Feb 21, 2019 | aging, aging investor, cost of aging, cost of long term care, declining health, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, health, long term care insurance, resources for senior, resources for seniors, retirement planning, senior citizen investor, senior investor, seniors finances
It used to be that we could think of retirement in a kind of predictable way. People lived into their 70s perhaps, and we measured retirement by that. We used tables, algorithms and other tools to tell us how much we should save and how much we could spend in retirement. And it was all based on assumptions that may no longer apply.
Life expectancy for a woman in the U.S. in 2018 was 84 years. For a man, the figure is 80 years. Those averages do not take into account the fact that well educated and financially secure people live longer than average. This is presumably based on the notion that people who know what a healthy lifestyle is and who can afford the best medical care will outlive those who do not have those advantages. In my own county, for example, which has a high proportion of elders compared to other counties in California, one wealthy city shows a life expectancy for men of 93 years.
Suppose that your aging client lives to be 93, having retired at age 65. That's 28 years of retirement. What the algorithms don't clarify is what you, the advisor needs to plan for with your client during the last decade of life, from 83-93. No formula is going to help you with the individual discriminations you need to make concerning your client's risks for care and how to assess and plan for them. They can be a substantial cost, out of pocket, not covered by Medicare, and absolutely necessary.
The way we age is determined by two main factors: hereditary tendency and lifestyle. Our genetic makeup directs only about 30% of the equation. The other 70% is driven by the way we choose to live our lives. There are plenty of folks who think that a healthy lifestyle is just too much bother. They avoid exercise, eat whatever they feel like eating, never learn to manage stress and say they'd rather die a few years sooner than give up their habits, which their doctor advises against.
Here's the problem with that belief. Leading an unhealthy lifestyle does not just cause you to "die sooner". Rather, it may likely cause you to live with impairments, disabilities and a need for expensive long term care for chronic health conditions. These can go on for decades.
Take obesity, for example. Over two-thirds of Americans are overweight or obese. Obviously excess weight increases our risks for all manner of health issues, including diabetes, heart disease, high blood pressure, and strokes. When a doctor makes a diagnosis of one of these, the person doesn't typically just die on the spot and save a lot of expense later on. No. The medical providers will keep the person going with medications, surgery in some cases, lots of diagnostic monitoring and trips to the doctors. These chronic conditions usually lead to disability late in life, particularly when more than one of them exists in the same person.
If you have aging clients, you definitely need to understand health risks in a basic way, so that you can help your clients set aside funds for the care they are likely to need in the last years of their retirement lives. All of the chronic conditions I mentioned are manageable with an effort toward a healthy lifestyle but for those who do not wish to do the work involved, you can bet on a likely need for long term care. While you can't predict the future, you can plan for risk. It's what you do.
My own mother in law had high blood pressure and chronic kidney disease for decades. She worked vigorously at diet, exercise, social activities and other components of a healthy lifestyle. Heredity was not on her side. She lived to be 96. During the last 3 years of her life, she needed help. She moved to a seniors' community where help was available and eventually, she paid for private caregivers. Her cost of living at the last part of her life was $120,000 a year. If this were your client, would he or she have at the ready $360,000 to pay for care? How about if there was no pursuit of a great lifestyle? The care expense could easily be 10 years.
The takeaway here is that advising for longevity needs to include the skill of assessing fundamental health risks that create a need for out of pocket, long term care. You don't need to be a doctor and you can't predict everything, but you can do what is reasonable to help your client plan. Ask the right questions. Keep track of your client's general health picture.
To learn more about what to look for and what to ask, get Hidden Truths About Retirement & Long Term Care, available at AgingInvestor.com and on Amazon.
By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jan 25, 2019 | aging investor, financial advisors, investor
Do any of your
older clients have a problem with alcohol or addiction? You may be surprised at
the prevalence of these problems in our older population.
Opioid
addiction is not just about young people. Some sources tell us that opioid
dependency is present among people of all ages, which can include your aging
investor clients. According to a treatment facility exclusively for adults over age 50, the number of
adults over 50 with substance abuse problems will double from 2.5 million in
1999 to 5million in 2020.
Why
should this matter to you, as an advisor? There are several reasons why this
client health issue is important, particularly in retirement planning. First,
any substance abuse problem can affect financial decision-making capacity.
Dependency can lead to desperation, related physical issues added to existing
age-related issues and loss of capacity to make reasonable and necessary
judgments about any investment. Further, it can destroy family relationships,
just when you may need family members to get involved in helping an older
client make essential decisions about the portfolio and needed adjustments.
Your
aging client may not tell you about being substance dependent but sometimes you
can see the signs. They may confess to "a bit of drinking too much",
or feeling depressed about their future. Perhaps
the client comes to your office reeking of alcohol. Or you see them taking
pills right in front of you, with a shaking hand. That behavior doesn't look to
you like just some benign blood pressure pill or the like. There's a frantic
air to it, needing that pill fix. You can't be sure but your gut tells you
something isn't right. Listen to your gut.
Elders with a
drinking problem are not often talked about but we certainly hear about the
issues they cause at AgingParents.com, where we work with families to solve
problems with the elders and their adult children. According to publications at
the National Institutes of Health, prevalence rates for older-adult at-risk
drinking (defined as more than 3 drinks on one occasion or more than 7 drinks
per week) are estimated to be 16.0% for men and 10.9% for women. There is
also a substantial proportion of the older-adult population who are binge
drinkers (generally, 5 or more drinks per episode). This is not some small
problem among us.
You're not a
doctor, nor a mental health professional. Why should you care? Should you do
anything about a client who appears to you to show signs of substance abuse
risk? It can affect your client relationship if you do nothing. Your client can
accelerate age-related physical decline faster with substance problems than if
they aren't part of the picture. If they decline too much, you can't work with
them. If the client can't communicate or can't make decisions, you may have to
get rid of the client and the fees you earn on managing that portfolio. The
client can ruin your connection to them.
Have a plan
You can think
ahead and develop a plan if you suspect these issues are affecting your client.
One
essential strategy involves being prepared to reach out to your client's family
or close friends for help. Many, though not all investors have done some estate
planning. Often they wanted to protect their legacy and had a trust and will
drawn up by an attorney. Imagine that all their financial assets you manage are
in a trust. The trust will name a successor to your client, who is the person
who decided what the trust should contain. The successor trustee can assume
authority while your client is living, when he or she becomes impaired. Trusts
are written in many ways with no standard applied to when an impaired trustee,
your client, must or can step down and let the successor take over.
What to do first
You
can speak with your client about whether they have done estate planning. This
should be part of your job anyway. You don't want them to fail to do this and
have too much of their assets unnecessarily given to taxes after they pass or
have them go where the client didn't want them to go. Educate them. That's what
you do as part of your services. While you are on the question, find out whom
they've appointed as a successor trustee (assuming there is indeed a family
trust). Then ask for permission, in
writing to communicate with that successor trustee, whom they chose,
"in case of emergency" or some other event that may cause them to be
unable to function, such as a stroke. For help in getting the permission right,
reach out to us at AgingInvestor.com. We can help!
How to use permission to
communicate with a third party
That
permission will give you one essential thing: the ability to tell the appointed
person that you are worried about what you have observed (be specific; e.g., strong
odor of alcohol, forgetting appointments, etc.). You can simply request their
help. It's up to them to take it from there. You may not be able to solve any
problem your client has but with this kind of communication, you are doing all
you have a right or obligation to do to be of service. And who knows, your
contact with the right and motivated appointee, often a family member, could be
the trigger that starts their stepping in to assist with financial decisions.
Try this and you'll sleep better at night rather than worrying that your impaired client may do something dumb with their money, and expose you to scrutiny by heirs for your failure to act. This simple and proactive step can apply not only to a client you think may have a problem, but to any aging client. Make it your practice. It can prevent your loss of management of the client's assets.
Jan 18, 2019 | aging, aging in place, aging investor, cost of aging, declining health, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, health, long term care, resources for seniors, retirement planning, seniors finances
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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