Helping Loved Ones Through the Last Years

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Helping Loved Ones Through the Last Years

Even a financial professional can be caught unprepared when life doesn’t go as planned. Here are five things I learned with my own parents … and that I wish I had known before it all started.
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When my parents downsized to a duplex, we thought we had their final years all figured out — finances, housing and medical care. Unfortunately, things rarely work out the way you plan them.

Within a few years of moving from our family home, my father started showing early signs of Alzheimer’s. Complicating the situation, my mother had increasing mobility issues and relied entirely on a scooter and a walker to get around. Initially, we had high hopes that my father would be able to take care of her in a quasi-assisted living environment. His diagnosis and diminishing independence changed all of that.

 

Looking back, you see the signs. For years he loved driving to the local forest preserve to take long walks. Suddenly he would find himself lost and not be able to find where he parked. With my mother unable to stop him from doing something he loved and unable to chase after him, strangers would call her to tell her he had been found and would help him back to his car. And there were many other worrisome things happening, like him leaving the stove on, leaving the house and forgetting why, and becoming increasingly frustrated by the growing limitations of the disease.

 

Like many families in this situation, we never thought Alzheimer’s would happen to us. But when it did, we all knew that the future was going to be very different from what we had imagined. We felt a frightening sense of urgency to do something, anything, to make all of us better able to handle this unplanned future.

 

Leaving Home Is  Hard

My mother, while of sound mind and unrelenting determination, began falling frequently because of her multiple sclerosis. The 911 responders were becoming familiar visitors to their home, which only added to  our worry and sense of urgency to find a safer, more permanent solution. We knew  we had to begin looking  for a place for  them as soon as possible. But how do you find the right  place?  Everywhere seemed too expensive, too fancy or  too far away.

And once you move them to a new town, you need a new system of doctors, as well as transportation, drugstores and a new social support system. Concerns cascaded: How do you find the right caregivers and trust that they have your parents’ best interests at heart? How will you get them to the doctor once  they can no longer drive?

Concerns mounted, and there were few professionals or organizations to help back then. You could search the Internet, but the options were limited.

We relied on referrals from the family doctor, friends and co-workers. Then we searched the old-fashioned way: countless phone calls and interviews of staff members of the few assisted living centers in the area. We also tapped into the local senior citizens council. Finally, we found a place in a nearby suburb that seemed like the best alternative to their duplex. But it required my father to lose his home, garden and the companionship of his beloved cat.

The move completely changed his life — literally from one day to the next. That’s when his Alzheimer’s symptoms significantly worsened. He went from early-stage to mid-stage within a little over three months.  We were losing him fast, and it was terrifying. Before, we believed that nursing home care was at least five years away. Suddenly, it was the right here, right now.

Care Is Costly – Financially and Emotionally

Statistics say that three years is all you need in long-term care. My father was in full-time nursing care for a good solid six years. We spent almost $7,000 a month for both of my parents, $4,000 more than we had carefully planned for. I was familiar with long-term care planning, but I was not prepared for this.

Expect a Role Reversal

I worried about my mother. She did a fantastic job caring for my father, but I knew she was neglecting herself. Once he passed away, focusing on her became easier. But switching the roles of parent and child is never simple.

Parents don’t want to be a burden on their kids. As they age they give up control of almost everything: their finances, their health and their choices. That’s hard on everyone, but especially parents who are most comfortable being the ones depended upon, and not dependent upon others.

As their child, you take it on because you love them and it’s what you want to do. I felt like, “I can’t begin to pay you back for what you did for me, so let me do this for you.”

That doesn’t mean they’re going to be OK with it.

Everything becomes a power struggle. My mother often said, “Remember, I am the mother.” And even though I knew she wasn’t in a position to be the mother, I had to bite my tongue. You have to learn how to communicate a completely different way. You can’t bark orders, but you can’t let things slide either, such as neglecting hygiene or not taking medication.

Repeatedly, I had to remind myself that I had to be the grown-up, and not the child, as much as I wanted to sometimes cry, stomp my feet and have it my way. Communicating with my mother was a balancing act of restraint and persistence.

 

Have a Conversation before the Crisis Hits

Planning for old age is a conversation no one wants to have, but take it from me, it’s something you need to do. Nobody wants to talk about when they’re going to die, but it’s not an “if.” Legal and financial considerations abound. Make a list.

Everyone should have at the very least a will, a health care power of attorney and a power of attorney for property. If your parents don’t have those, that’s a great way to start the conversation. Once this hurdle is crossed, ask to be introduced to the attorneys and be included in conversations.

Also, talk about catastrophic illness when you’re planning. No parent wants their kids burdened with picking up the pieces in the midst of a health crisis with no preparation whatsoever.

All roads lead eventually to financial preparedness. Talk about what will happen if the funds run out and care is still needed. Typically, when retired parents run out of money, they end up on Medicaid. If the kids have the ability, they pool their money to get their parents a nicer room at a Medicaid facility. They help pay for entertainment, clothes, maybe a short trip. Several of these facilities won’t kick them out once they are on Medicaid, but some will. It’s scary, because people are living longer as medical costs escalate, and not having enough money to be admitted to a facility really limits your options.

 

Coming to Peace – It Takes Time

Some advice I would have given myself on the outset of this journey is to pick the battles. Let your  parent have their choice as much as possible. They have a truth in their head — it doesn’t have to match yours. And they do need a little control.

Many times, battles between adult children and aging  parents  come down to their own frustration and vulnerability. It has nothing to do with the child. But it is difficult to embrace that truth when you are in the middle of it.

Second, use your resources. There are a lot of them out there (so many more than when I was going through the process). Look to such resources as the AARP website, local senior citizens councils, as well as large social service organizations. And other people you know who are in the same boat qualify as an excellent resource, too. You don’t have to create a formal support system. Just talk about it, and find someone with whom you can relate. When you’re in it, it sometimes feels like it will go on forever, and it’s nice to know you’re not alone.

Finally, find peace in just making things a little better. We are so uncomfortable with aging and death in this country — it does us all a disservice. I could never do enough to make my mother’s life the way I wanted it to be. I wasn’t that powerful. I had to let go and make peace with the fact that I was doing everything I could to make the end better. That’s hard to do. You can’t fully prepare yourself for it. You just have to pay attention and appreciate the moments that do remain to spend time together. And when the end comes, you enter a new chapter of adulthood. You tidy up your parents’ earthly goods, you gather up your memories, and you move forward.

 

Note:  Investment advisory services provided through TC Wealth Partners LLC, an investment adviser registered with the U.S. Securities and Exchange Commission. Trust services and retirement plan services are provided by the Trust Company of Illinois, a trust company chartered by the Illinois Department of Financial and Professional Regulation. Past performance is not indicative of future results. The content of this article is for guidance and information purposes only and is not intended to be construed as advice. Information provided is not intended to provide investment, tax or legal advice.
Nancy Bell, CFP®, CDFA™

Nancy Bell, CFP®, CDFA™

Wealth Adviser

I guide my clients and their families through the host of life transitions: Pre and Post Retirement, loss of spouse/partner through death or divorce, change in Employment and Liquidity events. I also specialize in creating investment strategies that reflect personal values and financial goals using ESG metrics. I will invest the time needed to gain a full understanding of your unique situation, set priorities and provide insights to help make those important financial decisions. My mission is to create a clear and manageable path for my clients to attain and maintain financial security.

We will provide you useful and timely information you can use to be #financiallyfearless

5 Ways Women Can Support Their Financial Health Long-Term

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5 Ways Women Can Support Their Financial Health Long-Term

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Women’s contributions to society are boundless. But even as they continue to trailblaze the labor market and find greater financial power, one critical wildcard remains—longevity.

On average,

      • Women earn less than men—about 82 cents to the dollar, according to NBC News.
      • They are more likely to take breaks from their career for child support and/or caregiving, resulting in an over 1 million dollar gap in lifetime earnings, according to Merrill Women and Money report.
      • Women are also expected to live longer than men, according to the CDC.

Looking at these facts, something doesn’t add up.

The impacts of COVID-19 on schools, childcare, and work, have caused even further setbacks for women in the workplace. Overall, women have lost a record 5.4 million jobs throughout the pandemic—1 million more than men.

It’s essential that women find long-term financial stability and wellness. But how can you plan for longevity when it seems like the odds are stacked against you?

Our TFS team would love to walk with you on this journey and help you build a plan completely tailored to your unique situation. Today, we’re going to explore avenues for women to consider longevity in their long-term financial plan.

How Does A Longer Life Expectancy Impact A Woman’s Financial Plan?

According to the CDC, the average life expectancy for women is 80.5—about 5.5 years longer than men! This data suggests that it’s rather likely that a woman will outlive her spouse. It’s also likely that women will be the primary caregivers for their spouses.

That’s roughly five extra years of living expenses, healthcare, lifestyle needs, taxes, and more, all of which could be supported by one income instead of two. Social Security benefits alone will be reduced by at least ⅓ and possibly up to ½. This presents several important considerations and potential lifestyle changes.

The impact on your lifestyle rests on several moving pieces:

      • Your investments (401k, IRA, brokerage, any inherited accounts, etc.
      • Insurance policies
      • Healthcare needs
      • Social Security
      • Pension income
      • Retirement goals
      • Spending habits
      • Estate plan

Longevity predictions should be baked into your and your spouse’s retirement plan from the start. Doing so will help each of you prepare to take care of the surviving spouse. Planning early can help mitigate financial stress and uncertainty in the future. Let’s dive into the top ways that women can prioritize their financial health throughout retirement.

1. Consider Your Health—Physical and Fiscal

Physical health is an essential component of longevity planning. Everyone’s health situation is different and should be accounted for on a case-by-case basis. Some elements that could impact your health long-term are:

      • Current health and underlying conditions
      • Family health history
      • Lifestyle habits

Staying active in retirement is an excellent way to promote your health long-term. Even so, it’s expected that 70% of people 65 or older will require long-term care at some point, and in Washington, such care doesn’t come cheap.

Most recent data revealed that the average cost of nursing homes in WA runs at $266 per day—a solid $38 higher than the national average. With the average stay in a nursing home running 28 months, you’re looking at over $210,000 in nursing home expenses alone. That’s almost $30,000 more than the average 401(k) balance at 70—$182,100.

All that, and an AARP study also found women comprised over 70% of residents in nursing homes, making long-term care a critical consideration for women.

Those numbers aren’t counting any other long-term care requirements like home caregivers before or after the nursing home stay and other medical expenses like surgery, ongoing treatments, or regular Medicare payments.

Healthcare costs and funding can easily absorb a significant amount of your nest egg, making it necessary to properly plan for. All of these numbers lead to one question:

How can you pay for it?

Tips To Prepare for Long-term Care Costs

      • Long-term care can be funded from multiple sources.
      • Long-term care insurance
      • Personal investments
      • Medicaid

There is another option for Washington residents. The state recently passed an initiative to create a publicly operated long-term care insurance program. How will the state pay for it? They’ll issue a new tax. Starting January 1, 2022, W-2 employees will be subject to a 0.58% payroll tax on all earned income. The tricky part about this tax is that there is no income cap, so all earnings for W-2 employees will be subject to this new tax.

Is there a silver lining? If you have your own long-term care insurance policy, you can opt-out of the tax and the program.

Keep in mind that everyone’s situation will be different and that these are simply general ideas to consider as you look at how long-term care could fit into your longevity plan.

Long-term care insurance can be a good way to bring flexibility and options to your care plan. We like to view it as a supplemental tool to your other retirement resources. It may not cover the full cost of your care, but it could go a long way to preserving your nest egg, future inheritances, and other retirement assets to support your desired lifestyle.

But long-term care insurance can be costly and isn’t right for everyone. Generally, our rule of thumb is that if the premiums consume more than 7% of your income, it’s too expensive.

For those with robust retirement resources, they may be able to divert some funds from their nest egg to pay for the cost of care.

While Medicare doesn’t cover the costs of long-term care, Medicaid can kick in should you qualify. In many cases, qualifying for Medicaid means dipping into nearly all remaining assets and as such might not be an option you want to rely on.

Keep in mind that states have “spousal protection” provisions that allow for a healthy spouse to retain more assets. It’s designed to help people keep enough for living expenses while also allowing their spouse to receive long-term care via Medicaid.

2. Create a Social Security Plan

Building a strategic Social Security plan with your spouse is vital for longevity planning. Social Security benefits are based on lifetime earnings and indexed for your highest 35 working years.

What if you don’t have 35 years in the workforce? The Social Security Administration inputs a “0” in your formula, which can have drastic impacts on your full benefit amount. This can affect women who may have taken time away from work to raise their children or care for a parent or relative.

For married couples, Social Security planning is critical. Our team can help you build a plan that maximizes the surviving spouse’s benefits. Survivor benefits are among the more complex elements of Social Security. Let’s take a look at the basics.

A widow or widower qualifies for survivor benefits if,
They are at least 60 years old
Have been married for more than 9 months before the time of death

There are several exceptions including if you have a disability or if you’re caring for a minor child—which allows you to apply earlier.

Survivors are eligible for 100% of their late spouse’s benefit should they claim at full retirement age. Claiming before full retirement age results in a reduced benefit. If you were receiving spousal benefits, the SSA will likely automatically switch to the survivor benefit once the death was reported.

It’s important to note that you won’t receive benefits both off of your work record and survivor benefits—the SSA will pay the higher of the two amounts.

While implications are complex and vary greatly from couple to couple, below are some general guidelines to consider.

Maximize the higher earner’s benefit.

Consider a restricted application—file for the lower benefit first, then switch to the higher at 70. While this type of application was removed from spousal benefits, it’s still a viable option for survivor benefits.
We know how critical Social Security planning is for longevity. Moving from two benefit checks to one can cause a dramatic drop in benefits—likely more than many people anticipate. It will reduce your benefit anywhere from 35-50%, and the discrepancy is worse for couples with similar earnings. Our team would like to help you make a plan for Social Security benefits throughout retirement.

3. Prioritize Your Investments

Women are strong investors. They tend to be more values and goals-based, save more, maintain realistic expectations, seek counsel when needed, and take a long-term view of their portfolio’s performance, according to a Fidelity study.

While women are steady investors, they tend to face several financial obstacles when it comes to retirement planning. A Merrill Lynch benefits report found that women enter retirement with an average of $70,000 less than men. This could present a significant challenge as they are also positioned to outlive men by about five years.

Women need to prioritize their investments to and through retirement. A strong investment plan tailored to your goals, values, risk tolerance, and more can put you in a better position to support your lifestyle longer.

Women also tend to be more risk-averse than their male counterparts. While risk is inherently personal, a certain amount of risk is necessary to sustain a 30+ year nest egg.

We’d be remiss to talk about longevity and not bring up inflation. Your portfolio needs to consider the impacts of inflation on your total nest egg. $1 today certainly won’t equal $1 10 years from now, making it critical that your portfolio is positioned to withstand the effects of inflation.

It’s all about building intentional portfolios and creating a withdrawal strategy meant to stand the test of time.

4. Account for Changes In Spending and Goals

According to Fidelity, 60% of women are concerned about outliving their retirement savings. This is a common fear among many pre-retirees. How can women prepare their finances to last well into the future?

Let’s take a look at a few ideas.

      • Avoid spontaneous overspending early in retirement
      • Know spending goals and habits
      • Create a strong cash flow plan

Consider lifestyle changes should you outlive a spouse—downsizing, moving to a retirement home or closer to family, etc.
Preserving your nest egg is all about maximizing the resources available to you. We’d love to help you build a plan that works for you.

5. Work With A Team You Trust

Planning for a long life is a beautiful, exciting, and sometimes challenging experience. It’s critical to know that you don’t have to undergo these life transitions alone. Our team at TFS is positioned to guide you through life changes and help bring confidence and clarity to your money.

Is your retirement plan built to support your life? Let’s talk about it together.

Dale Terwedo, CLU®, BFA™, CFP®, ChFC®, CPRC

Dale Terwedo, CLU®, BFA™, CFP®, ChFC®, CPRC

Certified Financial Planner and Founder, TFS Advisors

You may be wondering how your lifestyle will change as you move through retirement, and how to create a plan that reflects the lifestyle you want during this new chapter in your life. Things may feel unstable as you gear up for retirement, and we’re here to help provide clarity and understanding to your situation. Our goal is to empower you to be self-sufficient in your role as the “CFO” of your household, while also freeing you up to spend your time and energy to enhance, protect, and focus on your family, community, and interests.

We will provide you useful and timely information you can use to be #financiallyfearless

The Basics of Long-Term Care

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The Basics of Long-Term Care

HSA Heath Savings Account

New York Life Insurance Company and New York Life Insurance and Annuity Corporation

Aging is a fact of life and it comes with certain realities. While most of us probably don’t want to picture ourselves eventually needing help with daily activities, more than half of Americans turning 65 today will need some type of long-term care during their remaining years. As this type of care is not generally covered by private health insurance or Medicare, it’s important to create a plan to help protect yourself and your family from the financial and emotional impact of a possible long-term care event.

What is long-term care?

Long-term care encompasses a variety of services that assist those who can no longer perform everyday activities on their own. These activities, known as activities of daily living (ADLs), include dressing, eating, and bathing. A chronic illness or a physical impairment can lead to a need for long-term care, but it’s most commonly needed as the result of a cognitive issue, such as Alzheimer’s disease. Care services can be provided in the home, a community setting, or a facility such as a nursing home.

How much does long-term care cost?

On average, women need about 2.5 years of long-term care and men an average of 1.5 years. The national average for a home health aide is $23.27 per hour (so for example, 20 hours of care per week would cost more than $24,000 per year), while a private room in a nursing home averages $103,660 per year.

Long-term care costs can quickly add up and can have a significant impact on your retirement and the assets you’ve worked so hard to accumulate. Understanding the various long-term care planning options available is critical to helping you put a plan in place to ensure you have access to the type of care you prefer while protecting your finances.

How to plan for long-term care.

Depending on your age, health, means and needs, there are several ways to address long-term care.

Long-term care planning options:
    • Standalone or traditional long-term care insurance plans generally provide the most robust long-term care coverage based on the premiums paid, can be customized to suit your needs, and offer the option to receive care at home, in an assisted living facility, or a nursing home.
    • Linked-benefit or hybrid plans combine long-term care insurance with life insurance, providing broader coverage and greater flexibility usually at a slightly higher price point since you are insuring multiple risks.
    • Riders, such as chronic care riders on life policies, offer the most basic coverage, allowing a portion of the policy’s death benefit to be accessible should you become chronically ill.
    • You may be able to pay for long-term care out-of-pocket (self-fund) if you have significant assets. While this may be an option for some, it’s often valuable to weigh the benefits of private insurance versus self- funding as there are additional advantages that come with private insurance including care management and risk sharing, which can benefit you in the event of a catastrophic long-term care event.
    • Medicaid does cover some long-term care services (unlike Medicare, which most people are surprised to learn does not cover long-term care) but you need to spend down most of your assets to qualify and you need to receive care in an approved facility.

When to start planning for long-term care

Health and age are key factors used in determining eligibility and rates for private long-term care solutions, so it’s best to explore these options when you are in your 40s and 50s.

It’s never too soon to start planning for long-term care. The peace of mind you’ll have knowing you’re protecting your family and retirement can be an important benefit of creating a plan, even if you elect to just protect part of your risk with a smaller amount of coverage.

Roger Silvera, LUTCF®FSCP®

Roger Silvera, LUTCF®FSCP®

Agent

We will provide you useful and timely information you can use to be #financiallyfearless