Will You Be Caught in the Middle-Class Bind?

The middle-class bind means you are too wealthy for government help and too poor to do without it. More specifically, the term comes from a study by Health Affairs and reported in the New York Times that finds in ten years 80 percent of middle -income seniors will have less than $60,000 a year in income and assets. An amount that disqualifies them from Medicaid benefits to pay for assisted living but is not enough to actually pay for assisted living for a long period of time.

Details from the report

• By 2029 there will be 14.4 million middle-income seniors (up from 7.9 million in 2014), 60 percent will have some type of mobility problems and 20 percent will need medical care due to chronic illness or disability.  
• The projected average annual cost for assisted living rent and estimated medical out-of-pocket spending is $62,000.
• 54 percent of seniors will not have sufficient financial resources to pay for senior housing with the level of care they need; in general, they have more debt, less savings and are less likely to have pension plans. 
• Even if we assume that seniors devote 100 percent of their annual income to senior housing—setting aside any personal expenses—only 19 percent of middle-income seniors will have financial resources that exceed today’s costs of assisted living.
• Many of these seniors will not have family members to help them stay in their own homes, either because family members do not live nearby, family members are not able to help or there are no family members.

Caroline Pearson, lead author of the study is quoted in the New York Times saying, “This group gets ignored and underserved in today’s long-term care market, and it’s a problem that’s going to explode over the next 20 years. When you see the numbers, it’s sobering.” Pearson is a health researcher at Norc (formerly the National Opinion Research Center) at the University of Chicago.

We agree that these numbers are sobering. If you believe that you may be headed for the middle-class bind, please act now! Using trust-based planning we can help you protect your assets, qualify for Medicaid in the future if you need it and still have a nest egg.

All too often clients come to us after a loved one is already in assisted living or a nursing home. While we are often able to help, we prefer to create a plan that avoids a crisis – and allows you to keep more of your savings.

Call today to avoid the middle-class bind, 302-651-0113.