The Best Life

When Margie Jenkins's aging father could no longer live independently in his home, he was despondent about leaving behind a lifetime of memories and going to an institution that could accommodate few of his possessions. Jenkins, a Houston psychotherapist, recognized that her dad was engaged in a very difficult but natural grieving process. Her therapy was to put a tape recorder on the kitchen table and let her dad say goodbye to his home.

"We just walked through the house, and he talked about all the things in the house, what they meant to him, and who in the family he wanted to have them," she recalls. "Later on, after he had moved out, he said to me, 'That was a real gift to me. Thank you.'"

[See 6 Reasons You Need a Financial Plan.]

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In the effort to cut the federal budget deficit, reforming the tax code seems to be an area of common ground among Democrats and Republicans. Reducing or eliminating long-cherished tax breaks would undoubtedly trigger major clashes among affected consumers, companies, and advocacy groups. The fact that such battles may be waged anyway is a telling sign of how serious the deficits have become, and how difficult it is to reach agreement on other solutions to the problem.

In the simplest terms, Democrats are seeking ways to reduce budget deficits without threatening Medicare, Medicaid, and Social Security—programs of vital interest to retirees. They believe raising taxes must be part of the solution. Republicans are seeking ways to reduce deficits without raising taxes, and they're more open to entitlement cuts to achieve their goals.

[See 10 Essential Sources of Retirement Income.]

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The annual trustee reports for Social Security and Medicare were released late last week. It was hard to find any good news for retirees in the continued financial erosion of both programs. Perhaps the best that can be said is that the problems with Medicare have become so acute that Social Security reforms are off the Congressional agenda for the time being.

[See 10 Essential Sources of Retirement Income.]

The headlines say Medicare's hospital insurance (HI) trust fund will run out of money in 2024. That's five years sooner than last year's projections. How could things have slipped so much in only a year? According to the report, payroll taxes into the HI fund were 1.3 percent lower than last year's projections. Healthcare expenditures, meanwhile, were 3.6 percent higher than projected. Voila—five years of reserves down the drain. And it could happen again.

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Although long-term care costs in nursing homes and assisted living facilities continued to rise last year, in-home care costs did not increase at all, and have risen very little in the past six years, according to the 2011 Cost of Care Survey sponsored by Genworth Financial, a provider of long-term care insurance.

"Home care rates have remained flat in part because of increased competition among agencies and the availability of unskilled labor, and by avoiding costs associated with maintaining stand-alone health care facilities," the survey said. Most consumers prefer to receive care in their homes, and Genworth noted that more than two-thirds of its initial long-term care insurance claims are for in-home benefits.

[See 10 Essential Sources of Retirement Income.]

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