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These are your chances of getting dementia — with potentially ‘catastrophic’ financial results

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What are your chances of ending up in old age with cognitive impairment or full-blown dementia?

If you think, “slim or none,” try again.

For those over 50, the full lifetime odds may be as high as 67%. So, astonishingly, a team of experts reported a few years ago in the peer-reviewed academic journal SSM Public Health. Those who became cognitively impaired did so at an average age of 70 for men and 73 for women, they found. Those who went on to develop full dementia did so at an average age of 79 for men and 83 for women.

Much lower, and more cautious scientific estimates, based on a smaller, older and more recent sample, still found that about 32% of people over 65 either had dementia or mild cognitive impairment. That appeared in the American Medical Association’s Neurology Journal.

But even if we take these lower figures as our benchmark, they represent a horrifyingly high risk. And the danger rises fast as we get older. About half of those in their late 80s are affected by dementia or cognitive impairment. And half of those, or 25% of the population, have full dementia.

All of that is alarming context for a new report, in the Journal of the American Medical Directors’ Association, about the “catastrophic” financial risks we face in old age if we get dementia. That’s the authors’ word, by the way, not mine: “Those with dementia were at greater risk of facing catastrophic out-of-pocket expenses for long-term care than those without dementia,” they wrote. 

The median senior citizen with dementia living in a nursing home or assisted living spends between four-fifths and 100% of their monthly income on long-term care, researchers found. But a quarter of them “spent close to 300% of their monthly income on LTC expense.”

You do not need to be a financial genius to work out that spending 300% of your monthly income on long-term care is not sustainable. The way it works is that you spend pretty much all of your assets, and then you throw yourself at the mercy of Medicaid.

The good news? These numbers are lower for those aging in place. Researchers said the average person living at home spent an average of $1,260 a month, or $15,000 a year, on care. In an email to MarketWatch, Professor Jing Li, the report’s lead author and an assistant professor of health economics at the University of Washington, said for most people the numbers are still better.

That $1,260 is the average monthly expense only among the small number of people who are both living at home with dementia and who are paying out of pocket for help, he told me. And that’s less than 10% of those who are living at home with dementia, he added.

Among those with dementia who are in nursing homes, he says, just over 40% are paying out of pocket. The average cost among them, he said, is nearly $3,900.

“Our finding suggests that it is cheaper for someone (especially one with dementia) to age in place as they pay much less out-of-pocket for long-term care than someone in a nursing home,” he told me.

But there are issues with that, too.

Many of those aging in place are being nursed, part-time or full-time, by a family member — often a spouse, but sometimes an adult child, another relative, or a friend. That burden won’t show up in any traditional economic data, unless money changes hands. But it isn’t “free.” It is often an exceptionally heavy burden, and borne by the carer.

The more professional health you need at home, the higher the cost, and the smaller the savings compared with a nursing home.

And it raises still further issues. What does this mean for those who are unmarried or don’t have children? Or for those — this happens — whose children aren’t willing to help?

For that matter, if a wife, say, nurses a husband with dementia, once he’s gone there’s no one around to nurse the wife if she gets it, too.

Horrifyingly, as many as 22% of older Americans with dementia are now living alone.

Sandra Gilpatrick, a financial planner in Boston, said too few people consider this risk when doing their overall financial planning. “I tell my clients one of the best financial ways to prepare for a potential cognitive impairment like dementia is a long-term-care policy.”

She added: “Relying on Medicare is not a good plan. Medicare will not assist with aging in place with dementia.”

(Gilpatrick practices what she preaches. She said that by happenstance I had emailed her about this just as she and her husband were applying for their own long-term-care policy. She said it was important to apply when you are middle-aged and still in good health, and therefore you can get insurance at a reasonable price.)

Jessica Hall — see here and hereBeth Pinsker and Judy Stringer have written extensively on MarketWatch about the challenges of aging in place.

Dementia has no cure, although one (expensive) new drug does slow the progression.

Meanwhile, life expectancy for someone with dementia is somewhere between six and 10 years.

It’s bad financial news for everyone, from individuals to Medicaid, Medicare and state governments — meaning taxpayers. The federal government has been expanding its support for home help through programs such as PACE, or Program for All-Inclusive Care for the Elderly, but at the moment 99% of beneficiaries are on Medicaid. Meanwhile, states have been trying out programs: Washington state has created a mandatory long-term care plan, funded by an 0.58% payroll tax. But the maximum benefit at the moment is $36,500.

Bottom line: Keep saving.

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