Last night SDXB invited me over for dinner and an outdoor concert at the bandshell in Sun City, where he lives. Uhm, in Sun City, that is…not in the bandshell. 😉
His home is in one of the older sections of Sun City, a term that actually denotes three developments: the original Sun City proper, Sun City West, and the much more recent tracts of Sun City Grand. All of these occupy a vast segment of the West Valley and, as a tax bonanza, have largely been engrossed by a town called Surprise, once a migrant worker settlement but now a suburb of Phoenix.
The original Sun City tract, which Del Webb began to build in the early 1960s, has seen its better days. During the recession, most of the little businesses in the development’s strip malls closed, and to this day many storefronts are empty. Near the bandshell, one strip mall is filled exclusively by second-hand stores. Although I’d heard, some years ago, that poverty is far from unknown in the Sun Cities, I was surprised to see a large food bank as we drove into the more venerable part of town. It occupies a defunct Safeway site and serves 400 people a day. In addition, Sun City hosts five other food pantries.
In the original Sun City proper, 6.48% of residents live in poverty, up from 4.61% in 2000. In Sun City West, where the population is younger and more affluent to start with (houses cost significantly more in Sun City West), the poverty rate 2.7%.
The old section is poorer than the newer tracts in Sun City West and Sun City Grand. This is not surprising: many residents in the original Sun City have been there a long time and now are in advanced old age. As you age your way through retirement, you run out of money. Residents in the newer sections by and large are younger and less likely to have outlived their savings. And the tract houses in the original Sun City are relatively cheap. Some duplexes and garden apartments there are very cheap, indeed, and there’s even a trailer park. So, younger seniors who move into that part of the Sun Cities are probably less affluent to start with.
No doubt the biggest contributor to poverty in Sun City is uninsured infirmity. Medicare does not cover nursing home care. So if one member of a couple has a stroke or comes down with, say, Parkinson’s, MS, Alzheimer’s, or Lou Gehrig’s disease, obtaining care for the person will (not “may”) drain their savings to zero. In SC West the disability rate among poor males is 51.2% (as opposed to 25.9% among local residents not classed as poor and 16.0% among Arizonans in general); among poor women, 49.1% are disabled, vs 22.7 of female residents not “poor” and 19.1% of Arizonans in general. Clearly, with age comes illness; with illness comes poverty.
Only after your savings have been drained and you have divested yourself of most of your property to pay your medical bills are you eligible for Arizona’s version of Medicaid. While my mother was dying in a nursing home, my father met a woman whose husband had been in that dismal, cruel place for TWO YEARS, with no end in sight. He’d had a stroke, was a vegetable, but could not die. Keeping him there to rot away was costing everything they had. By the time he died, she expected, she would be utterly without assets.
Once you’re old, the only way to protect yourself from this fate is to divorce or, if you’re already single, divorced, or widowed, never to marry. If you want to be with a partner, live together in unwedded bliss and keep your assets separate.
To protect his mother’s few remaining dollars and keep her out of the most abject imaginable poverty, SDXB had to arrange to divorce his Roman Catholic parents as his father lay dying, ruinously, after 18 years of Parkinson’s disease. When his mom died, a couple of decades later, she was living in an aging trailer park and had $6,000 to her name — and no, she did not live high off the hog. Never did, during her entire life.
If you’re not approaching your dotage yet, there are a few ways you can protect yourself. But you’ll need to start planning ahead now. Bear in mind that about 40% of elders will spend some time in a nursing home before they die.
Number one is to get yourself some long-term care insurance. Companies are trying to phase out this kind of coverage, and so it probably would be wise to get at least some coverage now, even if you’re under the recommended age of about 50 or 55. The younger you are when you buy this kind of coverage, the lower the premiums are. Conventional wisdom has said you should wait until you reach your 50s to buy long-term care coverage, thereby saving on the costs that would accrue over a lifetime if you bought it at a younger age. However, obviously if long-term care insurance is going away, you would be wise to grab it while the grabbing’s still good.
This is really not an option. The median cost of nursing-home care is $207 a day. That’s upwards of $75,500 a year! At that rate, a long-term infirmity will drive you and your spouse into true penury in a brief period. Even if you die after, say, two years in a home, the cost could consume half or more of the savings intended to support you and your spouse to the end. And costs are rising swiftly.
Second, try to take care of your health. Keep your weight, blood pressure, and blood sugar levels under control as you enter and pass through old age. Don’t smoke, don’t do recreational drugs, and don’t drink to excess. Drive carefully and wear your seatbelts.
Third, have an exit plan. You need a way to finish your life when livable life is over. Actually, you need more than one way:
a) Be sure to have a living will — doesn’t matter how old or young you are — and that you have given powers of attorney to someone who can be trusted to carry out your wishes. Do not rely on a doctor to do this — after my father had a major stroke at the age of 84, his doctor refused to abide by the terms of his living will. Appoint someone who understands with and agrees with your wishes.
b) Quietly prepare yourself to provide your own exit, if need be and if opportunity arises. When there’s really no hope for survival and the future holds only suffering and prolonged infirmity, you may have to find your own way to the door. And you know, you should have those plans in place before the need arises.
It’s a sad thing when people have to contemplate suicide by way of protecting the future of a spouse or an infirm dependent. However, it’s a reality we have to deal with.
As Walter Cronkite used to say, “That’s the way it is…” Monday, October 7, 2013.
This post was included in the October 23 Carnival of Retirement at Mom and Dad Money.
Hi I’m a social worker with geriatrics in Florida and some of the information about nursing home placement is NOT true, at least in Florida. Every state has its own Medicaid plan so what I’m writing may be different state to state . If you are married in Florida, your spouse may keep up to $113,640 in cash, their home (up to $500K in equity) and one car. The community spouse can keep a maximum of $2841./mos for expenses.
It used to be when I was a young SW that the community spouse would lose EVERYTHING , before their spouse could get care at a nursing home.
If the individual going to a nursing home is single, divorced or widowed, then ALL their assets are counted towards offsetting the cost of their care.
If you want to leave anything to your kids, Medicaid has a 5 year look back period where any large sums transferred to others are verified as many people try to hide assets from the state in order to get Medicaid sponsored nursing home care without losing any assets. Hope this clears things up.
Hi, Terry! Welcome! And thanks for your insights — it’s great to have some commentary from someone with practical expertise in this subject.
Now, the way I understand it, Arizona’s answer to Medicaid, AHCCCS (the Arizona Health Care Cost Containment System, pronounced “Access”) also has a 5-year lookback. This means, as it was explained to me shortly after I divorced and didn’t know how I was going to afford health insurance, that if you give any significant amount of money to your kids under the federal law allowing $10,000/year (more now, I think?) per kid or grand-kid within 5 years before you fall ill, you disqualify yourself for help no matter how much you are or are not worth.
So, let’s say in 2010, you give your four adult kids $40,000 (that’s $10,000 apiece) to throw in together and start a family-owned business and you also give two of the grandchildren $10,000 apiece to defray college tuition. In 2014, you have a major stroke and land in a nursing home, where you’ll probably spend the remainder of your life — which could be months or even years. Even though you had no way of predicting this illness, the $60,000 gift made four years earlier is regarded as a kind of malfeasance — i.e., it’s assumed you were transferring money to make yourself eligible for AHCCCS — and therefore you can’t get into AHCCCS when you need it.
This may have changed by now: I left my husband 20 years ago and shortly thereafter managed to find a job with health benefits, so the whole AHCCCS question was mooted. Thank God.
SDXB’s father died about 25 or 30 years ago, and of course things not only may have but probably HAVE changed since then. At the time, the rule was that the community owed the medical bills. Arizona is a community property state — and “community property” includes “community debt.” Any debt run up by one member of the marital community is held to be the other spouse’s debt, too, unless the debt occurred after the two separated — i.e., after they stopped living together.
I don’t think the community debt concept has changed. So in the eyes of the State of Arizona, presumably costs run up by one spouse’s nursing home care would be owed by both spouses. The logical extension of this thinking would be that the community has to spend down its assets before either member of the community is eligible for indigent healthcare assistance.
From what I could tell from a single PDF outlining the current AHCCCS eligibility requirements, you no longer are required to impoverish yourself to the point where you have to sell your home and your car. However, you’re allowed to keep only one car and your personal possessions. If you still owe a mortgage, or if you own a home in a middle-class area where the taxes are several thousand dollars a year, you still would be at risk of losing your home if you had spent down so much of your savings that your monthly income put you into the poverty range. Cashing out the home would, of course, render you ineligible for AHCCCS until such time as you had spent down whatever principal you cleared, so you would have to pay out of pocket until you were very poor, indeed.
Florida’s exempt $113,640 wouldn’t support anyone very long: a 4% drawdown would come to $4,546 a year. Add that to the average Social Security benefit of about 12 grand (out of which taxes, Medicare B, Medicare D, and Medigap have to be paid), and you’d barely have enough to buy groceries.
$2841 a month is not very much. I live on a NET $2465 a month, and most people here would consider that poverty level. The only reason I’m able to do so is that my house and car are both paid for.
What an interesting article and always good to hear about SDXB. Just curious how did he come to reside in the older section of Sun City? As I seem to recall he is a bit thrifty and I was wondering how he came to reside there. I will share, that in Florida where trailer parks and retirement villages abound there are bargains galore. It seems when a spouse dies there the surviving spouse usually decides to take up stakes and move back “home” to be closer to family for support and comfort. DF of mine recently bought a trailer in a park with ground rent of around $325 a month for $5K. That doesn’t happen in this neck of the woods. his plan is to vacation there to see if he likes it. Then if he likes it…sell his place… take advantage of the $500K exclusion for his present home…put the proceeds in dividend producing stocks….and live happily ever after.
For the aging, Maryland is much as you describe in Arizona…sadly a sick spouse often BK’s the healthy one. Leaving the survivor to pick up the pieces and live the remainder of their years (sometimes 20-30 years) in poverty. And I would agree $2841 is not a lot to live off per month…but the crazy thing is not so long ago that was considered a “comfortable” retirement…now not so much.
Well, his next-door neighbors, who loved to golf (SC residents use the courses for next to nothing), sold their house and were able to buy something comparable out there for so little they pocketed almost a hundred grand on the sale. So SDXB, of course, was intrigued by that.
Then we had the episode with Mr. B***, who had purchased the house next door from those very neighbors. Shortly after I moved into my present home, B*** (also known in these pages as The Perp) threw several gallons of used motor oil over the back wall into the pool, destroying the plaster and the filtering system and causing about $10,000 worth of damage.
SDXB, who is an experienced outdoorsman and tracker, was able to identify B*** as the perp by the tracks he left in the alley behind my wall — he wears a distinctive corrective boot to remedy a limp. We called the police and registered a complaint, since the insurance company said that if B*** were convicted of the vandalism, the claim against my homeowner’s would not be held against me and my premiums therefore not be jacked up.
In the ensuing flap (we were in court three times, during which B*** threatened a judge and alarmed my team of lawyers to such a degree that they urged me to sell my house and move forthwith, to the tune of a $40,000 loss), SDXB got into an altercation with B***’s son-in-law, who lives two houses down from me.
I could not move, because I simply couldn’t sustain that large a loss, nor could I handle the potential tax penalty entailed in buying a house and then turning around and selling it four or five months later. I had a German shepherd and a pistol that I was fully capable of using.
However, SDXB in fact was alarmed enough — and abhorred enough by the prospect of living next door to this character — that he did put his house on the market. He sold at a price so low the house sold in less than 12 hours, which was too bad — he could have earned a lot more on the place. Following in the former neighbor’s footsteps, he bought a place in the older section of Sun City that is roughly comparable in construction and design to the house he sold, for a LOT less than he made on the sale, despite the bargain-basement asking price.
Boomers in general don’t especially want to live in Sun City. Most boomers would prefer to retire in a large small town, such as Prescott or, say, Medford, Oregon, or in a large, highly sophisticated city with a strong cultural scene. Sun City is neither of these: it’s a sprawling cookie-cutter suburb of a rather dreary inland, mostly low-rent city. For that reason, prices there are very depressed, and many bargains are to be had.
If you don’t mind living in 1970s ticky-tacky surrounded by gray and green-dyed gravel — SDXB regards the house as his “hard tent,” where he camps out in Arizona while the weather’s nice — and the central city’s cultural attractions don’t draw you, it’s a very good deal.
Luckily for my grandfather, and unluckily for my grandmother, when he was deemed by the state of NJ to be in nursing care as living at home would be considered elder abuse (he was handicapped, mentally not there often, and was getting pneumonia from his lack of muscle control of his esophagus), my grandmother had to shell out the $14,000 A MONTH for his nursing home care for nine months until she “spent down” all the money in savings to get to the $100,000 limit.
The spend down happened via redoing their house as it hadn’t been remodeled since the 60’s. My father and his sister (two of the six kids) also got irrevocable trust coverage over my grandmother’s income.
Had my grandmother really planned ahead for this and set up an education trust to my six youngest, in-need cousins (their mother is terrible) years ago, she probably wouldn’t have had to pay 9 months of nursing home care for my grand father and those cousins could have had money to go to college or do whatever with when they turned 35.
But as such, Medicaid had 9 months that they didn’t have to pay for my grandfather… frustrating. Plus, by the time the house was remodeled, my grandmother, who no longer really had a reason to get up in the morning any longer, really wasn’t fit for a two story house either so she had to move into assisted living as she kept fainting due to her lack of control with her diabetes.
Long story, not so short, out of all of this is that my father realized its better to give your kids money now when you can as opposed to having to fork it over to the government when they mandate that you need to be in a nursing home.
(My grandfather definitely needed to be in a nursing home, I’m not arguing with the state of NJ, just with the fact that it was such an expense that had to be paid so long… that’s the tragic part).