Money, Time and Generations: Competing Priorities and Long Term Care

Middle-aged baby boomers are in the middle of a push-me, pull-you situation, summarized by the descriptive phrase “sandwich generation.” They have both minor-aged children at home, and parents who need help as they advance in age and require long term care.

The baby boomers and their parents find that decisions regarding long term care are often difficult and unsatisfying. The grandparent who wants to leave an inheritance anguishes over spending money instead on long term care needs. The baby boomer who works long hours can resent spending precious free time on parents, instead of his or her children. It may be impossible to lessen the time burden by paying for professional care without compromising other priorities such as saving for children’s education and the boomer’s own retirement.

There are only two ways to get long term care: by a friend or relative who sacrifices his/her own time, or by getting professional, paid care.

The cost to volunteer (unpaid) caregivers is relatively easy to understand by reflecting on this question: what would they be doing otherwise?

In the world of professional (paid) caregiving, payment sources can be boiled down to two: 1) private pay options (personal cash or long term care insurance proceeds); or 2) government programs. The costs of each strategy include money paid, income never earned due to time spent caregiving, as well as other factors such as choice of caregiving options.

The cost of paying with personal cash is straightforward: it comes from wallets or their equivalent, such as the liquidation of investments, and/or use of income. This cash is no longer available for other priorities, including support of a spouse or inheritance for children and grandchildren. Privately paying for long term care insurance involves a less dramatic situation; by planning ahead and buying a policy before care is needed, an affordable premium is traded for a much larger benefit when care is needed.

The cost of relying on government programs can be daunting. They can include a delay as you wait for services that are currently at capacity, or the fact that government programs often have an institutional bias, meaning that the system prefers to deliver services in nursing home. You may find it difficult to get the appropriate services needed, consistently, in your own home. Private payers are less likely to encounter these problems.

The federal government is also running into problems when it looks at funding long term care. A recent AARP report¹ asked “Can we afford our aging society?” The report goes on to explain that entitlement spending has been fairly stable over the last 20 years as a percentage of gross domestic product (GDP), with one exception – health care, including Medicare and Medicaid. Is this to be expected, due to an aging population? The report claims no, saying the aging population accounts for only about one-sixth of Medicare’s growth since 1970. President Bush’s new proposed budget includes reforms to cut federal Medicaid funding over $24.7 million from 2008-2012. These proposals, coupled with the Medicaid reform in the Deficit Reduction Act, leads many people to conclude that relying on government programs may not be the best option.

In the perfect world, we would all have lists of friends and relatives able and willing to be our caregivers. And, we would all have enough money that we didn’t have to rely on any of them!

Modern long term care insurance can make the highest-quality care within the financial reach of the middle class. Just as important, it can lessen the time burden of caregiving for friends and family, and provide a way to pay for the care we desire, regardless of what government programs may offer – or not!


Michael FitzPatrick, co-founder of the LTC Partnership, LLC, educates people about developing a plan to protect against the catastrophic financial and emotional costs typically associated with long-term care. Since long-term care insurance is one of the options that people consider, Mr. FitzPatrick has the unique ability to shop among 11 different long-term care insurance carriers on his clients’ behalf. He can be reached at 973-394-0053 or mbfitzpatrick@theltcpartnership.com.


[1] “In Brief: Population Aging, Entitlement Growth, and the Economy,” Research Report, John Gist, AARP Public Policy Institute, January 2007.

April 10, 2007