Today, our worst personal fears are rooted in our greatest success as a society--- a long life.

Only half a century ago life was hard and relatively short. Today millions of Americans can expect to live into their eighties. Multitudes will live into their nineties. And tens of thousands will live to be Centenarians.

While we worry about Social Security and Medicare--- for good reason--- we should never forget that longevity is a wonderful problem to have. We could solve the entire financial problem of old age simply by adopting the life expectancy of those who live in the former Soviet Union--- under 60 years and sinking. Most people would far rather worry about a premature shortage of money than an early death.

It also turns out that health statistics are often misused, creating the impression that all of us are doomed to interminable years in a nursing home. One of the most frequently used statistics is that 43 percent of all Americans will spend some period of time in a nursing home. The only "cure" is Long Term Care Insurance--- a policy that will pay the bills while we molder away.

A closer look at the same research, however, is less worrisome. At age 65, only 33 percent of all men will ever be in a nursing home. Only 22 percent will be in 3 months or more and only 14 percent will be in for a year or more. Similarly, 52 percent of all women will spend some time in a nursing home after age 65, but only 31 percent will spend one year or more. Women spend more time in nursing homes than men do because women live longer.

Duration of Nursing Home Stays

Length of Nursing Home Stay Chances for Men* Chances for Women*
Enter sometime in your life 33 percent 52 percent
3 months or more 22 41
1 year or more 14 31
More than 5 years 4 13

Source: Kemper and Murtaugh, New England Journal of Medicine, 2/1993 (*At age 65)

While the absolute number of people in nursing homes will climb, health statistics show that a smaller proportion of the elderly need nursing home care today than needed it 25 years ago. In 1973 some 257 of every 1,000 people 85 and over were in nursing homes. By 1997 the figure had declined to only 192 per 1,000. Of those age 75 to 84, the comparable figure was only 58 per 1,000 in 1973 and 46 per 1,000 in 1997. We are living longer and healthier lives.

Saving for long-term care, on the other hand, will be impossible for most people. According to an estimate in the Journal of Financial Services Professionals, a 55 year old would have to save $4,400 a year for the next thirty years to provide the $300,000 a two year nursing home stay is estimated to cost at that time. While that sounds horrifying, a single investment of $17,200 in a tax efficient index fund could provide a $300,000 fund in 30 years.

Which brings us to a kind of long-term care triage.

Some people have sufficient assets that they can afford to "self-insure"--- they can afford the cost, if it occurs. If, at age 65, you can afford to put aside a sum equal to about 1 year of net nursing home expenses---that could be about $45,000--- and allow it to accumulate, you're probably "safe."

Many people have neither the assets to put aside nor the income necessary for a policy. Their only option is Medicaid, once they have exhausted their assets.

If you aren't in either group, you're a candidate for long-term care insurance.

Should you buy?

For most people the answer is "not yet."

• If you are under 60, watch and wait. Between rapid changes in policies and the extreme distance to the need, odds are you will be wasting money. Many policies lapse long before they are used. Start a file and learn.

• If you are 60 to 65, consider buying a policy--- but only after you've eliminated the increasingly popular alternative of moving to an assisted living retirement community and only after you have determined that you'd rather pay for a policy than have the risk of self-insurance.

• If you are over 65, put this decision on the front burner because premium rates rise rapidly with age--- a cost you can cope with today may be too great in a few years.

On the Web:

Basic Information:

Consumer Law Page

Health Insurance Association of America Guide to Long Term Care