By Thomas "Greg" Darden, CLTC | May 1, 2020
Planning, planning, planning. It seems like that’s all we hear about these days. Career planning, family planning, financial planning, retirement planning. Then what? What do we plan for after planning for retirement?
We also need to plan for living a long life. As a population we are living longer. A 65-year-old today can expect to live another 17 years, but many are living far longer than that. The fastest growing age group is the group over age 85. When the social security system was initially put into place, it was set up as a safety net for those few people who lived much beyond age 65. Now there are people who are drawing from the Social Security system for almost as many years as they paid into it.
So how do we plan for living a long life? Obviously, we need to have our finances in order. The greatest fear of many retirees is outliving their assets. Many are dependent on investment income to supplement Social Security earnings to meet their day-to-day expenses. Most people are reluctant to tap into their principal, wanting to preserve it at all costs. They want to preserve the income stream, but they also want to preserve the principal, so they have something to leave to their children, grandchildren, or favorite charity.
One of the greatest risks to a portfolio is that of an extended care need. And the likelihood of needing care increases with increased age. The older we are, the more likely we are to develop conditions that may require us to have assistance with day-to-day activities such as bathing, dressing, getting in and out of a chair. The need for assistance can be due to things like severe arthritis, emphysema, cardiac problems, or even an accident. It may also be due to conditions such as multiple sclerosis or Parkinson’s. It may simply be due to growing old and frailer or developing dementia. Of those over age 85, fifty percent have some level of dementia. Remember, this is the fastest growing age group in our country!
Planning for a long life must include planning for disability or incapacity. Have you given this any thought? If you were unable to care for yourself, what would you do? Would your spouse be able to care for you? What if your spouse were to pass away before you? What if your spouse was the one who needed care? Would you be able, physically, emotionally, and financially to provide the necessary care?
Have you spoken with your children about your preferences if you need care? Many of us have living wills and other documents that may say we don’t want to be kept alive by artificial means. The chronic conditions that were mentioned earlier—arthritis, cardiac problems, emphysema, Alzheimer’s disease, do not require life support. These are not situations where you are given the choice of “pulling the plug.” You could live with these conditions for many years, still enjoying many activities and relationships while needing assistance on a daily basis.
I hear people say, “My children will take care of me.” What does that mean in your family? Does that mean that they will move in with you or have you move in with them and their family? Does that mean that they will provide hands-on care such as bathing you? Or does it mean that they will provide for you financially?
As part of your planning, it’s important first of all to acknowledge that living a long life is a near certainty; that the longer we live the more likely we are to need some type of day-to-day assistance. Medicare, Medicaid, and the Veteran’s Administration do not provide for the type of care that we are most likely to need. The care most likely to be needed is having someone come into our own home to provide assistance.
It’s then important to acknowledge that an extended care situation will have a tremendous impact on your family. What would the impact be on your child’s life if they become responsible for your care twenty-four hours a day? Think about the impact even if they provide care only eight hours a day. What does that do to their family time? To their career? To their other responsibilities and commitments? What would it mean to them financially?
I firmly believe that spouses and children will do all they can to provide care, but it can be very difficult. They will do the right thing. But having a plan in place can help them in this new role as caregiver.
So, for your planning, make your loved ones aware of your care preferences. Do you want to stay in your area if you need care or would you prefer to move to another part of the country where you have family or friends? Would you want to move in with your children or, like many, do you not want to be a “burden” to your family members? Do you want to receive care at home for as long as possible or would you prefer to be in a setting such as an assisted living facility where there are other people around, there is help as needed, and there are a variety of social activities planned?
If care is needed, how will you pay for it? Have you considered investigating long-term care insurance as an option to provide the financing for extended care services? Many people are unaware that long term care policies will pay for a caregiver to come into your home to provide care there. Many people are also unaware that they can insure for a portion of the cost if they feel that they can afford to pay the remaining portion of the cost of care.
Do a favor for yourself and for your loved ones. Have a plan for the eventuality of needing care. Let people know your desires. Set up the financial resources. Let your family know what resources are available either in the form of assets or insurance to pay for your care. Then, enjoy the peace of mind that comes from good planning and get out there and enjoy the years that you’ve been given!