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British Predict Very Bleak Retirement

There simply isn't enough money to put everyone in nursing homes.

By Will Offensicht  |  December 3, 2009

All the pother about health care reform has obscured another problem which is probably worse - elder care.  My grandmother died in a nursing home that, because of 3-shift operation and weekend coverage, had nearly as many employees as residents.

This model worked out very nicely for her, since back then there really weren't very many people living as long as my grandmother.  Today, alas, this degree of solicitousness is clearly not sustainable - there are simply going to be too many older people to have one employee look after each one.  As costs mount, we're seeing my grandmother's style of elder care begin to collapse.

The British, having put in place a single-payer health care system which is often used as a model for what America ought to do, are not as preoccupied with debates over health care as we are.  Thus, their reporters and columnists can devote news space to other issues such as pensions and elder care.

In "Care in old age: we won't pay, the State can't," Timesonline reports that retirement is going to be far more difficult than most people who're still working assume.

Part of the problem is that people are living so much longer.  In 1925, a 65 year old man could expect to live 12 more years; today, a 65er can look forward to more than 17 additional years.  It's one thing to support older people who can no longer work but who'd like to continue eating; as the Times reports, the real problem is that that their future medical costs are going to be astronomical:

Two in three women and one in two men will need some form of care during their retirement.

The situation is made worse by the recent economic difficulties which slashed government revenues everywhere.

There is a big, ancient, whiskered, incontinent elephant in the room.  We cannot afford to look after our growing army of the elderly.  Our ambition for a caring, inclusive welfare system is not matched by our tax receipts.  By 2050 the number of 80-year-olds is forecast to double.  As a nation [England] we are broke and ageing, a toxic combination.

The Times estimates that in addition to whatever living expenses are incurred, the average 65 year old will run up about $50,000 worth of medical expenses before death unless cost concerns mean that they'll be denied care.  Nursing home care costs about $55,000 per year assuming no major medical expenses.

The current system that pays for elder care is a mix of local options, state programs, and federal systems, with the occasional private long-term-care insurance plan thrown in.  Let's ignore the politics of trying to sort it out and ask a fundamental moral question: "Who should pay?"

In Britain, the answer for most people is easy is easy - polls show that most voters believe the government should pay.  In America, big-government Democrats are trying to sell the idea that the government should pay for just about everything.  The current US system requires that if you ask the state to take care of you, the state can claim all your assets, starting with your house, to cover the costs.  Only when you're bled dry does the government start putting up taxpayer money.

The bottom line is that your house, which you spent your life paying off, disappears into the state's maw, followed by everything else you own.  You've nothing to leave to your children, and as taxpayers, they're stuck with the bill for anything else the government spends.

The article ends on a pessimistic note:

But the boomers are rapidly ageing.  Either they accept that their houses should be sold to pay for their care, or they bequeath a monstrous tax burden.  Either way, their children will pay.

There is a third way which the Times overlooked.  An older person who's reasonably healthy can move in with their children or their children can move back into the family house with them.  Having older people live in multi-generation households was the only retirement program available to anyone outside the super-rich for centuries.

Talk of government-funded retirement is nonsense - politicians will spend any money put aside for retirement, leaving the burden of more and more retirees to few and fewer working taxpayers.  It should be obvious by now that raising children who love you enough to personally care for you is the only secure retirement plan.