TIME Aging

3 Simple Lifestyle Habits That May Slow Aging

There's more evidence for eating well, sleeping, and exercising

Stress makes our bodies age faster, but thankfully we can combat that with healthy eating and exercise, a new study says.

When cells age, telomeres—tips at the end of chromosomes—shorten. Telomeres help regulate the aging of cells, and their length has been used to determine the body’s current state of health. Things like stress and lifestyle behaviors can influence their length, as compelling earlier research has shown. In the new study, University of California, San Francisco, researchers looked at 239 post-menopausal women for a year and found that for every major life stressor they experienced during the year, there was a significant shortening in their telomere length.

That’s not great news, but the researchers also discovered that the women who ate a healthy diet, exercised and slept well had less shortening of their telomeres. It could be that the women’s healthy habits actually protect them from cellular aging, even in the face of life’s stresses.

The study, which is published in the journal Molecular Psychiatry, is observational, which means the researchers cannot say with certainty that it was these healthy lifestyles alone that offered them protective benefits. But at the very least, it shows once again that doing our best to eat well, sleep, and exercise can give us an edge.

MONEY Aging

As You Age, You Need to Protect Your Money — From Yourself

Piggy Bank Locked Up
Andy Roberts—Getty Images

A financial planner explains why he couldn't help his client when she became delusional.

After three decades as a financial planner, I’m seeing more and more clients reach, not just retirement, but their final years. An issue that becomes especially important at this stage of life is how to help clients protect their financial resources from an unexpected threat — themselves.

One of my saddest professional experiences came several years ago when one of my long-time clients, a woman in her late 80s with no family and few close friends, abruptly fired me. Because Mary had no one else, I had helped her in many ways beyond the usual client/planner relationship and even reluctantly agreed to serve as her trustee and power of attorney in case she became incapacitated.

At what proved to be our final quarterly review meeting, Mary initially seemed confused. I was able to reassure her about the stability of her finances, and she seemed clearer by the time we finished. Three weeks later, I received a handwritten letter from her: “You have my finances in a mess. I can’t get to my money. You are fired.”

I was stunned. Yet ethically I was required to comply with her wishes by moving her holdings to another broker.

Several subsequent conversations demonstrated that Mary was suffering from periodic memory loss and delusion. Had she been disabled by a sudden accident or a stroke, I could have stepped in. Yet, because her decision to fire me was made at a time when she was arguably still competent, my hands were tied.

In theory, I could have gone to court with my power of attorney or in my position as trustee and petitioned to have Mary declared incompetent. But that posed a problem: Essentially, I would have been telling a judge, “Mary fired me as her adviser. I’d like to have her declared incompetent so I can re-hire myself as her adviser.” There was no way I was going to ask a judge to do that. I had a clear conflict of interest.

Since this experience, I have confirmed the wisdom, given the potential for conflict of interest, of never serving as a trustee or power of attorney for a client. With the help of suggestions from several other planners, I’ve also learned some strategies to help protect clients from themselves.

One tool is to ask clients to sign a statement authorizing a planner concerned about possible irrational behavior to contact someone, such as a family member or physician, designated by the client. While this would not prevent a client from firing an adviser, it would provide a method of discussing the issue and also involve another person in the decision.

Another possibility is to put clients’ assets into either an irrevocable living trust or a Domestic Asset Protection Trust (in states that allow them) and naming someone other than the client or the planner as trustee. While the client, as the beneficiary, would have the power to fire the trustee, concern about a trustee being fired irrationally could be mitigated to some degree by having a corporate trustee. In addition, with a DAPT, the beneficiary client would not have the power to amend the trust without the agreement of the trustee. This would give some protection against self-destructive choices by a client who was gradually losing competency. One disadvantage of this approach is cost, so it isn’t an option for everyone.

Perhaps the most important strategy is to work with clients to create a contingency plan in the event of mental decline. It could include arrangements to consult with family members or other professionals such as physicians, social workers, and counselors. For clients without close family members, the plan might authorize the financial adviser to call for an evaluation, by professionals chosen in advance by the client, if the client’s behavior appeared irrational. This team approach might alleviate clients’ fears about being judged incompetent by the person managing their assets.

The possibility of mental decline is something no one wants to consider. Yet it’s as essential a financial planning concern as making a will. Helping clients build financial resources for old age includes helping them create safety nets to protect those resources from themselves.

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Rick Kahler is president of Kahler Financial Group, a fee-only financial planning firm. His work and research regarding the integration of financial planning and psychology has been featured or cited in scores of broadcast media, periodicals and books. He is a co-author of four books on financial planning and therapy. He is a faculty member at Golden Gate University and the president of the Financial Therapy Association.

TIME Aging

Gains in Life Expectancy in the U.S. May Be Slipping

Nearly four in five Americans over age 67 have multiple chronic medical conditions

The more chronic medical conditions you have, the shorter your life will be, say researchers from Johns Hopkins Bloomberg School of Public Health.

In the study, published in the journal Medical Care, the team found that nearly four in five Americans over the age of 67 have multiple chronic conditions such as heart disease, hypertension and diabetes.

Obesity may be driving much of this trend, and may responsible for slowing recent gains in life expectancy. Life expectancy has been growing at about .1 years per year in the U.S., (that’s slower than rates in other developed countries).

The study used the Medicare 5 percent sample, a nationally representative group of 1.4 million Medicare beneficiaries, which included data on 21 chronic conditions. On average, life expectancy decreased by 1.8 years with each additional chronic condition among older Americans.

“When you’re getting sicker and sicker, the body’s ability to handle illness deteriorates and that compounds,” says senior study author Gerard Anderson, a professor in the Department of Health Policy and Management at Johns Hopkins. “Once you have multiple conditions, your life expectancy becomes much shorter.”

For example, he says, a 75-year-old woman with no chronic medical conditions would likely live to at least 92 years old, or another 17.3 years. However, a 75-year-old woman with five chronic conditions will likely only live another 12 more years, and a woman of the same age with 10 chronic conditions would only live to about 80 years old. According to the data, women fare better than men and white people live longer than black people even with the burden of additional health conditions.

The type of chronic disease older people develop also seems to affect their life expectancy. A 67-year-old diagnosed with Alzheimer’s will only live an additional 12 years, while someone with a heart condition can expect another 21.2 years. But once people develop more than one chronic condition, the specific illnesses no longer matter.

“There are interaction effects among the diseases that result in decreases in life expectancy. Any condition on its own has a particular effect. When you have heart disease plus cancer, that has a particular affect, and then those start to accumulate,” says lead study author Eva DuGoff.

The findings may be important for calculating health costs in coming years, especially for Social Security and Medicare programs. Currently, 60% of people over age 67 have three chronic medical conditions that require medical care — a significant increase from previous years when individuals didn’t live long with chronic conditions.

“In some ways we’re a victim of our own success. As we’re living longer and our health system has gotten better, no longer are people dying of heart disease at age 50 so now they’re dying of heart disease later when they have other things like cancer as well,” says DuGoff. Whatever gains improved health care has provided may be eroded by the effect of these accumulating chronic conditions. “We need to reorient our healthcare system to care for chronic conditions. If we don’t reorientate ourselves in that way, the impact of chronic conditions on life expectancy could be extremely negative.”

MONEY Social Security

How to Fix Social Security — and What It Will Mean for Your Taxes

As Baby Boomers retire, the Social Security trust fund is getting closer to running out of money, a new study finds.

Last week I explained why I thought it would be a bad idea to close Social Security’s long-term funding gap by simply making all wages — not just those up to the annual ceiling, which this year is $117,000 — subject to payroll taxes, thereby socking it to wealthier workers. That wasn’t a popular opinion among those who feel it only right to raise the levies on the top 1%, or even top 5%.

“When all other sources have been depleted soak the portfolio holders even more disproportionately,” one critic responded via social-media .

Tweets, unfortunately, don’t make great policy arguments. And as Social Security’s doomsday clock keeps ticking, it’s all the more urgent to come up with a balanced reform strategy and act on it. Last week the Congressional Budget Office projected Social Security’s trust funds would be depleted during calendar year 2030—a year earlier than its previous estimate. If this happens, the program could then pay only about three-fourths of its scheduled benefits.

How, then, to close the funding gap? Although I do not want to see the wealthy as the primary bill-payer for Social Security reform, I do think the payroll tax ceiling is set too low. Today that ceiling, which is $117,000 this year, captures about 83% of all wage income, but it used to apply to 90%. The reason for the decline is widening income inequality, as the upper end of the wage scale has soared disproportionately higher.

Raising the ceiling until it once again covers 90% of the nation’s wage income would help, somewhat, to improve Social Security’s finances, the CBO found. The big headline here is that hiking the ceiling to cover 90% of wages would require a huge jump—from a projected $119,400 in 2015 to $241,600. The steep hike is necessary because high-end earners are a relatively small slice of the U.S. population. Even so, raising the payroll tax ceiling, which more than doubles the amount of Social Security payroll taxes paid by wealthier earners, would close only 30% of the system’s projected 75-year actuarial deficit.

You might wonder why we don’t eliminate the ceiling altogether so all wages are subject to payroll taxes. Glad you asked. Eliminating the ceiling would still close only 45% percent of the deficit, according to CBO. Both these projections assume that wealthier people would also see their Social Security benefits increase.

To make a more significant reduction in the deficit, you could limit Social Security benefit increases for the wealthy to only an additional 5% of pre-retirement earnings. In that scenario, along with eliminating the earnings ceiling, we could close nearly two-thirds of the funding gap. Still, as I wrote last week, I think soaking the rich this way is nearly as bad as soaking poorer people. Soaking people is not what Social Security was or should be about. It’s about requiring people to set aside enough money through a mandatory payroll tax to provide them a modest level of retirement security.

For most people the payouts are, indeed, modest. In 2013 a 66-year old who had earned average wages during his or her working life would qualify for lifetime Social Security payments beginning at $19,500 a year. This amounts to 45% of average pre-retirement income. What’s more, most workers file for benefits early, which sharply reduces the level of income replacement.

Yet that’s pretty much how the program was designed, and even these low levels of replacement income have been enough for Social Security to be a spectacular success. Before the program began in the ‘30s, retirees had the highest poverty rate of any age group. Today they have the lowest. (Medicare gets major credit as well.)

Problem is, even as Social Security has worked well, the other parts of the retirement system have fallen apart. The move from defined benefit pensions to 401(k)s and other defined contribution plans has shifted enormous retirement risk from employers to employees, and the numbers show that many aren’t saving enough to meet their goals.

Given the looming retirement shortfall, there has been growing support to expand Social Security benefits, not contract them. That will be tough to do. As the CBO reported last week, under current rules Social Security’s long-term deficits will continue to balloon. Over the next 25 years, program income will amount to 5.2% of the nation’s gross domestic product, while program benefits will account for 6%.

The fundamental problem is the aging of America. As the wave of Baby Boomers moves into retirement, the number of people collecting Social Security is projected to rise by roughly a third from 58 million today to 77 million in 2024—and by nearly 80% to more than 103 million by 2039. By contrast, the work force, defined as people aged 20 to 64, is expected to increase by only 5% by 2024 and just 11% by 2039.

Something’s got to give. Higher taxes, in one form or another, are inevitable.

Philip Moeller is an expert on retirement, aging, and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY Second Career

3 Tips for Launching Your Labor-of-Love Business

Women practicing yoga
Willie—Getty Images

An Air Force nurse turned yoga studio owner offers advice from her experience.

Switching careers to open a labor-of-love business in your 50s or 60s is a certifiable trend in America today.

As Ting Zhang, an economist at the Merrick School of Business at the University of Baltimore and the author of the Elderly Entrepreneurship in an Aging US Economy: It’s Never Too Late told me: “Some older workers have been cherishing a dream, wanting to start their own business, and the time is now. Aging is a new opportunity to be an entrepreneur.”

Huge Rise in Midlife Entrepreneurs

The numbers bear her out. According to the Kauffman Foundation, new-business creation by Americans age 55 to 64 rose by more than 60% between 1996 and 2013. Last year, their business starts accounted for nearly one-quarter of all launches.

(MORE: Plotting Your Next Move for Unretirement)

Economists Joseph Quinn of Boston College, Kevin Cahill of Analysis Group and Michael Giandrea of the Bureau of Labor Statistics have found that more than a third of men age 51 to 61 are self-employed, up from 20% in 1992. Some 15% of women in that age group are entrepreneurs, a rise from 10%.

Elizabeth Isele, the septuagenarian cofounder of the nonprofit Senior Entrepreneurship Works, applauds the trend but also has a concern. “There is too much happy talk about it,” she says.

From Nurse to Yoga Studio Owner

Amen, I imagine Liz Campbell saying.

Campbell, in her late 50s, is among the new generation of boomer entrepreneurs. The former nurse opened her Yoga Gem studio in Montgomery, Ala. in 2013.

It’s not that she regrets her decision. No, Campbell is passionate about her midlife career switch and her business. But after a rocky start, she has learned that starting and running a small enterprise is harder than some wannabes think.

“You really have to be prepared for the long haul,” she says.

(MORE: Busting the Myths About Work in Retirement)

Campbell graduated from nursing school in 1979 and then worked for about eight years as a nurse in the private sector. During much of that time, she was the sole support for her family of four, living in Oklahoma during the oil recession. (She later divorced.)

Campbell then joined the Air Force as a nurse—for greater financial stability—put in 20 years, and officially retired in 2009 as a Lieutenant Colonel. Like many boomers, Campbell wanted to keep active and employed, but the idea of sticking with the nursing profession didn’t appeal to her.

Instead, she used the GI Bill to pay for her training to become a yoga instructor in Albuquerque, N.M. She then moved to Montgomery and worked at a yoga studio before deciding to open her own and teach a style of yoga emphasizing healing and calmness.

“You see people change with yoga,” she says. “This is how you change the world.”

(MORE: Where to Get Help Launching Your Encore Career)

Limiting Her Financial Risks

Campbell somewhat cushioned the risks inherent in starting a new business by having a realistic financial foundation.

She pulled out about $60,000 of her money in the stock market to have safely at hand when, and if, needed. Perennially frugal, Campbell determined that the roughly $50,000 she receives each year from her military pension and veteran disability benefits would be more than enough to live on in Montgomery.

So she rented a large studio for $1,400 a month and crossed her fingers. “I opened the doors, and I would wait all day,” she recalls. “One or two students showed up. I thought: ‘What have I done? I signed a three year lease. What a fool I was.’”

Not really. Business picked up by the second month, through a combination of word of mouth, competitive pricing and marketing, including radio ads.

When I caught up with her recently, Campbell had two instructors on contract working a few hours a week, with another hire in the works. The studio now averages some 60 students a week and Campbell pulls in roughly $3,000 a month—enough to pay her rent, electricity, advertising and other business-related bills.

Better Prospects for the Years Ahead

She isn’t drawing a salary yet, though, and estimates that she lost about $5,000 last year. That turned out to be less of a concern than she thought. When Campbell delved into the bookkeeping records, she realized the loss mostly reflected costs associated with installing blinds at the studio and paying a co-instructor from a workshop that didn’t do as well as expected.

This year, Campbell expects her business will be in the black and that she’ll draw a small salary. Two reasons for her optimism: She’ll launch a yoga teacher-training program in September; 10 students have signed up, at $2,800 each. (She hopes the tuition income will allow her to hire more yoga instructors so she can devote more energy to the business side of the enterprise.) Also, Campbell plans to turn her volunteering as a yoga instructor at the local Veterans Administration medical center, into a paid contractor position there.

All in all, she believes it will take about five years to get her business humming and her hope is to sell Yoga Gem in about 10 years. At that point, she’ll likely ease into retirement by becoming a part-time instructor.

Her 3 Tips for Starting a Business in Midlife

I asked Campbell what advice she’d offer potential boomer small-business owners. Here are her three tips:

1. Writing a business plan is crucial. To learn how, Campbell took a class at a small business incubator run by the local Chamber of Commerce. “The class was a really good thing to do, even though the business plan changed right away,” she says. Campbell then quoted General Dwight D. Eisenhower’s famous observation: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Federal, state, and local governments offer a number of programs like the one Campbell took, typically in partnership with other organizations and usually at little to no charge to entrepreneurs. Also, every state has a network of Small Business Development Centers, housed in colleges, offering professional guidance. The web portals of the Kauffman Foundation and the Small Business Administration are valuable sources, too.

2. Network about the nitty-gritty aspects of business. Campbell says she’s approached all the time by vendors and usually meets with them to learn more about running a company. Her relationship with one of her yoga customers, an experienced entrepreneur who sells organic skin products online, helped Campbell better understand small-business accounting and taxes. “Talk to everybody,” Campbell says.

One advantage of starting a business after 50: you probably have deeper networks to tap than younger generations.

Look for local startup events, meet-ups, conferences and competitions. You might even want to begin planning your business at a co-sharing workspace for independent entrepreneurs, which is a great environment idea sharing.

I’ve found that many veteran entrepreneurs are eager to mentor newcomers, so take advantage of their generosity. When I visited TechTown, the Detroit-based incubator, in 2012, it had about 120 experienced entrepreneurs working with potential small business owners. Said Leslie Smith, president and CEO of TechTown: “They just want to help create value.”

3. Be sure you have a financial cushion before taking the leap into entrepreneurship. Financial uncertainty is tough at any age, but that’s especially true when you don’t have a lot of time to make up any losses if the business goes sour.

So make sure your finances add up before taking the leap into small-business land. And then remember: the hard work is only beginning.

Chris Farrell is senior economics contributor for American Public Media’s Marketplace and author of the forthcoming Unretirement: How Baby Boomers Are Changing the Way We Think About Work, Community, and The Good Life. He writes about Unretirement twice a month, focusing on the personal finance and entrepreneurial start-up implications and the lessons people learn as they search for meaning and income. Tell him about your experiences so he can address your questions in future columns. Send your queries to him at cfarrell@mpr.org. His twitter address is @cfarrellecon.

MONEY Aging

Why It’s Never Too Late to Fix Your Finances

Those over 50 may become less sharp, but a little personal finance instruction can make a huge difference in their financial security.

When we speak of financial education today, in most cases we are referring to the broad, global effort to teach students how to stay out of debt and begin to save for retirement. But what about those who already have debts and may already be retired?

Clearly, we should teach them too. It’s never too late to improve your financial standing—and unlike financial education among the young, elders exposed to basic planning strategies adopt them readily, new research shows. This underscores the sweeping need for programs that address financial understanding at all ages and why even folks well past their saving years may still have time to get it right.

Last year, AARP Foundation and Charles Schwab Foundation completed a 15-month trial of financial instruction designed specifically for low-income people past the age of 50. After just six months of training, the subjects exhibited significant improvement in things like budgeting, saving, investing, managing debt and goal setting.

For example, only 42% of participants had at least one financial goal at the start of the program and 63% had set at least one financial goal after six months in the program. The rate of those spending more than they earned fell by a third and 35% had paid down debt. Many had begun to track spending and stop overdrawing accounts and paying late fees.

Participants saying they were “very worried” about money dropped to 14% from 22%; those saying they were “not very/not at all worried” jumped to 42% from 34%. These are remarkable gains in such a short period and among such a generally disadvantaged group. Half in the group had saved less than $10,000 and average income was about $35,000.

The research suggests that the 50-plus set can make big strides toward a secure financial life with some instruction. It jibes with other reports illustrating the value of financial inclusion for the unbanked millions and how a higher degree of personal financial ability might even save our way of life for everyone.

But let’s be clear: this isn’t just a way for low-income households to improve their lot. Plenty middle-class and even affluent households have a savings problem. And as we age we tend to make poorer money decisions regardless of our net worth. So it’s nice to see the financial education effort move beyond the classroom—increasingly to places of employment as part of benefits counseling and now, maybe, to community centers and retirement villages where willing adults can find it’s never too late to learn something new and feel good about their finances.

MONEY Aging

Americans Want to Age in Place, and Your Town Isn’t Ready

Households headed by 70-year-olds will surge 42% by 2025. Who will drive them to the store?

The graying of the American homeowner is upon us. The question is: Will communities be ready for the challenges that come with that?

The number of households headed by someone age 70 or older will surge by 42% from 2015 to 2025, according to a report on the state of housing released last month by the Joint Center for Housing Studies of Harvard University, or JCHS.

The Harvard researchers note that a majority of those households will be aging in place, not downsizing or moving to retirement communities. That will have implications for an array of support services people will need as they age.

But the housing age wave comes at a time when federal programs that provide those supports are treading water in Washington. Consider the signature federal legislation that helps fund community planning and service programs for independent aging, the Older Americans Act. The OAA supports everything from home-delivered meals to transportation and caregiver support programs—and importantly, helps communities plan for future needs as their populations get older.

States and municipalities use the federal dollars they receive via the OAA to leverage local funding. The law requires reauthorization every five years, a step that has been on hold in Congress since 2011. Funding has continued during that time, with one exception: During sequestration in March 2013, OAA programs were cut by 5%; many have since been reversed, but other cuts now appear to be permanent.

A survey last year by the National Association of Area Agencies on Aging (NAAAA), which represents local government aging service providers, found that some states had reduced nutrition programs, transportation services and caregiver support programs.

Recovery since then has been uneven, according to Sandy Markwood, chief executive officer of the NAAAA. “In some cases, states made up the differences, but many programs still are not back to pre-sequestration levels.”

But here’s the more critical point: Even if all the cuts had been restored, treading water wouldn’t be good enough in light of the challenges communities will soon face.

“From a planning perspective, putting in place things like infrastructure and transportation services takes time,” Markwood says. “We don’t have the luxury of time here.”

Indeed, aging of communities is shaping up as a signature trend as the housing industry continues its slow recovery after the crash of 2008-2009.

Young people typically drive household formation, but the Harvard study notes that millennials haven’t shown up in big numbers because of the economic headwinds they face. Real median incomes fell 8% from 2007 to 2012 among 35- to 44-year-olds, JCHS notes, and the share of 25- to 34-year-old households carrying student loan debt soared from 26% to 39%. Meanwhile, home prices have been jumping, and qualifying for mortgage loans remains difficult.

Millennials eventually will account for a bigger share of households as more marry and start having families, according to the study. But for now, boomers are the story.

The oldest boomers start turning 70 after 2015, and the number of these households will jump by 8.3 million from 2014 to 2025. Most will be staying right where they are. Mobility rates (the share of people who move each year) typically fall with age: Less than 4% of people over age 65 moved in 2013, compared with 21% of 18- to 34-year-olds and 12% for those 35 to 45.

Mobility has been on a downward trend since the 1990s, and the housing crisis accelerated the trend, according to Daniel McCue, research manager at JCHS.

Aging in place could create problems in suburbs, which are designed around driving, McCue says. “People are going to need a more distributed network of services for transportation, healthcare and shopping in the suburbs. They’ll need some way to get to services or for the services to get to them.”

There is one possible silver lining in this story: The needs of aging-in-place seniors could spur better community planning. If so, the elderly won’t be the only group that benefits.

“When you do things to make roads safer or increase public transportation, or add volunteer driver programs, that’s good for everyone in the community,” Markwood says. “It’s not a zero-sum game.”

Related story: Why Most Seniors Can’t Afford to Pay More for Medicare

Related story: The State of Senior Health Depends on Your State

MONEY Social Security

3 Smart Fixes for Social Security and Medicare

Betty White in OFF THEIR ROCKERS
Actress Betty White works well past traditional retirement age. Justin Lubin—NBC/Courtesy Everett Collection

The aging of America threatens the financial stability of the nation's safety net programs. Here are sensible reforms that can help.

Last week Washington made a rare effort to help America’s fast-growing aging population. The U.S. Treasury and the IRS issued a new rule permitting people to use funds in their tax-advantaged retirement accounts to buy so-called longevity annuities—deferred annuities that typically don’t begin making payments until a person turns 80 or 85.

Longevity annuities can be a great option to ensure you don’t outlive your assets, as well as provide higher quality of life. Since you can count on future annuity income, you can spend more now, instead of having to set aside a big chunk of your nest egg for a longer-than-expected old age.

Related: The New 401(k) Income Option That Kicks In When You’re Old

But longevity annuities are only a small first step. Much more needs to be done to prepare for the many changes—legal, social, and behavioral—that will occur as we become not only an older society but one enjoying amazing longevity gains. In 1954 a 65-year-old man might be expected to live to age 83. In 2014 the average life expectancy for a 65-year-old is 86.

These gains have led many to push for raising the Social Security retirement age to 68, 69 or even 70. That needs to happen. (It’s already set to rise to 67 for people born in 1960 and later.) Still, longevity increases are not being shared by people with little education, lower incomes and, often, physically demanding jobs that wear out their bodies well before even the current full retirement age. So if we raise the retirement age, we also need to provide improved early retirement benefits for those who can no longer work.

Longevity and related healthcare issues will eventually lead to additional changes in the big three old-age safety net programs—Social Security, Medicare, and Medicaid. Few people in government have been willing to deal with these challenges. We do not have enough money to continue funding current benefit levels. Voters don’t want to hear this.

Well, I’m not planning a run for elective office anytime soon. So here are three aging and longevity reforms that you’ve heard less about but deserve serious consideration:

*Social Security payroll taxes should be reduced for workers who stay on the job past full retirement age (this change should also apply to employers). Continuing to work will improve what are, for millions of baby boomers, looming financial shortfalls in retirement. The design would be tricky, to say the least, but it’s possible to do this in a way that lowers total government spending. Giving employers a financial incentive to hire older employees encourages them to do the right thing and covers any higher costs of employee benefits for this group.

*A hybrid form of Medicare should be blended with employer health insurance to accommodate older persons who are still drawing a paycheck. The federal government will spend less than on pure Medicare. Employers will also spend less than for a purely private health policy. Older employees may spend more but they will have a job to help pay these bills.

*Medicaid must be reinvented or it will (further) bankrupt the nation. A long-term care trust fund should be created to help shoulder the enormous long-term care costs staring at us from the future. This would ease a lot of the financial pressure on Medicaid. Yes, it would cost taxpayers more money but a pooled approach is efficient and can reflect a progressive benefit structure as does Social Security. In the long run, these changes are well worth the cost.

Philip Moeller is an expert on retirement, aging and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

MONEY Estate Planning

Mom and Dad’s Money Secret (and How to Get In On It)

Stephen Swintek—Getty Images

Your Mom and Dad may be better off than you knew. But how well are they managing their finances?

Parents and their adult children often aren’t on the same page—and that’s especially true when it comes to money issues. But a new study uncovers a surprisingly big disconnect when it comes to understanding how prepared your Mom and Dad are for retirement. In many cases, the parents may be in better financial shape than their kids realize.

Three-quarters of parents and their adult children agree that it’s important to have frank conversations about wills, estate planning, eldercare and covering retirement expenses, according to Fidelity’s 2014 Intra-Family Finance Generational study out today. Yet 40% of parents surveyed say they haven’t had detailed conversations with their children about any of these topics, while 60% say they feel more comfortable talking to a financial professional than to their kids about their personal financial situation.

“Finances are always a difficult topic to broach with children. Parents want to retain their independence and they don’t want to be a burden to their children,” says John Sweeney, executive vice president of Retirement and Investing Strategies at Fidelity. “People in the sandwich generation know how tough it is from taking care of their own parents.”

The communication gap skews the expectations adult children have about taking care of their parents—and it adds to their stress about saving enough for their retirement. One out of three adults say they expect to support their Mom and Dad financially but 96% of parents say it won’t be needed.

The parents’ confidence may come in part from misunderstanding their retirement income needs. The survey found that 70% of parents don’t know exactly how much money they will have to live on in retirement, up from 65% when Fidelity did the survey two years ago.

The recent bull market may have also lulled parents into complacency. “It’s easy for people to become overconfident about their ability to manage their money,” says Ken Moraif, a senior advisor at Money Matters, a financial advisory firm in Dallas. “They don’t take into account that bull markets don’t go forever.”

Another startling gap from the survey: adult children underestimated the value of their parents’ estate by a whopping $300,000 on average. (The survey participants were an affluent group—parents were 55 or older, had children older than 30 and at least $100,000 in investable assets.)

Parents say a big reason they don’t talk to their kids about their personal finances is that they don’t want their kids to count too much on their future inheritance. Of course, that doesn’t mean parents will be passing on that wealth to their kids. Only half of American retirees are planning to give an inheritance to their children, according to a recent HSBC survey.

There’s also a big misunderstanding about who will care for Mom and Dad if they become ill. Nearly half of adult children expect to take care of a parent but only 6% of parents expect their kids to do that, the survey found.

“Adult children may plan to take care of their parents at the expense of other financial goals. If they know how those things will be funded, they can make better decisions about their own retirement,” says Sweeney.

Have these conversations before a health issue or financial problems crop up. “It’s much easier before there is a crisis,” says Moraif.

Of course, the hardest part is getting the conversation started. You could share a story about a friend who ran into problems because her father passed away before letting his children know how to find important documents. Another approach is to talk about your own plans for retirement and then inquire about how they are preparing.

“Tread lightly but sincerely with your parents. If they feel you’re coming from a place of love and caring, they’ll be more open. If they think you just want to know how much money they have for your inheritance, it’s not going to be a good conversation,” says Moraif.

Related: The Tough Talk Worth Having With Your Parents This Weekend

MONEY Aging

Why Most Seniors Can’t Afford to Pay More for Medicare

Replacing Medicare with vouchers would push costs higher and put older Americans at risk.

Should seniors pay more for Medicare? Republicans think so; they have repeatedly called for replacing the current program with vouchers that would shift cost and risk to seniors.

There’s no doubt this is where Republicans will take us if they capture control of Congress this year, and the White House in 2016. Representative Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, advocates “premium support” reforms that would give seniors vouchers to buy private Medicare insurance policies in lieu of traditional fee-for-service Medicare.

Under the latest version of Ryan’s budget proposed in April, starting in 2024 seniors could opt to buy premium-supported private plans or stay in traditional Medicare. Ryan has argued that introducing competition will bring down costs over time, and capping the government’s costs does sound like a tempting way to address Medicare’s financial problems.

Medicare’s trustees project total annual spending will jump 78% by 2022, to $1.09 trillion. Much of that increase will be fueled by higher enrollment as the baby boom generation ages.

But premium supports would shift risk to seniors, and could effectively make traditional Medicare much more expensive by siphoning off healthier seniors to private plans. The Congressional Budget Office has estimated that this effect could boost traditional Medicare premiums 50% by 2020 compared with current projections.

Most seniors simply can’t afford to pay more. If you doubt it, check out the new interactive tool launched last month by the Henry J. Kaiser Family Foundation, one of the country’s leading healthcare research groups.

The tool analyzes the income and assets of today’s 52.4 million Medicare beneficiaries, and how their financial picture will change between now and 2030, when 80.9 million people will be covered by the program. It can compare different demographic slices of the Medicare population based on variables such as education, race, gender and marital status—and here you get a stark look at how economic inequality affects the pocketbooks of seniors.

Kaiser’s tool is based on a simulation model developed by the Urban Institute that uses population data to analyze the long-range impact on retirement and aging issues. I encourage you to test-drive the tool, but here are some highlights:

INCOME

Fifty-three percent of Medicare beneficiaries had $25,000 or less in annual income last year; half had savings below $61,400 and less than $67,700 in home equity on a per-person basis.

The income figures reflect the sharp divisions that characterize the wider U.S. population. Just 4% of seniors had income over $100,000 last year; 27% had income below $15,000 (which is just a bit higher than the average annual Social Security benefit).

Healthcare already is one of the largest expenses for seniors, most of whom are on fixed incomes. HealthView Services, which develops software for gauging healthcare costs, recently estimated that a senior retiring this year in high-cost Massachusetts would pay $7,020 in Medicare premiums alone—a number that will jump to $11,536 in 2024. And that figure doesn’t include co-pays and out-of-pocket costs for things Medicare doesn’t cover, such as dental care. It also doesn’t include costs for a catastrophic event.

“Sixty-six thousand in savings is less than the cost of one year in a nursing home,” says Tricia Neuman, senior vice-president at the foundation and director of the foundation’s Medicare policy program. “That tells us that many people on Medicare today don’t have the resources they’d need to pay for a significant health or long-term-care expense if it should arise.”

DEMOGRAPHIC DIVIDES

Neuman says she was especially surprised by the extent of the gaps in income and saving by race, ethnicity and gender. Median 2013 per capita income for white Medicare beneficiaries was $26,400, compared with $16,350 for African Americans and $13,000 for Hispanics.

Men had $25,880 in median income, compared with $21,800 for women. And married couples were better off than singles: Per capita income for married seniors in 2013 was $27,400, compared with $20,250 for divorced people, $21,050 for widows and $14,150 for those who never married.

That’s unlikely to change by 2030. “The model suggests there won’t be phenomenal changes in wealth, or that seniors will be that much more comfortable,” Neuman says.

Neuman says the data also points to continued income inequality and sharp divisions in the status of seniors. In 2030, 5% of Medicare beneficiaries will have income over $111,900, while half will have income below $28,250.

“There will always be a small share of the Medicare population with sufficient wealth and resources to absorb higher costs, but most will not be in that position,” she says. “The assumption that boomers are healthier and wealthier and that we’ll have a much rosier Medicare outlook down the road just isn’t going to happen.”

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