D

The article really got me thinking about my long term financial positions and what kind of costs I should anticipate for retirement.  I know that when the time comes for retirement I hope to have enough funds so too avoid outliving my savings.  That is why now during this economic downturn instead of selling, or sitting on the sidelines, I have decided to invest what I can, when I can.  I have stopped making any unnecessary purchases, and directed those funds into stocks.  The way I see it, I have 20-30 years to ride the profit wave up from historic lows.

The marketwatch article provided some examples of  high vs. low vs. national average cost of living in retirement situations.

They are as follows:

In Home care: National average -- $24,375. 

Lowest, Louisiana -- $19,296.

Highest, Alaska -- $30,849

Assisted-living facility: National average -- $38,529. 

Lowest, Missouri - $25,900.

 Highest, Maine - $65,700.

Nursing home (semi-private): National average -- $66,367.

 Lowest, Texas - $37,960.

 Highest, Alaska - $161,450.

Nursing home (private facility): National average -- $74,368.

 Lowest, Louisiana - $40,241. 

Highest, Alaska - $177,634.

With todays retirement averages you can come close to a prediction of what it will cost you at the time of your desired retirement.  By using Time Value of Money and factoring in rate of inflation at 3% you can determine Net Present Value.  The example I used to calculate was 20 years from now using todays national average @ 3% rate of inflation which provided Future Cost Prediction of:

In Home Care National Avearge 20 years from now = $44, 023

Assited Living National Average 20 years from now = $69,587

Nursing Home (semi private) National Average 20 years from now = $119,866

Nursing Home (private) National Average 20 years from now = $134,306

As you can see in just 20 years time the costs jump dramatically.  And that is given the rate of inflation does not exceed 3%, which everything the treasury and fed are doing right now point to figures higher than 3% over the next couple years.

Listen to your elders; its never too early to start saving for retirement.

  

Wild Card blog 3

In this blog I want to touch on the amount of money the United States spends annually on health care, and compare it with another country.  The figures are very interesting and illustrate the vast scale of money spent on health care.  It also brings into focus how difficult it is to think that by just throwing money, and new programs at the health care system, that somehow our problems will be alleviated.  The money spent annually is tremendous and when you add it up over the years; wow.

 According to the CMS the National Health Expenditure for 2006 was $2,105.5 trillion dollars (#1.www.cms.hhs.gov).  The CMS forecast projection was to see an increase in the National Health Expenditure for 2007 by 6.7% (#1.www.cms.hhs.gov).  The math shows when you multiply 6.7% by the expenditure figure from 2006 of $2.105 trillion, you reach an estimated figure of  $2.246 trillion dollars.  The CMS projected figure for 2007 is $2.245 trillion (#1.www.cms.hhs.gov).  

Comparison of the U.S. figures with that of the Netherlands shows that in 2006 the Netherlands GDP was $597.23 billion (#3.www.oecd.org).  A cost breakdown for the national health expenditure for the Netherlands shows they spend $55.54 billion per year (#2.www.oecd.org)

GDP (gross domestic product) is defined as, “the market value of the final goods and services produced in a country during a given period” (#4.Bernanke & Frank G-3).  According to the Bureau of Economic Analysis, the United States GDP for 2005 was $12,421 trillion, and $13,807 trillion for 2007 (#5).  The percentage of the GDP that was spent on health care was 15.9%, or $1,973 trillion for 2005, and a projected 16.3%, or $2,245 trillion for 2007 (#1.www.cms.hhs.gov).

I then compared the 2007 projected 16.3% health care expenditure of the United States with that of the Netherlands recorded 2006 health care expenditure of 9.3% (#2.www.oecd.org).  Also note that in 2006 the Netherlands spent an average of $3391 per capita on health care, versus the United States average of $6714 per capita in 2006 (#2.www.oecd.org).

 

Works Cited

1)   Centers for Medicare and Medicaid Services. (2008).  Retrieved Sep 13, 2008 from:http://www.cms.hhs.gov/NationalHealthExpendData/Downloads/proj2007.pdf

2)   Organization for Economic Co-Operation and Development (2008).  Retrieved Sep 13, 2008 from: http://www.oecd.org/dataoecd/46/8/38980162.pdf

3)   Organization for Economic Co-Operation and Development (2008).  Retrieved Sep 13, 2008 from: http://stats.oecd.org/wbos/viewhtml.aspx?queryname=474&querytype=view&lang=en

4)   Bernanke, B.,  & Frank, R.  (2007).  Principles of Macro Economics: Third Edition.  Boston: McGraw-Hill Irwin.

5)   Bureau of Economic Analysis.  (2008).  Retrieved Sep 13, 2008 from:http://www.bea.gov/national/index.htm#gdp

Wild Card blog 2

For this wild card blog I wanted to do a little research on the costs associated with long term care within Florida, preferably in the Orlando area.  Throughout my search I found many sites and ultimately my search lead me to this site

http://www.longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx

This site provided many helpful, and informative facts about long term care.  Such as overall national averages for health care costs.  The average monthly care for an assisted living facility in the U.S. is $3008 for 2008.  Also provided was a cost breakdown for all 50 states.  The figures were provided by "Genworth Financial" in march of 2008.  Their figures stated that the Florida state average for monthly assisted living was $2642, whereas Orlando had an average monthly cost of $2726.  Other notable figures on Florida averages were daily nursing home rate (private) at $213, daily nursing home rate (semi-private) $190, home health aide hourly rate $20, and homemaker services hourly rate of $17. (2008 cost of care survey, Genworth Financial, March 2008).

I then compared with the California state average for monthly assisted living which was $3099, and the state average of New York which was $3295. (2008 cost of care survey, Genworth Financial, March 2008).

This information was very interesting.  I wanted to compare the figures with that of another large payment such as a new home.  The average median home value in the United States according to the "National Association of Realtors" is $213,000 for September 2008.  Lets say a traditional 30 year fixed mortgage, with an average rate of 6.2% gives us a figure of roughly $1300 a month, plus a round figure average of $700 a month for taxes, insurance, and mortgage insurance brings us to a total of $2000 a month for a new home.  Compare that to the monthly cost of an assisted living facility in Florida of $2700.  Needless to say these figures to someone who does not have a large retirement nest egg, or living on a fixed income could be a little scary.  

So the old saying does hold true, "Its never too early to start planning for retirement".  And at the rate our country is spending money now its more important than ever to save and reach for personal financial independence.  Of course that is not the total cure for everyone's long term costs, but sound retirement planning can help to alleviate the stresses of mounting costs.

Long Term Care: What is it? Where is it headed?

I personally have no professional experience with anything related to the long term heath care industry.  My knowledge and experiences come from personal observations with family, friends, and my own health issues.  This is my first semester taking any courses related to health care industry.

Long term care is the provision of services for individuals who are incapable of taking care of themselves or elderly who are in need of some extra help with health concerns at either a retirement home, or their personal residence.  Individuals with disabilities may seek out long term care for health related issues, or daily objectives such as help with tasks around the house.  Many elderly choose to seek help through the use of nursing homes but there are many who just hire part time help who come to their home to provide the long term care.  I have witnessed examples where a nurse would visit an elderly person at their residence everyday to check vitals or administer medicine.  Also I have seen physical therapists come to someone's home after an accident, surgery, or when someone is disabled.  An example of the other side of this spectrum would be a uninterrupted live-in care professional who would assist the client, or family with all daily activities.

I would say that the growth potential with the long term care industry is very strong due to the fact a large segment of our population, the baby boomer generation, here in the United States will be reaching retirement age in the coming years.  With such a large amount of our population reaching retirement age around the same time this will inevitably put strain on our health service industry as a whole.  Thus increasing the need for alternative services to direct the baby boomers to more adequate facilities to address their needs on a more regular basis. Preventative medicine, healthy living, and a high quality of long term health services will vastly improve the longevity of our nations citizens as a whole, while easing the expenses, and strain on our health care system associated with the health problems plaguing our nation today.  

What affect can I have on this system?  With no experience its hard for me to inject my opinions on how to fix the stigma or negative stereotype that is sometimes associated with nursing homes, retirement facilities, or long term care in general.  I do not even know if my perspective on long term care is even close to accurate.  I do know that from what I have witnessed in class so far there appears to be very little interest in a field that is absolutely vital in our society.  There appears to be many challenges in recruiting young professionals to this growing industry.  I am optimistic that the long term care industry can meet and exceed the upcoming challenges.