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What about Mom?

Ever worry like crazy about something, but don’t want to talk about it?  The topic of aging and long-term care seems to fall into this category. We’re all suffering from a terminal disease, and that disease is called time. Rarely does a week go by that someone doesn’t mention to me about how worried they […]

Ever worry like crazy about something, but don’t want to talk about it?  The topic of aging and long-term care seems to fall into this category. We’re all suffering from a terminal disease, and that disease is called time. Rarely does a week go by that someone doesn’t mention to me about how worried they are about their parents, grandparents or themselves. What’s going to happen when they are no longer able to care for themselves? Who will care for them? Where will they be cared for? How will they be able to pay for care?

These are important and difficult questions.  I realized that my clients had nowhere to go to get these answers, so I decided to better educate myself on the topic. I wasn’t looking forward to it, because I thought it was going depress me. I have good news!!  I feel much better now.

This is not your parents’ long-term care.  Options in this area have made significant progress since my parents were in this situation. Ten thousand Baby Boomers turn 65 each day.  Baby Boomers have changed the world as they’ve gone through each phase of their lives. Now they’re working on improving what retirement and aging look like. As with everything else – they want options!  So now, we’re beginning to have great options for aging and long-term care. “Nursing homes” are moving to the back, while an array of better options are moving forward.

What are the options?

  • Aging in place – there’s no place like home. This is a good option for people who are generally in good health. A major consideration is the current floor plan, and if it needs to be changed. Check out universal design for suggestions on preparing the home. There has also been a large increase in the types of services available to come to your home, including meals, transportation, and nursing care.
  • 55+ independent living communities – best suited for active, healthy, 55+ adults looking for a hassle-free lifestyle. There are options for every budget. They usually provide limited health services.
  • Continuing Care Retirement Communities (CCRCs) – this is a combination of living accommodations and a continuum of health care services for life. Independent living, Assisted living, and Skilled nursing is usually in one location. There are a wide variety of price ranges. Most provide a wide range of activities for active, healthy adults. They will help you when/if you become ill, but that is not the vast majority of residents.
  • Assisted living facilities – this is for individuals who need help with some activities of daily living, such as bathing or dressing. Many have individual apartments and activities, including things like a movie theatre.
  • Skilled nursing facilities – this is the closest to what we think of as a nursing home. They provide 24-hour skilled nursing services for the seriously ill or advanced dementia.

 

What do they cost?

The costs are vastly different based on the option, and even within each category. The good news is that there are options for most budgets. You will want to take your time and get a clear understanding of what services are included and what are extra.  A few questions to ask:

  • Is there a down payment? Is it refundable?
  • What does the monthly fee include? Food? Utilities? Transportation? Activities? Health care services?
  • Do the monthly fees increase each year? Do they increase with additional care?
  • What if I run out of money? Is there a benevolence fund? Do they take Medicaid?
  • Private pay – maybe use the value of your home?

 

How do you pay for them?

I suggest you talk to your financial advisor/planner. You can use your home, your investment assets and your retirement assets. You can also use a long-term care policy as additional care is needed. There are many more long-term care insurance options today. Your advisor should be able to educate you on all of these options.  Many policies now allow for a death benefit, or for you to change your mind and get all or most of your money back.

The bottom line: Options, options and options – from the type of places, to the services offered, to the cost and the availability of insurance.  At some point, we will all have to face this for ourselves or a loved one.  Start educating yourself today!

Any opinions are those of Mary Evans and not necessarily those of Raymond James.  Expressions of opinion are as of September 6, 2019, and are subject to change without notice.  There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct.  Investing involves risk, and you may incur a profit or loss regardless of strategy selected.

Mary Evans, CERTIFIED FINANCIAL PLANNERTM, 1134 Pennsylvania Avenue, Emmaus, PA 18049.  610-421-8664

Securities offered through Raymond James Financial Services, Inc.  Member FINRA/SIPC.  Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.  Evans Wealth Strategies is not a registered broker-dealer and is independent of Raymond James Financial Services.

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Health Is Your True Wealth

Why would someone who does Financial Planning be so concerned with their client’s health?  Beyond the obvious reason, that we deeply care about our clients and want them to live a long and healthy life, health care costs can have a dramatic effect on a person’s finances.  They present a particular challenge for retirees.   Not […]

Why would someone who does Financial Planning be so concerned with their client’s health?  Beyond the obvious reason, that we deeply care about our clients and want them to live a long and healthy life, health care costs can have a dramatic effect on a person’s finances.  They present a particular challenge for retirees.   Not retiring yet?  This still applies to you, since the more time you have to prepare, the better off you’ll be!

Missed Opportunities and “Fun Facts”

Young Professionals

  • Not having a power of attorney, medical directives, and a will. Should something happen to you, even if temporary, you’ll want someone to be able to take care of your expenses, and receive the information on your illness.  If married, perhaps your spouse.  If single, maybe one of your parents.
  • If there are people dependent on your income, you need to have your income insured.  You’ll want it to be a multiple of your annual salary.  Term insurance is the most cost effective solution for this purpose.
  • Take advantage of your employer offered benefits such as disability, long term care, and additional life insurance.  They’re usually cost effective but may not transfer with you if you leave.
  • If your health plan offers an HSA (health savings account), this may be very beneficial for you, particularly if you’re in reasonably good health.  Your contributions are tax deductible, and if you don’t use the money before you retire, you can withdraw from it like an IRA.

Pre-Retirees

  • Don’t wait until you retire to think about getting long-term-care insurance.  The longer you wait, the more expensive it may be, and as we age, some health problems start to arrive, and we may no longer be eligible to purchase this coverage.
  • Life insurance that was purchased when we were younger may no longer be needed.  In many cases, the premiums rise significantly, and those funds may be put to better use for long term care insurance.
  • Educate yourself on all of the rules of COBRA.  This is the law that allows you to purchase medical insurance from an employer under certain circumstances.  These may include a layoff, divorce, death, or a child being over the age of 26.
  • Understand the difference between Medicare and Medicaid.  One of the main differences is that if your income is at poverty level, Medicaid could pay for your long-term care needs.  Know all of your options before there is a medical emergency.

Retirees

  • Out of pocket healthcare cost for a 65-year-old couple is $259,000 to $395,000.  This does not include long-term care costs over 100 days, such as assisted living or nursing home care.  This also assumes you’re on Medicare. 1
  • The Medicare Part B premium is based on your retirement income.  Keep in mind that withdrawals from your IRA or 401K increase your taxable income.
  • Medicare covers about 60% of retiree healthcare costs.  The consumer is still responsible for co-pays, premiums, and deductibles.  Also, Medicare doesn’t cover dental, vision, hearing or long-term care costs. 2
  • Healthcare has historically increased at a higher inflation rate than most other expenses, so you should plan for that. 3
  • A person at age 65 has a 70% chance of needing some type of long-term care during retirement. 4
  • If you are still working or covered by a group plan past the age of 65, you can delay paying for Medicare part B, but you will need to maintain continuous coverage to avoid a penalty.

I would love to tell you that there are easy solutions to this challenge, but there aren’t.  This doesn’t mean there’s nothing you can do. Here are some steps to take:
If you haven’t already, talk with your financial advisor to:

  • Estimate your health care costs
  • Develop a retirement income plan to help cover the health care costs
  • Evaluate long-term care funding options
  • Revisit your plan regularly, and make necessary changes

If you have a financial advisor that does full financial planning, they can help you with all of this.  If not, you can do the research on your own.   Some useful sites for information would be:

  • Official Medicare Site
    www.Medicare.gov
  • Employee Benefit Research Institute
    www.ebri.org
  • Affordable Care Act
    www.healthcare.gov
  • Retirement Planning Calculator find one at
    www.raymondjames.com/wealth-management

As a word of caution, don’t spend your health to make money, and then spend your money to try to buy your health back.

FOOTNOTES:
1. Savings Needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Out-of-Pocket Drug Expenses for Retirement at Age 65 in 2015. Assuming a 90% chance of having enough savings. “Amount of Savings Needed for Health Expenses for People Eligible for Medicare: Unlike the Last Few Years, the News Is Not Good,” by Paul Fronstin, Dallas Salisbury, and Jack VanDerhei, EBRI. October 2015.
2. Employee Benefit Research Institute
3. Bureau of Labor Statistics, June 16, 2016. The annual inflation rate for the United States was 1.0% through May 2016.  PwC Health Research Institute, “Behind the Numbers,” 2016.
4. “Medicare & You 2016,” Centers for Medicare & Medicaid Services.
Mary Evans, CERTIFIED FINANCIAL PLANNER™
Evans Wealth Strategies 902 Chestnut Street Emmaus, PA 18049
“Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Evans Wealth Strategies is Independent from Raymond James Financial Services.”
The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Mary Evans and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investments mentioned may not be suitable for all investors. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. These policies have exclusions and/or limitations. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

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Write a Love Letter

As a Certified Financial Planner™, I’m often asked what I actually do for my clients. Up until recently my answer was a bit long and cumbersome. Then one day after speaking with a few of my clients, it dawned on me that what I really do is help clients write love letters. Let me show […]

As a Certified Financial Planner™, I’m often asked what I actually do for my clients. Up until recently my answer was a bit long and cumbersome. Then one day after speaking with a few of my clients, it dawned on me that what I really do is help clients write love letters. Let me show you two very different examples of these love letters.

Dear Kids,

I know how heartbroken you are over the passing of your Dad, as am I. He was a wonderful man and we’ll always miss him. I also know how worried you are about me.
You don’t have to worry about me. Your Dad and I, although hoping this would never happen, have planned for this. I can keep the house as long as I would like and will have no problem paying my bills. What I need from you is your love, affection and the ability to spoil my grandkids.

All my love,
Mom

OR, the second paragraph, could sound like this:

I just don’t know what I’m going to do. Your dad and I never took the time to plan for this. I’m sure I’ll have to sell the house and I don’t think I have enough to pay all my bills. It’s with such great sadness, that I’m going to have to ask you for help.  I’m so sorry.  I never thought it would come to this.

All my love,
Mom

A good Certified Financial Planner™ helps people write the first letter, so they never have to write the second ending. Some good things a comprehensive plan should answer are:

  • Is there a comprehensive list of questions that focus on your long term and short term goals?
  • Does the plan involve a list of scenarios, including such things as an early death or disability? A Job layoff?
  • Does the investment performance use a Monte Carlo simulation and not just an average return?
  • Does it include scenarios for potential road blocks, such as increased/decreased inflation, changes to social security, pensions and other retiree benefits?
  • Does it include the impact of rising medical expenses and long term care?
  • Does it lay out your cash flow year by year until you end retirement?
  • Is it being updated at least once a year and also when there are any major changes in your life?

This is just a small sampling of the questions your plan should be answering.

Although a good comprehensive plan will analyze if you’re holding the appropriate investment to meet your goals, it is not the beginning. The plan should be first and the investments second. Then your planner will make sure that your investments are designed to help reach your goals.

The burden for retirement has shifted from the employer, the union and the government to the employee. When pensions, social security and retiree health care handled most of a retiree’s expenses, financial planning wasn’t as important as it today. Putting all of the emphasis on the investments is like building a house without any architectural plans. So find yourself a good CFP who focuses on building a custom plan first.

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