Hurricane of Another Sort

The 2005 Atlantic Hurricane season is underway. This means that residents along the Eastern seaboard, and in particular south Florida, have begun making their annual pilgrimages to Home Depot stores and supermarkets looking for batteries, water, generators and that staple of American homeland security, duct tape.

Everyone is warned repeatedly about the need to prepare for what is surely coming — significant storm activity. Whether a particular urban area is hit by a powerful hurricane is not something that can be accurately predicted long range. There is no doubt that overall storm activity during hurricane season is intense and the risks are very high. We see the risks, we are warned about the risks and some people heed the warnings and take preventive action.

There is, however, another intense and clearly predictable problem which faces all of us, not just in south Florida, but also throughout the United States and the world. It is a problem that will hurt many individuals tragically, but will also affect every local government and every individual who fails to prepare diligently amid the great risks. It is the crisis in retirement income.

Life expectancy is increasing to the point where a child born today will have a life expectancy of about 80 years. Parents of a newborn today will likely find that the child spends more time taking care of the elder parents than the parents spent taking care of the child. Retirement will last years or decades longer than my mom and dad ever expected.

Another symptom of this coming storm is the size of our expectations. We live in a society that has become a culture of entitlement. Among those entitlements is the expectation of access to high quality health care and all that goes with modern medicine, including drugs and rapid access to modern diagnostic, surgical or therapeutic interventions.

It is expected that if a person goes to a doctor with chest pains and the person accepts the physician’s recommendation that coronary bypass surgery or insertion of a stent is the best treatment, the person will have the surgery and receive the care in a matter of hours or days rather than in the rest of the world, of weeks, months or never.

We whine about health insurance premiums increasing far beyond the rate of inflation and find significant unrest in the workforces that still have unions (i.e., declining traditional manufacturing industries and the "growth industry" for American unions — local governments) when co-pays are increased or provider networks are reduced.

There is often a Category 5 storm response whenever a county or city dares to suggest to the firefighters, for example, that the organization needs a less costly method of providing and paying for health insurance.

Certainly a longer lifespan and a realized expectation of quality healthcare are good things. However, there is no substantial evidence of widespread preparations for the time when we are no longer working, may not have access to health insurance or may be in need of hugely expensive long-term nursing home care.

In a recent retirement confidence survey, 69 percent of Americans say they are saving for retirement. This means that just under one-third are not. They make assumptions that they will be taken care of somehow by Social Security or by their benevolent former employers after they retire. More than half of the 69 percent who say they save for retirement, report that they have saved less than $25,000 toward their retirement! Imagine trying to retire based on your current income level when your cash in the bank equals $25,000.

Soaring healthcare costs and a greater need for healthcare as we age suggests a dangerous disaster scenario, especially when it applies not only to individuals but also to our society in general. An estimated 50 million Americans lack health insurance now. As costs increase, as economic changes occur such as the continued shifting of manufacturing jobs to fast growing economies, like China’s, the scenario is likely to worsen.

Very regrettably, no national consensus has emerged on what policies should be applied in the face of the hurricane to come. There is no general political courage at the federal level to propose uniform programs such as single payer for true emergency or catastrophic care, or any of the other policy kinds of initiatives suggested by the HR Doctor in a prior article found in Don’t Walk by Something Wrong, the HR Doctor’s recent book.

Take the clear symptoms of trouble ahead, the lack of will or vision to address the problems properly and comprehensively and the result is the equivalent of telling everyone how important it is to prepare for a hurricane and then closing the National Hurricane Center, FEMA and local disaster services for a long summer break following in the footsteps of America’s schools!

Every local government leader understands what no retirement or long-term healthcare preparation means for local government. More and more retirees will be only one illness or injury away from becoming indigent retirees. The average widowed or unmarried woman Social Security recipient gets about $9,576 per year while the average male receives $12,468. For these elderly recipients, Social Security constitutes a very significant, perhaps their only source of retirement income. In fact, Social Security represents the majority of retirement income for women over 65, 38 percent of income for men and 35 percent for elderly couples. It is the only source of income for 29 percent of unmarried, elderly women, including widows.

These Social Security Administration figures are the statistics of an increasingly impoverished and growing lower economic class in society called "mom and dad, or grandma and grandpa."

Among the many difficult social problems this situation of lack of vision will generate will be significant increases in unfunded health and welfare mandates which will fall on — you guessed it — local government. The Department of Rhetoric headquarters will remain in Washington, D.C. and in state capitals. But the "Action" headquarters, with insufficient tools to do the job ethically and properly, will be found in the struggling local governments.

A storm is coming which will affect every government agency and every citizen in the United States, even those with health insurance. Currently, an estimated $1 out every $12 spent on health insurance premiums is the result of providers needing to increase premiums to make up for indigent healthcare costs for the uninsured. That number will grow.

This is not only the beginning of the Atlantic hurricane season in Southeastern America, it is clearly also a season where a hurricane of another source is brewing. We had better take the steps needed to educate ourselves about retirement planning. We need to switch from a "credit card" mentality of "buy it now, worry about payment later" to a preparation and savings mentality and hold national leaders accountable for implementing the visions that put them in office in the first place.

The HR Doctor is one of the many local government employees who regularly add to deferred compensation, purchase long-term care insurance and try to take good care of themselves.

In doing so, we are, in effect, putting seven years worth of grain in the granaries for the hard times which will come. Sadly, this hurricane of the unprepared will affect so many for so long in the future unless serious action starts now!

All the best as you plan for your own retirement!

Phil Rosenberg
The HR Doctor
http://www.hrdr.net/