Mitchell’s Musings 6-6-16: In the Long Run… Daniel J.B. Mitchell John Maynard Keynes is often quoted as saying that in the long run, we’re all dead. His famous statement was meant as a critique of economic reasoning concerning processes that would eventually lead to a desirable stable outcome, while neglecting the difficult transition on the way to that outcome. But the issue of getting to the long run arises in other contexts as well. Consider the following news item: Demand for long-term care is expected to increase as the nation ages, but the majority of Americans 40 and older lack confidence in their ability to pay for it. The annual cost of long-term care expenses range from $17,680 for adult day care to more than $92,000 for a private room in a nursing home, according to Genworth Financial. Yet an Associated Press-NORC Center for Public Affairs Research survey finds that a third of Americans 40 and older have done no planning for their own long term care needs, such as setting aside money to pay for a home aide or to help with daily activities or a room in a nursing home…1 The article excerpted above is not unique. Think of the number of articles you have read in recent years about people – especially aging baby boomers - not saving enough. Usually, the thrust of such articles is to urge readers to plan ahead “better” than they otherwise might. But there is another message implicit in such pieces. It is that folks don’t generally do a very good job about planning for the future and the private market doesn’t do a great job in helping them. If such planning was well handled privately, you wouldn’t be seeing such news items. In the long run, the baby boomers will pass on as will everyone reading this musing. However, the transition will be difficult in the absence of some provision dealing with the possibility of needing expensive long term care or just outliving one’s savings. And, as noted, there are problems in private provision of protection against such risks.
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https://insurancenewsnet.com/oarticle/poll-people-unsure-about-ability-to-pay-for-long-term-care
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