by Robert Powell
Alzheimer's, inability to increase savings are two steep obstacles to golden years
When it comes to retirement, there are lots of things to consider: tax rates, earthquakes, and drug interactions to name a few. But experts say there are two big elephants in the room with which many of us will have to deal, sooner or later.
One is trying to make up for lost time on the savings front by assuming you can work later in life. The other is a diagnosis of Alzheimer's disease, either for oneself or a close family member.
Let's tackle the tougher one first.
Some 5.3 million people now have Alzheimer's, according to a recent report issued by the Alzheimer's Association. That's roughly the population of Colorado. The disease is the seventh leading cause of death in the U.S. There are some 10 million unpaid caregivers.
What's worse still, there's no end in sight: The prevalence of Alzheimer's is expected to grow by more than 80% from 2000 to 2025 in at least nine states, including Colorado. By 2050, some 19 million Americans will have Alzheimer's.
You don't have go far in your family tree or on your Facebook page to realize that you're just one degree of separation away from this disease. In my extended family, for instance, I know of at least three people with Alzheimer's or symptoms of dementia, all of whom are, by the way, women, the gender most affected by the disease.
So how should you tackle or at least think about this elephant in the room?
"Alzheimer's disease is the largest thief of retirement" said Chris Cooper, president of Chris Cooper & Company, Inc. and ElderCare Advocates, Inc. "It is a slowly progressing disease, leaving the person oftentimes with good physical health and less mental faculties to use this good physical health."
Americans are often diagnosed with Alzheimer's in their late 60s and 70s, but it can and does occur earlier. And, Cooper said, many Americans fail to plan for the disease. "When confronted with the diagnosis, families often scramble for information and begin to engage in different forms of 'quackery,'" said Cooper, who is a former president of the Ohio Council of the Alzheimer's Association and whose maternal grandmother had Alzheimer's disease.
To Cooper, the quackery usually takes three forms: medical, financial and legal. People might pursue medical treatments that have not been proven to work, and many times are harmful, he said. And they might try to do things with legal and financial instruments, he said, "all in the name of 'fear of running out of money' and 'the only way to get the government to pay for my parent's nursing-home care.'"
In some cases, Cooper said caregivers could be accused of stealing when they set up gifting schemes.
Because there's a long three-to-20-year life span from diagnosis to death with Alzheimer's disease, Cooper said retirement planning can be difficult. "You have to plan for a possible 20-year period of dependency on others to manage your resources, to make decisions for you, and see to your care and comfort as your fiduciary," he said.
But just because it's difficult doesn't mean that you should avoid it. Instead, you have to confront it head on. "It is happening to more and more of us now, as our life expectancies increase," he said.
Working in Retirement
The Employee Benefit Research Institute's recent report about retirement confidence found that many Americans plan to keep working as a way to make up for not having saved enough or invested wisely enough for retirement, or as a way to keep health insurance.
But, as many have written before, working is not a fail-safe plan. Or is it?
Two new reports seem to indicate this elephant might be smaller than we think, unless of course you develop Alzheimer's.
According to a recent Urban Institute report, unemployment rates for men and women age 55 and older did hit record highs in 2009. And older African Americans, Hispanics, and adults with limited education were especially likely to find themselves unemployed. Plus, the report noted that older adults who lost their jobs spent more time out of work than their younger counterparts.
But there were some encouraging developments. For instance, employment rates for adults age 62 and older did not fall, because many older workers stayed in the labor force, and earnings for full-time workers age 65 and older grew substantially, the report stated.
A separate EBRI report confirmed the Urban Institute's findings. The percentage of those aged 55 or older in the labor force increased to 39.4% in 2008, from 29.4% in 1993. For those aged 65 to 69, the percentage increased to 30.7% in 2006 from 18.4% in 1985. Yet, while older workers working full time increased steadily from 1993 to 2007, that trend ended with the recession in 2008.
Still, working in retirement does seem viable for some. "My recommendation to workers is to delay retiring as long as possible -- another three to five years, or even longer where feasible," said Olivia S. Mitchell, associate director of the Financial Literacy Center. "Working longer preserves assets, yields higher eventual Social Security benefits, and probably results in people staying healthier, as compared to retiring early."
Robert Powell has been a journalist covering personal-finance issues for more than 20 years, writing and editing for publications such as The Wall Street Journal, the Financial Times, and Mutual Fund Market News. Powell is the editor of Retirement Weekly.
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