Consider for a moment the construction of a typical financial plan for a married couple. We financial planners assemble a great deal of information and documents listing assets, sources of income, future expenses, and risk tolerance. Once gathered, this information is entered into a software program along with several variables. In order to project future retirement income, we assume rates of return on investment, future Social Security and pension benefits, inflation, taxes, and other input specific to the client (i.e., future inheritances, large expenses, etc.).
Suppose that we are right on the money with regard to financial assumptions but one of the two individuals needs unforeseen in-home care or nursing care. An unexpected drain of $56,000 per year, after tax, will cause our picture-perfect financial plan to go up in flames. Even if the investment returns were underestimated, the plan becomes worthless.
In 25 years in this profession, I have never seen nor heard of a financial plan or process that includes a client’s current and future health as a variable, yet it is the one thing capable of wrecking the best of plans.
This book was created based on a six-step process to help smooth the aging process, with less stress and hopefully less financial drain. More specifically, it will address:
• how to anticipate the consequences of having an older family member;
• how to avoid a court-appointed guardianship and retain control of your family member's future;
• how to safeguard assets against devastation from long-term care expenses;
• which documents an older person must have;
• how to evaluate the living options for a senior citizen who needs some level of long-term care;
• how to prevent disputes among siblings during a crisis;
• how to stay independent longer and “age in place;”
• what “living trusts” are and why they may or may not be right for you;
• what Medicaid is and how it differs from Medicare.
The financial, emotional, and legal issues are inexorably intertwined when dealing with ailing relatives. For this reason, I propose a paradigm shift involving two processes that are woven into my six-step plan:
• Plan ahead and anticipate instead of ignoring the inevitable.
• Create a practical, workable plan involving all family members and advisors.
Do you know what would happen if you had a stroke? Where are your important documents and insurance policies kept? Other than your doctor, who knows which drugs you are taking? Who is your primary “go-to person”? Where would you live if you could not stay in your home? Are your adult children all in agreement on these issues?
The last thing in the world most senior citizens want is to be financially dependent on their children. The generally poor conditions of Medicaid-sponsored nursing homes are reason enough for family members to do everything in their power to prevent their loved one from that fate.
Medicaid, which is available only to certain low-income individuals and families who fit into an eligibility group recognized by federal and state law, covers 50 percent of all nursing-home beds in the United States. Based on that statistic, it can be deduced that 50 percent of all nursing-home residents are financially destitute and have no other options.
Most of those who wind up in a Medicaid facility go where they can find a bed, not necessarily near loved ones and sometimes not even in the same state. Growing older has its moments. Those of us who are called “baby boomers” will have to look after our parents, pay for college, and plan our retirement all at the same time. This book provides a roadmap for both adult children and senior citizens to use in planning for an uncertain future. The roadmap was developed based on my own experiences and hours of discussions with social workers, attorneys, and physicians. For an older person, financial, emotional, and legal issues are intertwined. How many people, if they were being completely honest, could answer the following questions in a definitive fashion?
• Who is going to take care of you in your later years?
• How long will your money last if you need long-term care?
• What if your "go-to person" lives out of state?
• Are all your legal documents up to date and easy to locate?
• Who knows what drugs you’re taking and the names of all your physicians?
• Would you have to move out of your house if you have an impairment?
The six-step plan, outlined on other pages answers these questions and many more, but most importantly it can ensure that your entire family is on the same page — before a crisis hits. These six steps together will provide an assessment of your particular situation and can be taken in any order, as long as they all are executed.
For more information contact David Disraeli at 512-464-1110 or david@pcfo.net