Facing the national retirement nightmare

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(MoneyWatch) COMMENTARY The topic of retirement already causes many people to lose sleep at night, as they realize they don't have enough money saved up to retire any time soon. Making matters worse is the understanding that we may need to help our parents with long-term care in their final years, placing another emotional and financial burden on our finances and families.

Then another troubling reality hits: We may need the same special care in a few decades.

Several heart-wrenching stories have appeared in the news of late describing the travails of baby-boomers struggling to cope with aging parents. (If you haven't experienced these challenges first-hand, I encourage you to read "A Life Worth Ending" in New York Magazine, "The Long Goodbye" in Time Magazine, and "Preparing for a Future That Includes Aging Parents" on National Public Radio's website.)

These reports give you an up close and personal look at the challenges we'll all face, either with our parents or for ourselves down the road. The stories sounded all too familiar to my wife and I, as our families scrambled in recent years to help my father and her mother receive the care they needed in their final years. Our experience provided a wake-up call to plan ahead in order to address this challenge for ourselves in the years to come.

Long term care for aging parents could reach $300,000 per person: How to cope
Should you buy long term care insurance?
Don't let Alzheimer's and dementia spoil your retirement

A long-term care event -- either with your parents or yourself -- can easily destroy anyone's retirement plans. The cost of paying for long-term care at a nursing home for a few years -- which insurance firm Genworth recently calculated at more than $80,000 per year -- could pay to send a grandkid to Harvard or fund a nice retirement.

Since we're on a roll, let's get all the bad news on the table. Recently, major insurers such as MetLife (MET), Prudential (PRU), and Unum (UNM) have stopped selling new policies for long-term care insurance, citing low interest rates, growing life expectancies, and uncertainty surrounding the prevalence and duration of Alzheimer's and dementia. The Obama administration also announced last year that it was shelving implementation of the Community Living Assistance Services and Supports program because of problems in designing a financially viable program to pay for long-term care. If feds couldn't solve this problem, what are our chances?

OK, I've got your attention. Now what? Well, you can't just sit around and brood about it. One of my favorite quotes comes from singer Joan Baez: "Action is the antidote to despair." So what can we do to take action, either for ourselves or our parents?

There are  only two things we can do: (1) Take steps to reduce the odds of needing long-term care, and (2) prepare a plan for paying for the costs in case we need such care. Much easier said than done, of course, but that's the plan.

If you're now facing these issues with your parents, the die has already largely been cast. It's most likely too late to buy long-term care insurance, and your parents can't go back and retroactively save more money to pay for the care they need. But they can still take steps to improve their health, regardless of their age, and you can make the best use of existing financial and family resources.

If your parents are still fairly healthy and you haven't already discussed these issues with them, do it now before your backs are against a wall and you're forced into hasty decisions about their care. Genworth's website has some excellent tips for getting these conversations started.

If you're a boomer thinking down the road for yourself, now is the time to plan. Get serious about eating right, getting plenty of exercise, taking care of your brain-health, and preparing a financial strategy to pay for long-term care in the event you or a loved one needs it. (I'll explore some more ideas on these topics in future posts.) And if you have insightful stories or good ideas to share with our readers, please write them in the comments section.

There are no easy answers to this challenge. But that's not a reason anyone should put their head in the sand. We have to be creative, resilient, and resourceful, and we'll just have to do the best we can and rise to the occasion to address this problem.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.