Feb 5, 2019 | aging, cost of aging, cost of long term care, custodial care, declining health, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, health, long term care, nursing home, resources for senior, resources for seniors, retirement planning, seniors finances
The financial services industry often refers to retirement planning for the future with aging clients in terms of "housing choices". This reflects some degree of misperception about what happens as we age. For healthy people of retirement age, there is little interest in planning for the need for care and planning for loss of independence. People usually resist talking about it. We don't choose to lose our independence. It happens. It is up to the advisor to raise it if you want to advise for longevity. The subject is emotional and can be difficult.
Where we need to get help when we can't be independent any longer is really a choice about care, rather than housing. This is not house shopping. Does a client want to pay for care in her own home when that time comes? Most would say yes, they want to remain at home. They then must calculate what a home care worker costs and whether that is the best way to receive the help they are likely to need one day with their activities. Can the resources be available to enable that choice of where care will be given?
If an elderly client is living alone and can't manage at home anymore without assistance, there are indeed choices, often driven by the degree of care needed and the cost of getting it. Elders may not be interested any longer in maintaining a house, cooking, shopping, and other necessary chores. For them, assisted living may be desirable because their daily lives will be different and free from the burden of the household that has become unmanageable. The choice to go to assisted living is usually not one a client is going to make because of wanting to downsize into an apartment for its own sake. Rather that is the price of going to the place where assistance is on hand. Again it is to receive care, not because they love the idea of not having their home any longer. For many elders, downsizing from a house to an assisted living apartment is a difficult adjustment, required because of physical or mental changes of aging. From that perspective it is a choice forced upon them.
A factor every advisor should know is that the likelihood of living alone increases with age. Almost half of women age 75+ lived alone in 2010, according to the Institute on Aging. The "choice" of a different living arrangement is brought on by safety and care concerns, often raised by their adult children.
It will be good for every advisor who wants to help clients plan for longevity to consider that their role is to introduce the issue of possibly needing care in the future, as about 70% of us will one day. If your client has you in her life, she already has housing. Planning for "housing" is a misnomer. Focus on places and choices where care can be delivered. Having no care plan can be disastrous, as sudden health crises can force decisions without considering the cost of care in advance.
In helping to educate your client about where he or she can receive care, the costs of all the offerings available in most areas are spelled out in detail in our book, Hidden Truths About Retirement & Long Term Care. You can develop quick expertise on the subject there. Skilled advice about longevity for your aging clients requires knowing your numbers, what care options are available where they live and how much they can expect to spend for that care. Smart advisors gather the data before a crisis happens and urge clients to look at it with them.
By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jan 30, 2019 | aging, aging in place, cost of aging, cost of long term care, declining health, diminished cognition, elderly, finances for elders, financial advisors, financial capacity, handling money for seniors, long term care, nursing home
Most advisors who even ask this question of their retirement-aged clients never spend time on it. About 90% of those asked say they want to remain in their own homes as long as possible. That sounds fine. Until one faces physical decline, cognitive impairment or both. The advisor providing competent guidance about financing aging at home had better know the facts.
None of us like to think about losing physical ability or needing help. We abhor the thought of losing our total independence. In our view at AgingInvestor.com, the only advice clients are getting is about the long term picture is whether or not to purchase long term care insurance. Since most people don't do that, the actual costs of living at home can boggle the mind. It's the best advisor's obligation to educate your client about the risks of the plan to age in place, just as it is your obligation to educate them about balancing their portfolios. You are giving the client added value if you take the time to talk them through the risks and dollars they may need to have available.
Here are some briefly stated facts from a real case in which an 89 year old wanted to age in place and his wife promised he would never have to leave home.
At the outset of his declining health, he had about $3M in invested assets. His portfolio was healthy and balanced for his age, according to conventional wisdom. He began to lose his ability to walk due to multiple medical problems. His wife hired home helpers, three days a week at first. As his conditions progressed he needed more and more help. He had to have a wheelchair, and a special van. A stair chair was installed in their two-story home. By the time he reached age 95, he was spending over $150,000 a year on care and assistance around the clock. In the space of time during which he was steadily losing independence until he passed away at 95, his assets were depleted to the tune of $2M. He lived in a higher end market for the needed help but the reality is that in any market, the kind of care he needed would be very expensive.
For him, aging in place was more costly than a skilled nursing facility would have been. Home modifications, private caregivers, (none of whom were licensed nurses), equipment, medications, adaptive devices, etc. drained his resources by 2/3. And not everyone has as much invested as he had to even start the journey. His wife had her own assets and she paid the cost of household maintenance, taxes, food, and utilities with her funds. Had she relied on him for those things too, there would likely have been little left at the end of his life.
It is not all doom and gloom however. Many clients live rather well in their last years without all the care this gentleman needed. Some get by with family caregiving help, and some have fewer medical conditions. But if you are going to competently help your clients plan for longevity, it's essential to understand the real out of pocket costs of aging in place or anywhere else outside the home. If you want to add value to your services to older clients, know what they need to know to properly anticipate what can happen with living into one's 90s and beyond.
Learn all the actual costs of care for every aging client option in our book, Hidden Truths About Retirement & Long Term Care. Be well prepared to walk your client through the scenarios they could face in their futures. You distinguish yourself from other advisors when you sharpen your knowledge in planning for longevity.
By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com
Nov 15, 2018 | aging, aging investor, cost of aging, cost of long term care, custodial care, declining health, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial judgement, handling money for aging parents, handling money for seniors, health, investor, long term care, seniors finances
Your clients are getting ready for retirement. You’ve done the calculations, balanced the portfolio and advised them of what income to expect. You’ve discussed how much spending is ok. You used your program and your analysis was thorough. You’ve done your job, right?
Not exactly. There is probably no algorithm nor program that will calculate your client’s individual profile of health risks that will likely lead to the expense of long term care. That can be a whopper. Maybe you’ve suggested long term care insurance. Most people don’t choose to buy it. For those who do, the benefits are limited and the “elimination period” (deductible) is thousands of dollars. There go your careful calculations. At least 90% of folks don’t have that coverage. Now what?
But how can you predict what’s going to happen to anyone’s health in retirement, you ask. You can’t be precise, but you surely can make some rational observations and give advice accordingly. Those observations consist of two parts: what you can see with your own eyes and what you can glean by asking a few basic questions. If you think asking any client about their health conditions is too nosy or not your job, consider that if the client needs long term care and runs out of money because of it, they’re not going to think much of you. And the cost can wipe out their security.
Asking about health issues is not nosy at all. Rather, it’s what any smart advisor planning for longevity must do. Let’s not keep pretending that everyone stays the same physically and mentally from the start of retirement to end of life. Our bodies go through wear and tear and things break down. Cognitive decline affects at least a third of people who reach the age of 85. The risk of Alzheimer’s disease keeps climbing after that. Now, what was that life expectancy you were using in your calculation? Was it age 99?
Let’s start with what you can see in your client with your own eyes. (If they’re not in front of you, perhaps Skype is an option). Is your client obese, as about 40% of the U.S. population is? This leads to heart disease, stroke, and diabetes, among other diseases and conditions. The medical care people receive in many cases will save them from dying but they then live with disabilities. And yes, they will be very likely to need expensive long term care. Neither health insurance nor Medicare will cover long term care. Such help as a part time caregiver at home is how most folks start out with long term care. Your client pays out of pocket most of the time. Did you calculate how much it costs as well as how long they will likely need it? If they have multiple medical conditions, and have started long term care, they’ll probably continue to need some form of it for all their remaining years.
Find out what you may not know from simply observing your client’s appearance by asking questions. You can make your own list or get a health care provider to help you with a few targeted questions. You will need to educate your client as to the reason why you need this information. It’s to help them plan for how much to save in their retirement years.
Here are some examples of basic questions that can help you predict the need for possible long term care:
- How’s your health these days? Has a doctor told you that you have any long term conditions?
- Are you taking medications? What are they for?
- Do you smoke?
- Are you concerned at all about any health issues you have at this time?
- Do you recall your parents’ ages when they died?
Your aging clients will not be eager to talk about the potential need for long term care. When you told them about what to expect for “out of pocket medical costs in retirement”, you did not give them a figure that included long term care. Long term care is not “medical” according to Medicare. Rather, it is called “custodial care”. The client probably will not bring it up, so you must do this.
When you have done your observations and gotten answers to your health-risk related questions at least there is a place to start a meaningful conversation. You can give them figures as to the cost of typical kinds of care, such as a non-medical home care worker. We at AgingInvestor.com recommend starting your projections at age 80 as to when a person might need physical help. Many of us know someone who did require help with at least some part of his or her life at that age. Then you can talk about how any condition your client identifies for you, such as high blood pressure, diabetes, etc. as shortening normal life expectancy and increasing the risk for needing help. If your client already has difficulty with some normal daily activity such as walking or bathing, they are definitely at high risk for needing paid help sooner than a person without these problems.
Clients may be completely unaware of such things as the hourly cost of a home care worker, what assisted living costs each month and what home modifications cost if they are able to remain in their own home. You can find a thorough discussion of these and many other parts of long term care in our book, Hidden Truths About Retirement & Long Term Care, written specifically for financial advisors like you.
Every conscientious advisor needs to wake up to the reality that your retirement income calculator omits the reality check of health problems. We’re not talking about nursing homes, but every other kind of care and help most people will need as they age. If you do want to help clients who are reaching retirement age to plan realistically, include the health risks you can see or learn about by asking.
By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Aug 9, 2018 | aging investor, cost of aging
Whether your older clients have family or not, living alone can lead to increasing social isolation and higher risks of health problems. The case study here is based on a true story involving a 75-year old that was very independent until a crisis. Imagine that she is your client with a multi-million dollar portfolio.
Brenda is single and never had kids. She has one family member two thousand miles away. Few friends live in her area. She rents a two-story condo with steep stairs, in a largely inaccessible hillside area. She has been driving herself places though she admits she shouldn't drive. Brenda is also in chronic pain, even after two surgeries and she feels ready to give up. She takes multiple medications.
With multiple medications, things can go wrong. They interact, they have side effects, and they can cause chemical dependency. All of these things happened and one day Brenda could not get out of bed. An emergency room visit, hospitalization, and rehab followed. She acknowledged that she could no longer live alone in her unsafe condo. She was just too weak to keep managing the stairs.
What happened next is something we at AgingInvestor.com personally witnessed. Brenda was referred to us just before the crisis. We had established a trusting relationship by phone but first met her in the hospital. Without professional help and a transition team of committed people, she would most likely have gotten stuck in the healthcare system until her only relative could fly across the country and rescue her. She needed a suitable apartment in a seniors' community with help at hand found in assisted living. The healthcare folks were not going to offer a transition team.
Brenda got a great deal of assistance from us, as we were able to assemble a team consisting of a psychologist, geriatric care manager, nurse-attorney (myself), mover, and a personal assistant, just to line up a plan. She needed to complete physical therapy to strengthen her so she could walk around and get settled in a new apartment. Without that, what would have happened? If statistics tell the story, she would have returned to her unsafe condo. She probably would have fallen there and ended back in the hospital, perhaps in worse shape than when she left there a few weeks earlier.
When you have a very independent older client, alone, who has the means to retain professionals to help plan for the next phase of their lives, it's good advice to urge that planning on them. Making a change of one's living arrangement in a crisis is uncomfortable and leaves few choices. Finding a suitable assisted living apartment alone can be a daunting task. In Brenda's case, the change was thrust on her without time to consider it, think of all options and prepare emotionally for losing her independence. We were able to help her, but not everyone can immediately access and hire the right people to make such a transition easier. Brenda, on her own, would have had no idea what to do after she left the rehab facility. Going home again would have been asking for a repeat crisis, or worse.
The Takeaways:
- Consider every aging client in your book as having risks associated with getting older. Living alone typically can't go on forever. Plan with them about their options.
- Cost of various choices such as assisted living is a factor that drives decisions. Plan with them. What budget is reasonable? Brenda's assisted living costs over $6000 a month for basic services, which include meals and laundry but no personal care. That's extra, as are all outside professionals.
- Even if your aging client is not ready to think about giving up living alone, it should be part of your job to help the client plan for the possibility. It's real.
We hope Brenda's story will encourage you to bring up the topic of what help an aging client in your book might need in the future. A good plan can make all the difference and you can be the guide. You need to do more than just manage the money with isolated elders. If you aren't sure how to approach this, we offer advice at AgingInvestor.com, a nurse-lawyer, and geriatric psychologist team.
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Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
They are the authors of "Succeed With Senior Clients: A Financial Advisors Guide To Best Practice," and "Hidden Truths About Retirement And Long Term Care," available at AgingInvestor.com offers accredited cutting edge on-line continuing education courses for financial professionals wanting to expand their expertise in best practices for their aging clients. To learn more about our courses click HERE
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Mar 16, 2018 | cost of aging, cost of long term care, financial advisors
With the recent Texas Court of Appeals decision striking down the authority of the DOL to enforce its fiduciary standard, the industry remains enmeshed in its own conflict. Some firms embraced the concept of acting in a client's best interests for retirement accounts. Others fought it tooth and nail. What about your own clients if you are a broker and do not have to follow the DOL rule? Do you think no one is going to question you, your advice, or your commissions and fees?
With the amount of publicity generated in the long fight to get the rule passed in the first place, and the aftermath efforts to have it overturned, the public is more aware than ever of the need for transparency in what you recommend and in what advice you offer. Some clients may trust you and never ask a question about why you suggest a product, but don't count on that being universal. The public's perception of what you do is changing and in a sense, the cat is out of the bag.
In their marketing, firms that embraced the fiduciary standard can brag about it and when you have rejected the premise of prioritizing a client's best interest, you can't brag about it. In fact, prospects may be asking more and more often whether you are a fiduciary. What are you going to tell them?
Here at AgingInvestor.com, we educate advisors of all stripes about managing aging clients, particularly those with diminished capacity. Our associated site, AgingParents.com, is a resource for those with aging loved ones. At AgingParents.com, we advise and counsel families about watching over their aging parents' finances and we strongly encourage them to review what their elders are doing with their money. When they follow our advice, they are going to be looking at what you've done with the elder's portfolio. If you adhere to a fiduciary standard, no problem is likely. If you don't, beware. Your client's heirs are gradually assuming power over their parents' investments as their loved ones age and become less capable of financial decision making. Dementia is a frequent cause of loss of capacity. Often the adult children can take over as successor trustees or agents who are appointed as power of attorney long before the parent passes.
About 70% of women change advisors after the death of their spouses. Their adult kids will be encouraging them to find someone with a fiduciary standard. Perhaps large numbers of adult children will switch advisors before the death of the patriarch, once they scrutinize what choices you have recommended. They may even get a second opinion about your work.
This is merely a caution to any advisor who does not adopt a fiduciary standard, regardless of whether it is mandated legally. The next generation is looking at a parent's portfolio with fresh eyes and you may lose clients because of this. Keep the older clients in your book for life and future generations by staying the course as an advocate and making decisions in their best interest, always.
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