Ted

Welcome everyone. This is Ted Gudorf. Our Repair the Roof podcast today is going to talk about trends affecting the aging. Our special guest today is Mark George. Mark and I have known each other for a long time. He is the owner of Issue Insurance Agency over in Vandalia. Mark’s company specializes in the wholesale market of life insurance and long-term care insurance products and other financial

Mark, welcome to the show today.

Hey, tell me a little bit about how you ended up getting involved in the insurance market so many years ago.

Mark George (28:07.973)

Happy to be here.

Mark George (28:15.983)

So our company’s been in business for over 50 years and my father-in-law started it out of the basement of his house and built it to a point that I left a career with Caterpillar to take it over in 2000 and I’ve been having fun ever since.

Ted (28:29.122)

So what does your firm primarily focus on?

Mark George (28:36.111)

So we help advisors, financial advisors, legal advisors, help their clients manage risk. And that could involve the risk of long-term care or disability or of dying, income replacement, and those things. Not property and casualty risk, but actual financial services insurance risk.

Ted (28:56.046)

You know, Mark, I heard you speak at a forum in Columbus and that’s what he wanted me to have you come and speak at one of our podcasts about what you’re seeing with respect to the demographics and our aging population. What is it about this topic that intrigues you or got you to get interested in it?

Mark George (29:23.651)

Well, don’t think I’m a baby boomer and I don’t think baby boomers or Gen Xers are aware of the environment that they’re aging into. And I think that it’s a topic that is important as the baby boomers are close to retiring. And I think as an advisor community, we need to do a better job of educating clients on what the future might look like as they age in the years ahead.

Ted (29:48.078)

You know, my recollection from your presentation was that you broke it down, if I recall correctly, you talked about our longevity, you talked about the baby boomer population, you talked about the declining fertility rate, and it’s ultimately, it’s those three factors impact upon our long-term care needs and our ability to get long-term care in the future.

Is there anything else we need to add to that agenda today?

Mark George (30:24.751)

Well, I think there’s some societal trends that don’t have as significant an impact of the three that you just mentioned, longevity, the baby boom population and declining fertility rates. But, you know, part of what I present, sometimes I sit back and say, God, there was a lot of gloom and doom there. And I’m not trying to scare people. I’m just trying to get them to recognize the importance of planning for this, because you can’t, at least with the demographic trends.

You can’t buck them. They are what they are. so that’s why. And a lot of people, my agency, you know, we’ve sold tens of thousands of insurance policies, financial advisors have through my wholesale business. But there’s a lot of interest in this now as we’re starting to age the population. So maybe I ought to go into some of the presentation that

Ted (31:21.964)

Well, let’s do that. Let’s just jump right into it and let’s talk about some of the demographic information that you shared.

Mark George (31:23.071)

I shared with you at our meeting.

Mark George (31:35.715)

I’m going to go through this quickly to respect everybody’s time.

Ted (31:40.738)

You know, the good news is that it’s not all doom and gloom and there are some very positive aspects to this.

Mark George (31:53.155)

You already talked about the three trends that are going to have significant societal impact. Can you see that? Yes.

Ted (31:55.82)

Mark, we cannot. Nope, what we can, you’ve attempted to share your screen, but it’s, you’re sharing yourself rather than the slide.

Ted (32:22.958)

still went and shared yourself rather than the slide.

Mark George (32:33.231)

All right, Ted, we’re going to do this old school. We’ll just have a conversation if that’s OK with you. So to me, when you look at those things, these trends, these demographic trends, this is what they mean to me. They mean that people have a much greater likelihood of needing long-term care today than in past generations. They’re going to need long-term care, in my opinion, for a longer period of time than in the past.

Ted (32:33.461)

Alright.

Sure.

Mark George (33:02.465)

it’s going to be harder to get care, and it’s going to be more expensive. So that’s what the three trends of longevity, the baby boom bubble, and declining fertility rates. But let’s drill down a little bit for the audience just so that they can see what we’re seeing and see if they agree. So as far as longevity is concerned, throughout the history of time, or history of most of recorded time,

the average life expectancy was under 20 years of age. And then at the turn of the 19th century, due to improved hygiene, better medical care, better health styles, reduced infant mortality rate, among other things, the life expectancy raised to like age 47. And today, if you’ve…

made it to age 65, you have a very, very good chance of living deep into your 80s and beyond. So we’re seeing a greater number of older people. And then the other thing, here’s an interesting statistic, I think. If you contemplate all of the people in the history of recorded time that have made it to age 65 or greater, two thirds of them are alive today. So that kind of

blows my mind a little bit to try and set the stage. So we’ve increased our lifespans, but we have not increased our health spans to the same degree. So in the United States, you can expect to live 12 years in poor health. So the average life expectancy is around, if you make it to age 85, excuse me, make it to age 65, the average life expectancy is around

87. And again, 16 % of your life, the remaining the last few years are going to be in poor health. In the United States, we spend more on health care than any other country. And yet our life expectancy is 40th in the world. And our health expectancy is 68th in the world.

Mark George (35:19.055)

So I think the fact that we’re living longer, we’re adding years to our life, but they’re not necessarily good years. And so that’s why it’s important to plan for when we’re aging.

Ted (35:26.69)

That’s a staggering statistic to think. I don’t think most of my clients really appreciate the fact that they may live 12 years.

what I hear you say, 12 years where they…

with chronic illnesses. Yeah. And I guess that’s being played out, you know, the more I think about it, that’s being played out with my clients more and more are having those chronic illnesses, whether it be diabetes or otherwise.

Mark George (35:46.733)

or health with chronic illnesses.

Mark George (36:03.683)

I read a statistic yesterday that over 50 % of the population in the US has diabetes or pre-diabetes. And I thought that was interesting. And why that might be important is that 50 % of long-term care insurance policy claims are for cognitive impairments. And there’s a connection between diabetes and cognitive impairment.

So I think, again, we’re living longer, but some people need to be prepared that they’re going to have to deal with some of these chronic illnesses and may have a need, probably will have a need for long-term care. As a matter of fact, statistics show that 69 % of people who make it to age 65 and above will have a need for long-term care. But surveys show.

when they ask people, what do you think the odds are of you needing long-term care, they respond 25 % affirmative. So there is a disconnect between reality and perception that I think advisors need to help educate clients. So along the lines of cognitive, I thought this was interesting too. So since I can’t share a slide, I’ll just look at mine. Some of the people that we recognize

that have cognitive impairments or have had cognitive impairments, your audience will recognize Robin Williams, Tony Bennett, Casey Kasem, Jack Hanna, Raquel Welch, Jay Leno’s wife, Bob Barker, Glen Campbell, Burgess Meredith, mean, there’s Charles Bronson. I mean, the list goes on and on. So it is, and we probably all have family members that we can relate

Ted (37:52.056)

Sure.

Ted (37:57.688)

Well, I can certainly tell you just in my own life, it’s one of the reasons why I got involved and not just estate planning but elder law planning because my own father had Alzheimer’s. So we went through that experience with him and that was really taught me a lot and really made me want to focus more on helping others in the long-term care, recognize the need for long-term care.

Ted (38:26.594)

Well let’s drill down into some of your other statistics that you’ve got. I’m one who likes statistics. I think they kind of bring reality home to us. What else can you tell us?

Mark George (38:27.343)

sure we do important work I think with regard to that.

Mark George (38:41.231)

So let’s talk about the baby boom population. We’ll shift to that next of the three trends. And so there’s 76 million boomers alive today. And between 2011 and 2030, every day 10,000 of them were turning age 65. We’ve heard that statistic before. But a lot of people aren’t aware that baby boomers make up 28 % of the population.

They’re responsible for half of consumer spending. They control 80 % of the personal financial assets in the United States. But contrast that against one in three Americans over 65 relies on social security benefits alone. Three out of four people claim social security benefits at age 62 early out of financial necessity. And then three out of four.

Ted (39:32.366)

Three out of four? Well, that’s remarkable. And you said out of financial necessity.

Mark George (39:40.503)

And then.

That’s correct. Which is subjective,

What might be a necessity for one person might not be a necessity for somebody else.

Ted (39:50.158)

Yeah, to a degree, but it’s certainly a relevant point.

Mark George (39:59.407)

Then if you contemplate that, you know, the safety nets that we have, Social Security, in 1950 there were 16 workers paying in for each retiree receiving Social Security. In 2019 there were 3.3 people paying in for everyone receiving. And by 2025, next year, they’re projecting there’ll be two people paying in for everyone receiving. And I bring that up only because

If we’re relying on the government to help us, I don’t know that they have the ability to handle the problem on their own. That citizens are going to have to take an interest in their aging process as well.

Ted (40:37.848)

Sure, and I think it also suggests that somewhere along the line we got to recognize what the trends are and maybe do things a little bit different in terms of how we support it because if we really have gone from 16 workers down to two workers next year, you don’t want to crush those people who are working by making them just pay higher costs.

I think you want to spread that out a little bit, I think. But it’s going to be interesting to see what solutions are proposed to try to figure out that conundrum.

Mark George (41:20.569)

You know, when Social Security was first introduced, as you know, I think you received benefits at age 65, but the average life expectancy back then was like 62. So they were designing a program that really was if you had an above average life expectancy.

Ted (41:35.266)

Yeah, for sure.

Mark George (41:40.591)

So another interesting statistic is that boomers, so by 2030, all of the boomers are going to have turned age 65. And by 2026, the front end of the boomers are going to start to turn age 80. So why is that permanent or why is that germane? And when you survey long-term care insurance companies, they have varying statistics, but they say that the average long-term care insurance policy

claim begins somewhere between age 78 and 83. So if you contemplate that the boomers are going to be turning 80 next year, we haven’t even seen the ramifications of that large bubble hitting the system yet. And I think it’s going to have a significant impact.

They call it the silver tsunami. So that’s the second one, Ted. You have the longevity, you have the baby boom bubble, and then the third demographic trend that I think will have an impact is the declining fertility rates. And so back in 1960, most families had around four children, give or take, average. And today, the fertility rate is 1.67 children per couple.

And so it’s below the replacement rate. So some social researchers think that over the next three decades, we’re going to see a decline in population growth. And that once that starts, it’s kind of a spiral that will continue. And it’s kind of scary when you contemplate the implications of that. Let’s first talk about why that’s happening. And I think part of it is that

Females are entering the workforce and finding careers that, satisfying careers. I think contraception has a part of that. I read a statistic that for the first time, 30-year-olds may not be doing as well as their parents when they were 30 years old. So they’re holding off on family formation till later ages if

Mark George (43:58.799)

forming a family at all. So all of these things are affecting the amount of younger people. And for the first time, we’re seeing that in a couple years, we’ll have a greater number of older people than we have children. And that’s never happened before in the United States. And I think if you think that through how it might prevent a family from helping a loved one who needs care,

Ted (44:27.235)

Sure.

Mark George (44:28.335)

It’s a trend that we need to consider. There’s some other societal trends outside of those demographic trends that I think are important. And that is, we all can relate to this today, family dislocation. You know, it used to be that you grew up, you had 10 children if you owned a farm and they all stayed in the community and they all got married and there were 20 people to share the load if mom and dad needed care. But today we have smaller families and they’re dislocated. It’s not unusual.

to have a child in California, one in Texas, and one in New York. And so when a parent needs care, there’s less hands to help. I think the other societal trend that’s happening right now is that two-family incomes are almost necessary to have a middle class or above lifestyle. And in the past, you used to be able to depend on mom after she was done raising the children.

to step into the role as the caregiver of the parents. But families, young families, are dependent on two incomes. unlike in the past, the female may be the main breadwinner. And so that’s an option that isn’t as available to help the family out in the event that an aging parent needs assistance. And then I think.

there’s a shortage because we have fewer younger people. There’s a worker shortage across the country and really quite honestly globally. And as the declining birth rate continues, we’re going to see that have a significant and severe impact on being able to get services. And one thing that I’ve witnessed is that within the care space, like assisted livings, 58 % of assisted living facilities are reporting

at not being able to sell rooms because they have worker shortages. So they have the facility, but they don’t have the employees. So they’re turning away new applicants. So thought that was interesting.

Ted (46:34.104)

You know, I think all of us are seeing that just in our local communities when we see signs at restaurants can’t open today because we’re having a worker shortage. I don’t know if you’ve seen it, but I’ve seen it at the coffee shop. I’ve seen it at the Bob Evans. I’ve seen it everywhere. That’s, that’s, that’s, you know, and that’s, I guess when we think about it, that should not be terribly surprising.

Mark George (46:55.695)

even the assisted living facilities.

Mark George (47:06.127)

Well, the other thing is, earlier this year, the government increased the minimum staffing standards for nursing homes. So you can’t have one person managing 50 residents, right? And there’s some quality standards that have to be achieved. So that’s going to put even more stress on the system. So let me, these are a couple of personal real quick stories, hopefully we’re okay time-wise, with my mom and my dad.

So my father in 2010, he had Parkinson’s and he ended up getting Parkinson’s dementia and 2010 is when he passed. But a couple of years prior to that, he was in an assisted living facility. this might sound snobbish, but I remember coming into my father’s room and this was a, I don’t want say it was a Gucci facility, but it was a nice facility that we’d all be comfortable our parents being there. And I remember coming in and he had a nice room, but

It’s first come first serve and when he came in the room that was available he took But I noticed that the rooms on the left and the right of him other residents were slightly bigger and I was just wondering Why couldn’t we get that into a nicer or a slightly larger room? And then I come to find out that the left and the right rooms were being paid by Medicaid a hundred percent and yet

My dad was spending about six grand a month or a little under six grand a month back then. And I know we need to, I’m embarrassed that I felt this way, but I kind of felt like, darn, shouldn’t he get a nicer room because he’s paying for it. You know? so then fast forward from then to my mother passed away at the end of last year. And, she, was 89 and was in good health up to maybe the last few years and had spent.

that time with my sister in New York and moved into an independent living facility. It may have well have been called an assisted living facility because it was all older people and it got to a point my sister was running over there you know two three times a day and it was impacting her family over a long period of time and finally she held up the white flag and said hey I need help.

Mark George (49:28.399)

And we used to have these calls as a family. We called them the Brady Bunch calls where me and my sisters, I have three sisters, would get online and we’d all try and project what could happen and what solutions we had. I swear we had these things weekly. everybody probably lost a couple of years of their life worrying about what could happen. Any event, we all agreed because my sister definitely, the younger one that had my mom, definitely had a

done her service that we would go out and look at facilities in the area. So I went out and visited a dozen assisted living facilities in the Dayton and Northern Cincinnati area. one thing that, well, first of all, one of the things that was important, my mom still had some money and she had social security, but she didn’t have a lot of money. So if she had a need for care that exceeded maybe a couple of years or two and a half years, it was going to deplete her assets. So we wanted to find a facility.

that would take her in as private pay first, but if she ran out of assets and had to roll into Medicaid coverage that they wouldn’t displace her or remove her. That was the specs. And so when we talked to each of the facilities, the director of admissions, all of them told us that today all 12 facilities, you can’t come in as Medicaid from day one.

Now I’m not saying there aren’t Medicaid right away facilities, but they’re not the ones that I would want to put my parents in.

Ted (50:59.566)

Yeah, we’re fortunate to this extent in Montgomery County to have two such facilities. We have one in Clark County and we have one in Franklin County that I’m aware of. But you are 100 % right. When it comes to assisted living, first of all, 70 % of assisted living facilities don’t take Medicaid at any time.

Of the 30 % that do, they have private pay periods that you have to privately pay the full rate. Some are one year, some are two years, some are three years. There are a handful of places that will take it on day one. And of those facilities, let’s just say perhaps they’re not the most desirable facilities for that reason. So it does

perplex people why that disparity exists. And it’s simply because under Ohio law, up until 10 years ago or so, no assisted living facilities were paid for by Medicaid. It was unheard of. And we finally decided to do a pilot program in Ohio and Indiana on assisted living for a few rooms across the state.

It’s expanded a little bit, but unfortunately that’s the nature of the beast. It is left up to each individual facility to make a determination whether they will or won’t take Medicaid and if they do, what the private pay period is. And that’s where we’re at.

Mark George (52:44.207)

You know, I even read an article that for the first time, some of these assisted living facilities are rejecting patients that are Medicaid dependent. And I can’t believe that’s happening.

Ted (52:49.976)

Well, technically they’re not allowed to. There is a federal law that prohibits any kind of discrimination based upon who’s paying the bill. Now, they’re always trying to work around that rule, but they do need to be careful with that because there is some exposure they have if they start discriminating based upon whether somebody’s coming in under Medicaid or private pay.

Mark George (53:19.247)

A couple other things. There’s a statistic that the government tracks called long-term services and support. And it includes Medicare and Medicaid and the kind of services that someone who needed long-term care would pay for. And so it’s not strictly government pay. It’s just in the United States how much money is spent on long-term services and support. And in 2010,

It was $30 billion in the United States. And this will blow you away. In 2021, it was $467 billion, 70 % of which the government paid for. So again, I’m bringing this up only because there will be safety nets, but I’m not sure if they’re going to get bigger. And we have to plan for this.

Ted (53:54.167)

Wow.

Ted (53:58.616)

Wow.

Mark George (54:16.039)

I think part of the reason people are reluctant to plan is when they look at their parents or their grandparents, maybe they didn’t have to plan. They were able not to plan. But the environment that we’re in today is different than the one that our parents and grandparents are in. And I think it’s important to plan for it. So you know that long-term care can be one of the biggest financial risks in retirement. So you ask yourself, what are the ways that we can deal with it?

In my opinion, number one, a lot of people are in denial. Remember, 69 % of people are going to need care. By the way, 20 % of people age 65 and older are going to need care for five years or more. So contemplate that statistic. But 69 % of people 65 and above are going to need care. But only 25 % think they are going to need care. So we’ve got a little bit of denial going on. The other way to deal with it is

to minimize risk, to take care of yourself, to exercise, to eat better. But it’s kind of counterintuitive because you might be extending your lifespan. And if you extend your lifespan, you might be extending your unhealthy period. The other way to deal with the risk is to depend on the government, but the government’s broke. There are $36 trillion in debt. And I’m not sure that that’s a good option for some people.

You can pay for care out of your current income and assets and that could make sense. But when you liquidate those assets, you don’t know if it’s going to be the correct time, if the market’s going to be cooperating with you. Or you can transfer the risk to an insurance company. Now, I understand I’m biased, I’m an insurance wholesaler, but I do think that that is a viable option, not for everybody, but it’s one that should be considered.

But I do want to emphasize the importance of people planning earlier. You cannot wait until you’re in the mid to late 60s to address this problem. I’m not saying it can’t be addressed, but it needs to be addressed earlier. And I saw a statistic from a long-term care company, one of the majors out there, and this is their approval rates for long-term care by age. So two-thirds of people age 50 to 59 are able to get long-term care insurance.

Mark George (56:41.089)

a third don’t qualify. 50 to 59. Ages 60 to 64, about half can qualify for long-term care insurance. And ages 70 to 74, about a third qualify for long-term care insurance. So I’ll

Ted (56:57.132)

Having said that, that’s still fairly remarkable from the conventional wisdom to think that a third of the people aged 70 to 74 can still be insured. I think the general population would say no, once you hit 70, you you can’t get insurance. What I think it’s important for people to understand is that for some of us, there’s still an opportunity out here, even if you’ve hit age 70 or 74.

there’s still an opportunity to put that risk on the back of an insurance company. Here at our firm, we typically don’t see people, unfortunately, when they’re 50 to 55. Less than 10 % of our clients do estate planning when they should. The bulk of them wait until they retire, and typically that’s somewhere around age 65. And what we find is that that’s the time period when people are coming in

and looking at asset-based long-term care because they finally realize that the Medicare program that they signed up for isn’t going to cover long-term care. That reality sets in around age 65. And of course, the bulk of our clients say, boy, I wish I had done this 10 years ago.

Mark George (58:18.511)

Sure. You know, I’m hopeful and I know you’re an advocate of this, but I’m hopeful that estate planning clients who are in that 65 range or above, that they educate their children or have their children come talk to advisors about managing this risk or contemplate in their estate plan that they’re going to pay it forward by trying to help their clients, their children get the care earlier because it’s going to be a definite need.

And I’m going to set it up now. When I look at those statistics, the earlier the better. It reminds me of a quote that you use a lot that I say you can have it on one of your walls in the building. You know what that is?

Ted (58:56.075)

I sure do.

Ted (59:01.314)

The time to repair the roof is when the sun is shining.

Mark George (59:03.875)

What is that?

Ted (59:07.436)

There you go, Mark. Well, I really want to thank you for sharing this information with us today, giving us your insights, giving us the statistics. Hopefully our listeners will find this of interest and maybe with a little bit of knowledge or education it just might make them be a little bit more motivated to look into this long-term care situation. Folks, wherever you find yourself, if you’re reasonably healthy and have necessary funds,

Mark George (59:09.667)

That’s it. How’s that a wrap up?

Ted (59:36.824)

we can take you down the path of asset-based long-term care. If you’re unhealthy or you don’t have the funds, we can look at Medicaid alternatives. We can put you into a Medicaid plan because that’s the best you’re going to do. Here at Gudorf Law Group, what we’re all about is educating our clients on what are their alternatives, what are their options, and allowing them to make decisions. So once again, thanks Mark for being with us. Happy holidays.

Thank you so much.