From the Archives: Major Business News

Many Consider a Living Will
Important, but Wait Too Long

By KELLY GREENE

Three out of four older Americans think that preparing a living will is a very important part of getting ready for later life -- but most people haven't gotten around to writing one yet.

In fact, "preparing a living will" tied with "build up your savings" as the most important preparation you can make, in survey results recently released by the National Council on the Aging, a nonprofit group in Washington, D.C. Among people 65 to 74 years old, the importance of a living will ranked even higher than building savings, at 77% and 75%, respectively.

"It's surprising, because the data say so few people have a living will," says Nancy Whitelaw, the council's vice president in charge of research. "It shows there's a readiness to pay attention to the issue."

Between 20% and 30% of all Americans are estimated to have a living will, which is a document that spells out your wishes about future medical treatment if you're at the end of life and unable to communicate. Some states technically refer to a living will as a "directive to physicians," "health-care declaration," or "medical directive." The idea behind such documents is to help your family and doctors decide how aggressively to use medical treatment if you are unconscious or too ill to speak up.

You often can get fill-in-the-blank living-will forms from health-care providers, such as your doctor, local hospital or long-term-care facility. You also can download forms free from the Partnership for Caring site (www.partnershipforcaring.org), another nonprofit group in Washington, D.C. Keep in mind that living wills are regulated by state governments, so make sure you get the form that specifically adheres to your state's law.

Once you fill out the form, you might want to consider registering it -- free of charge -- with the U.S. Living Will Registry's Web site (www.uslivingwillregistry.com), so that your family members can find it more easily when they need it.

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If you're thinking about getting long-term-care insurance, here are two questions to consider: Can you glom onto the new federal program? And if you can, is it the best deal for you?

About 20 million people are eligible for coverage under the new Federal Long Term Care Insurance Program, which kicked off its first-ever enrollment period March 25. The program includes many categories of workers and relatives, including current federal employees, postal workers, employees of the Tennessee Valley Authority; retirees of any of the above; spouses and adult children of current employees and retirees; and parents, in-laws and step-parents of current employees. (To check out each category, go to www.opm.gov/insure/ltc/faq/eligibility.htm for information.) You can apply through May 15 for one of three prepackaged options, or wait to apply for a wider range of benefits during a longer enrollment period from July 1 through Dec. 31. If you need the coverage urgently, you can apply now and tinker with it during the later enrollment period.

There are some big advantages to signing up.

THE PLAN HAS a lot of potential for stability, since it could wind up the largest group plan ever for long-term-care coverage, it's being sponsored by the federal government, and it's being run by a joint venture between two large, stable insurance companies, John Hancock Financial Services Inc. in Boston, and MetLife Inc. in New York.

IF YOU'RE A SINGLE person buying coverage with normal health, the premiums are designed to provide you with a 15% discount off policies in the open market, says Paul Forte, the joint venture's chief executive. It also offers some relatively rich benefits not available in many policies, he contends, such as payments for informal care provided at home by neighbors or family, 100% benefit payments for assisted-living facilities, payments for foster care, and a third-party appeals process.

But there could be disadvantages as well, particularly if you're in good health. First, most individual policies offer a discount to married couples buying coverage together, and the federal plan does not, says Mr. Forte. The U.S. Office of Personnel Management "wanted the program to have uniform low rates and not treat some people different because they were married," he explains.

Tom Grzymala, a financial planner in Alexandria, Va., who works with many federal workers, says his clients are finding that "if you're young and in good health, you can still get a better package from some providers on the open market."

Do you really need a $1.2 million nest egg to wind up with $40,900 a year for a 20-year retirement?

Several readers questioned this recommendation, made by Allstate Corp.'s Allstate Financial Group, Northbrook, Ill., in its Cost of Leisure Index, reported here recently.

Allstate's explanation: The baby boomers interviewed for that survey anticipate spending about $10,900 apiece each year to have fun in retirement and they estimate that basic living expenses will cost them $30,000 a year each. By the time the boomers retire, inflation will probably raise these costs significantly.

Tally the two amounts together, and a 47-year-old -- the average age of those surveyed -- by age 63 needs to have saved $1.2 million to get the inflation-adjusted equivalent of $40,900 a year in income for a 20-year retirement. That assumes a 4% inflation rate and 6% annual earnings on post-retirement savings. If you're older than 47 now, inflation won't raise your costs as much, and if you don't spend so much on leisure activities, you won't need as much saved, says Pam Hollander, an Allstate marketing director.

Kelly Greene is a reporter for The Wall Street Journal and for Encore, the Journal's guide to life after 55. E-mail: encore@wsj.com.