Lois has a long history of money mismanagement, but she’s gotten much better about saving money as she’s gotten older. When her mother died, Lois inherited a modest sum, and was quite disciplined with the money. She didn’t buy the shoes she wanted or take the trip she desired. She wasn’t going to do those things until she was confident she had enough saved where she didn’t ever need to borrow from her children. She may have been careless with money in the past, but vowed that she would never be a burden on anyone, especially when it came to money.
Planning So You Don’t Have to Ask for Financial Help from Kids
Lengthy life spans have played a role in increasing the odds that many seniors will deplete their savings, face debilitating health problems, and need to turn to their children for financial help or caregiving. It’s true that children should honor their mothers and fathers. But this doesn’t mean they should do so at their own financial peril. And, similar to Lois, most parents don’t want to become a burden to their children.
As a senior, it’s important to plan ahead to get your finances and health in the best shape possible. Some of the things seniors should consider and plan for include:
Unanticipated health care costs. According to the 2018 Fidelity Retiree Health Care Cost Estimate, the average person retiring in 2018 at age 65 will need to pay around $5,000 per year in health care premiums and out-of-pocket health expenses. This amount does NOT include long-term care expenses, which are not covered at all by Medicare, and this number doesn’t apply to people using Medicare Advantage health plans. It’s entirely possible that the savings many think would allow them to travel or to at least pay all the bills could be gobbled up by medical expenses. As you near retirement, you will have numerous major decisions to make, including when to retire, when to claim Social Security, how to pay health care expenses and long-term care expenses, and how to generate enough cash flow from your retirement assets to have a comfortable retirement. These decisions are of course all interconnected and can make a drastic difference in your retirement lifestyle.
As you start thinking about retirement, you owe it to yourself and your family to do comprehensive retirement planning, which involves working with an experienced elder law attorney and retirement planner, such as myself, to learn about and understand all the available planning options.
• Long-term care planning. When it comes to retirement and aging, you must consider the strong likelihood that at some point you will need to receive long-term care, weather that involve home healthcare, living in an assisted-living facility or nursing home, or all three. The costs of such care are catastrophic for most families. For example, home healthcare can cost $50,000 or more per year; assisted-living can run close to $100,000 per year or more; and nursing home care can run as high as $150,000 per year or more in the DC Metro Area. If you’re like most people, you don’t want your kids to have to shoulder any of these expenses because this obviously puts a huge financial burden on your children. The good news is that with proper legal and financial retirement planning, there are ways to prepare, such as developing strategies for protecting your assets and obtaining valuable government entitlements (such as Medicaid and Veterans aid and attendance benefits) through our Living Trust Plus Asset Protection Trust or Life Care Planning and Medicaid Asset Protection.
• Self-care. Research is now telling us that longevity is over 70% lifestyle.
Therefore, it’s important to integrate self-care into a retirement plan. Spending money on preventive health routines to take care of yourself now can help you avoid significant health problems that lead to even costlier expenses later on.
One Situation that has a Hefty Financial Impact on Adult Children (but it’s often a labor of love)
Did you know that other than a spouse, the most common people to be tasked with caring for a senior loved one are adult children? Currently, 10 million adult children over age 50 are acting as a caregiver for their aging parent(s), a number that equals a quarter of all Baby Boomers.
Whether or not you want to be taken care of by your children, in some situations, there isn’t much choice. When it comes to caregiving, seniors aren’t taking money from their adult children directly, but there is a hefty financial and personal impact on the adult children, including lost income, reduced hours at work, lost pension earnings and Social Security benefits, lost vacation time, and extra expenses out of their own pockets.
It’s a good idea for parents and adult children to be proactive and have a frank discussion about their long-term living situation and their potential care needs down the road.
Call us to Plan for Retirement and Long-Term Care
Whether your retirement is coming up soon or many years away, it is important to save as much as you can (so you don’t have to ask for financial assistance from your adult children) with effective retirement planning and long-term care financial planning, especially with a recession possible in the next year or two. Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my company Lifecare Financial Services, LLC (in business since 2006) and I am highly knowledgeable about using fixed indexed annuities to provide safe retirement income, while also helping to pay for long-term care using hybrid insurance policies and asset-based policies that combine life insurance or an annuity product with a long-term care benefit, and using tax-free money (money in your IRA, 401(k), 403(b), or Thrift Savings Plan) to help pay for long-term care.
Here at the Farr Law Firm and Lifecare Financial Services, we stay on top of the strategies you need to put in place to keep yourself and your family protected. If you’ve not done Retirement Planning, Estate Planning, or Long-Term Care Planning (or had your plan reviewed in the past 5 years – or last 3 years if you’re over 65), please call us to make an appointment for a consultation:
Retirement Planning Fairfax: 703-691-1888
Retirement Planning Fredericksburg: 540-479-1435
Retirement Planning Rockville: 301-519-8041
Retirement Planning Washington, D.C.: 202-587-2797
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About Evan H Farr, CELA, CAP
