Research shows that 70 percent of people 65 and older will need long-term care at some point in their lives. Despite these projections, the 2014 Department of Human Services State Fair Survey shows more than 30 percent Minnesotans do not know how they would pay for that care. An additional 13 percent of respondents said they would rely on government programs to pay for long-term care.

Since the survey was launched in 1998, respondents consistently have said they do not know how they would pay for long-term care. At the same time, losing health coverage and needing care register as major concerns for those surveyed. Nearly 48 percent said losing health was their biggest worry, while 34 percent identified running out of money, 11 percent said being a burden to family and 7 percent said not being able to save for retirement.

In response to these trends, the Dayton-Prettner Solon Administration launched Own Your Future in 2012. The initiative is designed to help Minnesotans plan for their long-term care needs, including how to pay for care.

The private financing of long-term care is critical to reducing undue pressure on public programs and helping older Minnesotans gain access to the care they deserve, said Lt. Governor Yvonne Prettner Solon. More important, when Minnesotans are able to plan for their long-term care, they have more choice, control, and peace of mind.

Own Your Future currently is analyzing a variety of long-term care financing options that may be attractive to middle-income Minnesotans. In addition to long-term care insurance, these include new types of life and health insurance and new ways to tap home equity and savings plans.

The need for Minnesotans to prepare for their long-term care becomes more urgent when we consider that the number of Minnesotans over age 65 will double between now and 2030, said Human Services Commissioner Lucinda Jesson. By 2030, one of every four Minnesotans will be over 65 compared to one in eight today.

Of the 2,624 people surveyed this year, 32 percent said they do not know how they would pay for long-term care while an additional 13 percent said they expect to use government programs.

Of the remainder, 22 percent said they would use personal savings and 24 percent said they would use long-term care insurance.

More than 40 percent of the State Fair survey respondents said they dont know where to go if they wanted to purchase a product to pay for long-term care. Other respondents said they would go to their financial advisor (29 percent),

insurance agent (22 percent), the Own Your Future website (11 percent) or the Senior LinkAge Line (17 percent), which is an informational and assistance service of the Minnesota Board on Aging.

More information about financing long-term care and a copy of the survey report is available at

On July 15 of 2008, homebuilder Mike Roberts, of Scottsdale, Ariz., thought it was all over. I got tired of fighting, he told me during a phone interview last week. Roberts successful homebuilding business had collapsed under the weight of too many loans and canceled purchase agreements. Roberts stuck the barrel of a pistol into his mouth and was about to pull the trigger, when the phone rang and startled him. The message machine picked up the call and a voice filled the room. It was not an angel. It was a creditor, anonymously threatening to kill Roberts if he didnt pay up. The irony of a death threat interrupting a suicide, snapped Roberts out of making a very bad decision. He put the gun down and wrote a book instead, Broke But Not Broken, detailing one builders fall from a net worth of $46-million to flat broke in 18 months.

I read this book a few years ago. Its part confessional, part business reality-check, and while not the best written, certainly one the most heartfelt and honest accounts in the archives of the Great Recession. Its also the only book about the recession written by a homebuilder, despite the thousands of us that were deeply affected.

For the backstory leading up to that fateful moment when Roberts chose life, I recommend reading the paperback. Its a quick, breezy book that captures one of the darkest times in homebuilding history. The book even hints at a happy ending, although it never quite gets there. In real life, things dont always wrap up so quickly and neatly. Nevertheless, its been about five years, and wondering whatever happened to Roberts, I contacted him and asked if hed share with Fine Homebuilding the rest of the story.



A Slow, but Happy Ending

When I spoke with Roberts, he was busy working at his on-site sales office in Scottsdale, Ariz., where his new company has just completed and sold 24 homes, with another 18 under construction. Roberts has two developments underway, which at build-out will add 448 more homes to his already considerable resume. Homebuilding is rebounding, he told me. And so is Roberts, who describes himself as a builder of homes, companies, families, and dreams. A man focused on the future, not the past, he says.

Yet it was the past we kept talking about. When I asked him how he managed to get another loan, after defaulting on so many, he told me, The lenders hoped I learned from my experience. They know I built 2000 homes. They know that I know what Im doing. I lost 94 million in bank loans, 12 million in private funds, and yet they looked at the new me.

The new Roberts is no less ambitious than the old, but a lot less ostentatious.  In his heyday, Roberts flew his own jet and routinely dropped $500 or more for dinner. I eat at Olive Garden now, not at Ruth Chris, he said, And I pay more attention to the right-hand column of the menu, where the prices are. My aspirations for luxury and opulence are gone.

Roberts approach to business also changed, I am more conservative with my business model. I no longer hope that the numbers work out, I make sure they work out. I used to do financial models based on what-ifs, now its based on what is. When I cost out a home, I build it only if I know I can make 16% today. My projections no longer include a line item for future appreciation.

When I asked Roberts if hed give himself a raise once the dollars started rolling in again, he answered, No. Ill give my retirement fund a raise. I like my life now, and I wont sacrifice myself again. Money changes people. Its evil, and I wont live like a king again. The fall was much too hard.

I asked Roberts if he felt guilty, given the loan defaults and unpaid subcontractors, and he replied stoically, There was no way to avoid it, he said. The recession was like a black hole, he explained, and once in the vortex, there was nothing he could do to avoid getting sucked in. All the awful financial rumors came true abruptly, like an avalanche, all my buyers dropped out. Imagine 160 People left behind their deposits! 

Guilt--no guilt. I paid every employee, and this was critical for me. The banks cut off the funding. I didnt benefit from any of it. The constant attacks lead to my becoming suicidal, not guilt. I had an IRS investigation, a bankruptcy audit, forensic audits, people wanted me in jail. For two years I was under investigation, but Id done nothing wrong--sometimes things just go wrong. My frustration was that people were losing more money on Wall Street but nobody was going after those folks, they went after the homebuilder instead.


Lessons Learned

So I asked Roberts what, if anything, he would do differently. I had a nice comfortable growth at one point, and I got greedy, he told me, I got too aggressive and started to accept investor money. Today, Roberts wont take anyones personal savings to invest in a project--even if you insist. He only uses his own money and conventional financing.  I lost $94 million in bank loans, and only $12 million in private funds, but those $12 million became the most damaging part. When you lose somebodys life saving, youre the bad guy.

Roberts sums up the lessons he learned, and how he applies them to his new business in a few simple rules of self-discipline:

And make sure the numbers work. If they dont, dont build.

My life is good, now, Roberts told me, Its simple, and I no longer wonder if I can make it, I know I can. I owe less than $100.00, and thats real wealth. Someday Roberts plans to write another book detailing the comeback. But for now, hes too busy building homes and a bright future.   

posted in: Blogs

BUD HEBELER: Try living on your retirement budget for three to six months before making a commitment to retire with your employer. Keep in mind that retirement is a long time to go without working income, and preparation for it takes more effort than planning for a vacation. Here are some things to determine before you establish that budget for your trial period:

First, thoroughly consider what may be the best Social Security strategy for taking Social Security including deferring starting ages and possibly employing strategies such as filing a restricted application, file and suspend payments, or simple suspension. Deferral requires the use of savings, but that may be the best investment you can make.

Second, consider using retirement savings to pay down a mortgage or other debt. Generally, it's better to pay off the debt if your after-tax return on your investments is less than the loan interest rate or there is uncertainty about a steady retirement income or possible future expenses. However, savings that are in a qualified account such as a 401(k) or IRA require a more careful tax look before paying off debt.

Third, make a comprehensive retirement plan that (1) includes a projection of the surviving spouse's retirement income after the first death, but (2) excludes significant funds set aside for emergencies and known large future expensive events such as relocation, remodeling, roof replacement, new cars, etc. You don't want to have to finance these things with credit once in retirement. If you include those reserves in your retirement savings when you use most Internet planning programs, you'll likely pay for emergencies and expensive events with credit.

Fourth, make a long-term-care (LTC) decision about whether you will buy a LTC policy or self-insure or depend on a relative or welfare at that time.

Fifth, thoroughly understand what your health insurance will cost including Medicare monthly charges which vary with income and come directly out of your Social Security checks.

Sixth, base your plan on a conservative set of assumptions about inflation, returns and taxes. The future may not be as kind as the past considering (1) the growing number of elderly that will ultimately depend on welfare thereby requiring more government support, (2) the diminishing percentage of workers that will have to support the increasing percentage of elderly, (3) the growth of national debt and associated interest costs that compound as interest rates increase, (4) the appalling shortage of personal savings to support retirement, and (5) tripling of the money supply in the last few years with its impending inflation effect.

Henry "Bud" Hebeler was president of the aerospace division of Boeing Co. He has served on the board of MIT's Sloan School and currently focuses on the dissemination of free, sound financial planning on

Its hard to believe that just under 40 years ago, if your take-home pay was $100 a week (about average), you saved $17 of it — just socked it away, a full 17 percent.

Such was the record-high savings rate of recent decades, according to a Federal Reserve Bank of St. Louis study.

After that, we must have grown careless of the future. Or, apologists would say, “couldnt afford to save.”

By September 2005, the same Fed study found, our savings rate fell to 2.2 percent. Out of $100, we put away $2.20.

The national ability to defer gratification has gone up a bit since then, but its still low. And these are averages. Some families always piled up nest eggs above the norm; others, even high earners, havent been able to rub two nickels together.

In normal times, saved money makes money.

So, are there some public-policy steps that could help more people get in on this not-so-secret secret?

One is obvious, according to economist Veronique de Rugy: breaking the Federal Reserves zero interest rate logjam.

Its avowed purpose is benign: to keep stimulating the economy. But when savings accounts pay just a fraction of 1 percent, or not much more in a time certificate, its a “large disincentive to defer consumption,” says Rugy, a research fellow at George Mason University. Thats a fancy way to say the money might as well be spent. Inflation will cannibalize the interest.

Heres a guess, however, that average savers arent going to go out and spend it. Theyre not like that. Theyll sit there and suffer the shrunken incomes or risk some of their rainy-day funds in the stock market, at least buying dividend-yielding shares and mutual funds. Just such a tidal flow of thrift helped lift the stock market to all-time highs.

To liberals whod make up for needy folks laggard savings by beefing up Social Security payments, Rugy cautions that Social Security faces a long-range shortfall of $10 trillion, though its not in imminent danger of “running out.”

Still, to raise payroll taxes on todays workers to fund higher benefits for retirees isnt a zero-sum game to the economy. Every $100 into the Social Security pot crowds out an estimated $40 in private saving. And personal savings are exactly where business starters and job creators turn first for capital.

Rugy would replace the income tax altogether in favor of a levy on consumption — a national sales tax. More controversially, she would “eliminate efforts to buoy home ownership.” Tax breaks such as the mortgage interest deduction “encourage people to take on more personal debt” for an investment with a generally “weak return.”

As to the income tax, it not only fails to spur, it actually penalizes thrift, taking a slice for the government out of ordinary peoples interest and dividends, modest amounts that really should be left in private hands. Now that is destructive public policy, youd have to think.

Jack Markowitz is a weekly columnist for Trib Total Media. Email This email address is being protected from spambots. You need JavaScript enabled to view it..


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