For years, the press has done faulty reporting on long-term care insurance (LTCi) and the public has been in deep denial of the need for it. Now we have a new enemy of responsible long-term care planning: income inequality.
A story in the February 3, 2104 New York Times titled, “The Middle Class is Steadily Eroding. Just ask the Business World” caught my eye. It also confirms my observations.
The article says there is no doubt our middle class is eroding, in a pretty dramatic way.
“In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995. About 90 percent of the overall increase in inflation-adjusted income was generated by the top 20 percent of households in terms of income.”
“Investors have taken notice of the shrinking middle. Shares of Sears and J. C. Penney have fallen more than 50 percent since the end of 2009, even as upper-end stores like Nordstrom and bargain-basement chains like Dollar Tree and Family Dollar Stores have more than doubled in value over the same period.”
“Foot traffic at midtier, casual dining properties like Red Lobster and Olive Garden has dropped in every quarter but one since 2005, according to John Glass, a restaurant industry analyst at Morgan Stanley.”
“With diners paying an average tab of $16.50 a person at Olive Garden, Mr. Glass said, “The customers are middle class. They’re not rich. They’re not poor.” With income growth stagnant and prices for necessities like health care and education on the rise, he said, “They are cutting back.” On the other hand, at the Capital Grille, an upscale Darden chain where the average check per person is about $71, spending is up by an average of 5 percent annually over the last three years.”
Where am I going with this? Why am I reporting on this in a long-term care insurance blog?
Rationally, when finances are tight, insurance is actually more necessary than ever. Yet soaring income inequality evokes fear. When fear strikes, people panic. Business logic is inhibited.
I commonly see people who are suffering the effects of income inequality continue to spend money. It’s usually on “stuff”. A good many people can still afford long-term care insurance (LTCi) because we can get LTCi premiums to be very reasonable. But seeing their costs go up, their incomes remain flat and their jobs in possible jeopardy impedes people from doing the only sane, considerate, dignified thing, which is to buy reasonably priced long-term care insurance.