The Myth of That “Nice Long Life Ahead” at Age 65

The Myth of That “Nice Long Life Ahead” at Age 65

Feb 6, 2017 | aging, diminished cognition, elderly, finances for elders, financial advisors, long term care, medicare, seniors finances

Probably I'm not the only one who has seen the deluge of ads on TV for Medicare supplement insurance. One that really bothers me though is the bit with the actress saying she's only in her 60s and "I've got a nice long life ahead." She's so smug and so sure she's just fine and will stay that way.

 

The ad taps into the belief most people cherish, which is that impairments happen to other people and that they will just keep being fine, at any age. People say they want to live to be 100. Their imagination is that they will be perfectly capable in all ways and will not need any help at 100. That is belief, not truth.

 

What makes a "nice long life" anyway? No one ever wants to think about infirmity and cognitive decline. And yet, by the time we reach that nice old age of 85 at least one in three of us, and maybe even one in two will have Alzheimer's disease. Not so nice. And oh, by the way, that supplement insurance the actress is promoting doesn't pay for care if you need it at home long term. Neither does Medicare.

 

Every financial planner who has a client over age 65 needs to be considering that the "nice long life" that is part of our cultural fantasy is indeed dreaming for most people. It's not about longevity. That we've probably got. It's about good health in old age. That, we have definitely not totally figured out. As 10,000 people a day are now turning 70, it's time to get past fantasy and consider how to make that long life a lot safer financially.

 

Are your client's assets enough to pay for the care they are likely to need? If not, you, the client and her family must engage in the essential discussion about who will care for the client as she ages and how much it will likely cost. One must do the math. The cost of caring for someone with dementia at home is staggering. And the advisor needs to calculate it. This is not considering the usual figures thrown around about "the average couple at age 65 will spend "x" dollars on out of pocket medical expenses for their lifetimes". None of those commonly used figures consider what it may cost to pay for a person with Alzheimer's disease who lives for 7-20 years with the disease. Help from someone will be absolutely necessary for anyone with dementia.

 

Your portfolio review with a client at retirement is a good time to talk it over and bring up the actual, not fantasy prospects for the future. And here's hoping you will not be influenced by stupid TV commercials about what the future may look like. Longevity can be wonderful, yes, and you can help make it financially safer for your older clients. A nice long life is certainly possible. And a long life with accessible assets to cover long term home care near the last phase of life is ideal.

 

Carolyn Rosenblatt, RN, elder law attorney, AgingInvestor.com

What Does It Really Mean to “Know Your Client”?

What Does It Really Mean to “Know Your Client”?

Feb 3, 2017 | aging investor, declining health, elder investor, financial advisors

Every advisor understands that you are theoretically required to know your client. But does one or two contacts a year after you do retirement planning suffice? When it comes to aging clients we at AgingInvestor.com think it takes a lot more than that. Here's a real case that illustrates the problem with an advisor not really meeting this obligation.

Nigel is 80 and his wife, Berta is 84. Each had a large estate of separate property when they got married. Nigel owned a home in an expensive county and Berta had her own inheritance. They had had the same financial firm in a different state from where they now live for decades.

We got involved at the point of a desperate call from Nigel. His wife was being discharged from the rehab facility, he was told and he wasn't sure what to do. He had the means to pay for private care and that was what he wanted. I consulted with him at some length and asked about the medical records. He obtained them at my request. The news was not good. His wife was terminally ill and plans for how to manage her had not been discussed with anyone: not the doctors, not the rehab folks, no one.

A person's choices about care are driven largely by how much they have in assets that can be spent on care. I asked. He contacted his financial advisor and we all spoke together. There was plenty to cover the need, but at that point I learned that Nigel and Berta had never done any estate planning. No will, no trust, no beneficiary designation on any account naming the other as a recipient when one passed.

Where was the financial advisor in all this? Ignorant. Not involved in encouraging her clients to do what would benefit both of them. She apparently did not keep in touch with them, despite that Berta had been ill for over a year. She did not know that Berta was gravely ill and going into hospice care (comfort measures only for the terminally ill). She did not know that they were about to incur a daily cost for a private room in a well appointed nursing facility at a cost of $430 a day.

Scrambling to find an estate-planning attorney and get advice, we did accomplish what the advisor could have urged her clients to do long before this crisis. Nigel does not use a computer. The advisor emailed the power of attorney and beneficiary designation form to me and I ensured that it was signed and sent back. Now Nigel is on his wife's account, and can access her funds, should she lose consciousness. Why, I asked did this long time advisor not do this much earlier in the planning process? At least Nigel, who needs a trust for his estate, will now have one done, no thanks to any advice from his long time advisor.

Adding value for your clients takes more than the latest algorithm and getting the best returns. It takes knowing them, their life situations, the risks posed by aging and the skill to look at the anticipated expenses of care as clients near the end of the road. The nursing home cost for what Berta needs now is not covered by Medicare.

The simplest takeaway from this: contact your clients every six months if they are at retirement age. Keep in communication and know them, not just their assets. It's the least you can do.

Learn about the actual cost of care and how to help your clients with long term care planning in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices. Click here to download your copy today.

Carolyn Rosenblatt, R.N., Elder Law Attorney & Dr. Mikol Davis

co-founders of AgingInvestor.com and AgingParents.com

Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Jan 23, 2017 | elderly, finances for elders, handling money for aging parents, handling money for seniors, long term care

We at AgingInvestor.com met with some forward thinking business owners, all under age 40, expressing their concerns about their aging parents. They weren't sure what should be set aside or what to plan for their loved ones. Any of these business owners could be your HNW clients.

 

Some had purchased long term care insurance for a parent and we were happy to see that good planning.  Others figured they’d have to pay out of pocket when the need arose.

 

The gap between what older people think and expect and what really happens as we age is startling.  And it is likely to throw the burden of paying for it on the financially successful adult children of these elders in denial.  Some of their parents never had much wealth. Others have depleted their assets by outliving them or by other factors.

What about the dollars and cents?  The Genworth Cost of Care Survey is done every year and provides average rates charged by service providers for homemaker services, home health aides, adult day health, assisted living and nursing home care across the country.  And you can also search by state to see the average where a client's parents live.  Even the lowest level of care, someone to come in and help with cooking, shopping, laundry and errands averages $19 per hour, the national median hourly rate.  The national median monthly rate for assisted living is $3500.  And in my state, in urban areas and well populated centers, it is twice that.

 

If your clients must consider paying for long term help for their aging loved ones, it’s planning you need to do with them. It's a special fund or targeted assets to be used for aging parents as needed.

 

Educate yourself first. Figure out how much it may take. According to a colleague who knows long term care insurance benefits, the average time a person with this kind of insurance collects policy benefits is three years or less.  If it’s three years at $43,200 a year for assisted living, not factoring in the 2% annual increase in cost, that’s $129,600.  And that’s under the unlikely scenario that a person who lives into her 90s, say, is going to stay level in what she needs over that three years.  More likely than not, her needs will increase and the facility will charge more every month for more services.  We see clients who are shelling out over $10,000 a month for a parent to be in assisted living.  When parent is infirm and needs a lot of things from the staff, every new thing increases the monthly cost. A few years of that kind of expense can take its toll on your client's retirement planning.

 

Near the end of our fruitful discussion, one of the participants asked “What do the other 99% in our society do when an aging parent needs long term care?”  The answer: they either provide the care themselves at a very high personal cost, or their parent spends what assets he has until they’re gone.  Then he ends up on Medicaid in a shared little rom in a nursing home. No one wants to see that happen if you can help it.

 

Here are the takeaways to share with your HNW clients who may end up supporting aging parents or paying for their care.

  1. Look ahead.  Discuss what needs your client's family, particularly elders may have and what may be required from your client to meet potential obligations created by their family members.
  2.  Consider whether your client should buy long term care insurance for parents if their parents are not wealthy and have health issues. Do this before their parents turn 60 if you can. The elders may become uninsurable or premium cost may become prohibitive later.
  3. Educate your client about the real costs of long term care. If they're under 40 as our audience was, they are probably not thinking about their potential future obligations to parents who are not financially successful. This was an unusual group.

 

Smart planning now can save your client shock and distress later.  If they are responsible folks, help them to expect the long run as their parents age. People in the 85+ age group are the fastest growing segment of our population. Most of these elders are not wealthy and someone will need to care for them.

 

Your client can get a great head start with planning and communicating well with elders in our book, The Family Guide to Aging Parents. It can help YOU too, if you are in the situation of caring for your own aging loved ones. Click here for your copy.

 

Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com and AgingParents.com

What Is The Real Cost of Long Term Care For Aging Clients?

What Is The Real Cost of Long Term Care For Aging Clients?

Jan 16, 2017 | aging, finances for elders, long term care, long term care insurance, medicare

Are you doing retirement planning with your clients? Do you understand the real dollars involved in long term care? It goes way beyond out of pocket medical expenses for Medicare premiums, supplemental insurance and medicines. You need to help them free up enough to pay for it.

We are indeed living longer now due to advances in medicine and technology but what is the condition we're in with longevity? It's not true that we're living healthier than the prior generation.

No one wants to talk about the reality that things like obesity, in 30-35% of Boomers are going to affect whether they need to pay for lots of things Medicare does not cover. Obesity is frequently associated with significantly greater risk for heart disease, strokes and diabetes. Boomers have the highest rates of obesity of any age group in the U.S. If you want to pick conditions that are most likely to result in the need for long term care, all of these are among them.

Retirement planning can be very tricky when it comes to considering the cost of long term care. Most people don't want to have a conversation about what would happen if they became disabled. Most would rather change the subject quickly if the issue of possible diminished capacity is raised. "That's NOT going to happen to me!" is the expected response. But the risk is real, and there are plenty of statistics to support an analysis of what it costs to care for a person with disabling health conditions.

According to the Genworth Cost of Care Survey, which comes out annually, 70% of people over the age of 65 will need some kind of long term support as they age. At AgingInvestor.com, we recommend that every financial professional have the latest study on hand and that you share it with your clients when you do retirement planning. Chances are they are not as healthy as their parents were. And what kind of care will they need?

Most people want to stay at home as they age. Many will use home care services to be able to stay at home. Here's an example. My now 94 year old mother in law, Alice, had numerous hospitalizations for a couple of months, for blood pressure issues, the flu and other problems. She simply wasn't safe living independently in her apartment as she recovered. A home care worker came in every day for a cost of $25 per hour, initially for 12 hours a day. That cost is not paid by Medicare.

She's a good example of how we can need care with advanced age even if we do things right. She has always taken good care of herself, doesn't smoke, doesn't abuse alcohol, exercises regularly and keeps her weight in normal range. And yet, after illness she needed 24/7 care. The overall out of pocket costs associated with that bout of illness approached $10,000. She's fairly tough and did recover fully. However at her age that is not what usually happens. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.

The extra $20,000 a year any less resilient elder could need is for someone who has neither heart disease nor diabetes. Chronic illnesses put a person at even greater risk of needing expensive care. Full time around the clock help can run $250,000 per year and up, depending on geographic area market rates.

Here's the takeaway: Expect that anyone who reaches the age of 80 is much more likely than not to need cash to pay for help of some kind. If your client is overweight or obese, the risk is very high. Ditto if your client smokes. Be sure to plan for making cash available to cover your client's likely needs in his later years. Most of what is usually required is not covered by either Medicare nor supplemental "Medigap" insurance.

By Carolyn Rosenblatt, RN, Attorney, AgingParents.com and AgingInvestor.com

Will Your Senior Clients Be Harmed When Obamacare Is Repealed?

Will Your Senior Clients Be Harmed When Obamacare Is Repealed?

Dec 21, 2016 | aging, elderly, finances for elders, handling money for aging parents, long term care, Obama care

The short answer is "yes", unless every one of them is high net worth. For those who are very wealthy, there will be no effect as they will pay out of pocket. However for any client who lives long enough to spend down everything and to get low on funds the effect will be palpable. Though neither party is talking about what happens to seniors of modest means with the repeal of the Affordable Care Act here's the hidden truth.

Low income seniors who could not afford the high cost of long term care had no choice when they ran out of money except a nursing home. Until Congress passed legislation called Community First Choice (CFC), that is. This is a bipartisan supported program that is optional for states. It gives seniors and disabled people a choice to remain at home and supports family caregivers. If a state adopts CFC, it receives extra federal funding (6%) to pay for personal attendant services. This funding is critical. States who want CFC must make the initial investment in home and community-based services before they see savings over the long run.

According to the National Council on Aging, eight states have adopted it so far and at least four more are applying for it or are considering applying. With our growing senior population it is right to give elders a choice of not having to go to a nursing home, a fate many dread and fear.

Even though care at home is normally cheaper and better than nursing home care, there is still a bias in our Federal law that compels states to pay for nursing home care, but not home care. It makes no sense. The CFC is an effort to eliminate the bias in the law favoring nursing home care and promote doing what is better for our elders: allowing them a way to pay for home care using family to provide it with financial support.

Repealing the ACA will de-fund this successful CFC program.

The Republican Platform states: "Our aging population must have access to safe and affordable care. Because most seniors desire to age at home, we will make homecare a priority in public policy and will implement programs to protect against elder abuse."

Really? If this is a priority, how has a helpful program for seniors been ignored in the dialog about the necessity repeal Obamacare? And what about the millions of people ages 55-64 who need health insurance and can't afford it? Expanded Medicaid and subsidies help them now. Those programs are on the chopping block in the oncoming rush to "cut government spending".

The elder and disabled adults who need Community First Choice funding and all community based efforts to keep them out of nursing homes are not marching in the streets. They need total care or help to maintain themselves at home. They are not in the news. They are a population without a voice except by aging organizations who fought for CFC in the first place. Any client who spends a fortune on long term care over years and depletes her assets could end up needing Medicaid. Those are the most at risk folks. No matter how skilled you are no one can make money last forever for those who are less than high net worth.

Do not be fooled into thinking that those who relish the idea of quickly trashing Obamacare really are concerned about what happens to low income seniors. These seniors comprise a significant part of our population. The elders with modest means and modest savings who need long term care can't pay for it. They are the ones being forced to go to a place they don't want to be.

The Money Follows the Person Program, which assists states in making home and community-based services more widely available expired in October 2016. If Congress is throwing out all things related to the Affordable Care Act, what are the chances of renewing this program?

If you have aging clients who might live long enough to run out of funds, this will directly affect what happens with them. If you are planning for them for lifelong financial safety, consider that much of what formerly was in place to keep them out of nursing homes will likely be gone should they live to be 100 and are no longer wealthy. Be sure to keep in mind that nursing homes are about three times the cost of staying at home with care in place there.

By Carolyn Rosenblatt, RN, Elder Law Attorney, Dr. Mikol Davis, Geriatric Psychologist, AgingInvestor.com