Elder Planning

I represent clients who need Elder Planning which is the process of understanding issues, creating a plan, and implementing a strategy, which will improve your quality of life during retirement. Right now, you are making retirement decisions. Your current diet and exercise habits factor into your future physical and mental well being. Your savings, investing, and spending choices determine your financial security in retirement. However, the best lifestyle and financial planning do not ensure a healthy and secure retirement. Careful attention must also be given to uncontrollable factors such as health and entitlements.

For example, some health conditions including strokes and heart attacks have immediate impact while other health conditions such as Parkinson’s, dementia, and cancer have longer term ramifications. Similarly, failing to consider the impending reduction in benefits can be detrimental. Entitlement programs such as Social Security and Medicare are making drastic changes which will result in the reduction of recipient benefits. Health care costs continue to rise and Medicare continues to cut reimbursements to medical care providers. These providers will not be able to absorb the additional costs imposed by Medicare and will either transfer the additional expense to retirees or limit the number of Medicare patients. Therefore, you need to set aside funds to cover the costs of decreased benefits and increased health care costs. A fulfilling and financially secure retirement depends on active planning and management of your lifestyle and finances as well as being able to plan for changes in your health and the inevitable reduction in entitlement benefits from Medicare and Social Security.

A comprehensive elder plan factors decisions made by you and variables which are out of your control. Based upon an analysis of this information, an elder plan is created which addresses your current and future financial, legal, health care, and daily care needs. Failure to plan properly may not only diminish your quality of life, but could also adversely affect the quality of life of your children and other caregivers should they become involved with caring and making decisions for you. The goal of elder planning is to understand the issues then create a plan(s) which when properly implemented positively affects your quality of life and life of others around you.

Identifying the Stages of Retirement

There are at least four stages of retirement. The first stage is the period of time when you are working, raising a family, accumulating wealth, contributing to Social Security and Medicare, and planning for retirement. The second stage is early retirement. This is a time when you cease working and begin to live off your savings and other benefits. This period is marked with high activity and independence. The third stage is middle retirement and is a period of time when you may not be as active as you once were in the second stage of retirement but you continue to live independently. The fourth stage is late retirement and begins when a triggering event occurs in which a medical or mental limitation requires the individual or couple to seek assistance with daily, medical, financial and legal needs. It is at this time that the late retirement stage of your elder plan is implemented.

Identifying the Issues of Late Retirement

Numerous issues arise when a triggering event occurs in which either an elderly individual, elderly couple, child, caregiver, and/or family advisor become aware of a medical or mental limitation requiring the individual or couple to seek assistance with daily, medical, financial and legal needs. Take for example a child who is planning to return a parent home after an extended stay in rehabilitation. Three issues need to be addressed prior to the parent returning home. The first issue is how to oversee the daily well being and care of the parent. What is the parent’s schedule? Who will help with bathing, toileting, feeding, dressing, and transporting within and outside the home? Is parent’s house accessible for a walker or wheelchair?

The second issue is how to implement a health care plan for the parent. When and where is your parent’s next doctor’s appointment? Does your parent need physical therapy? What are the parents daily prescriptions? Does the parent need prescriptions filled. If so, what is parent’s prescription drug plan and what is covered? Are the parent’s upcoming treatments covered by Medicare and does the parent have supplemental medical insurance?

The third issue is whether or not you need to manage the parent’s legal and financial matters and whether or not you have the authority to do so. Where are the parent’s records kept? Does the parent have any legal instruments such as a will or durable power of attorney? Where does the parent keep investment and savings documents? What is the proper allocation of assets in the parent’s portfolio? What are the parent’s monthly income and expenses? What if a parent needs more monthly income to cover short term needs? Which assets should be saved and which should be used for monthly expenses? Is the child authorized to make financial and legal changes for the parent?

Choosing a Professional

Understanding any one of these issues is difficult and implementing a plan for the well being of a parent is not only time consuming but also may be outside the child’s expertise. A nurse may understand the medical needs of a parent but may not fully understand financial matters. Conversely, an accountant may understand the parent’s financial planning but not have the expertise to handle medical issues and daily needs. Seldom does a child or caregiver have command all three areas much less the time and energy to handle all issues relating to a parent in the late stage of retirement.

With so much at stake, you probably need expert advice and assistance. However, finding professional advice and assistance from a social worker, case worker, financial planner, insurance agent, or attorney can be difficult and choosing the wrong professional can be time consuming and expensive. Understanding an elder issue prior to meeting with a professional will save you time and money. It also allows the professional to focus on matters within the scope of the professional’s expertise. Identifying professionals in advance of a triggering event reduces stress and confusion when a triggering event occurs. By being proactive and knowledgeable, you and your professional will be able to create a plan or strategy to achieve your elder planning goals.

Updating an Elder Plan for Each Stage of Retirement

Not only should you have a plan for each stage of retirement, but you must periodically update your plan. Plans will change according to changing variables, needs, and aspirations and should be updated frequently. Take for example issues associated with a durable power of attorney. This is a document that allows a person, the “principal”, to name a loved one, family friend, or agent, the “attorney in fact”, to act in an official capacity of the principal during a period of incapacity or unavailability. It is not uncommon for a durable power of attorney to be executed twenty years prior to the first time the principal needs to use it. Due to a long lapse of time, your “attorney in fact” may be unwilling, unavailable, and unable to perform the duties under the durable power of attorney. Should this occur when you are incapacitated or unavailable, your durable power of attorney will be ineffective. Part of any elder plan should include periodic review of medical, legal, financial documents and periodic contact with fiduciaries and agents to verify if they are willing and able to carry out the tasks you have assigned to them.

Multi-Tasking Planning

A final consideration is that you may be working on your elder plan at the same time you are working on an elder plan of a parent and loved one. It is common for children in their 50’s and 60’s to assist with a plan for parents in their mid 70’s and 80’s. You inevitably will be assuming numerous roles both as principal and fiduciary. You could be a “principal” of a durable power of attorney, and be an “attorney in fact” for a spouse, parent, child, or friend. Proper elder planning for yourself, spouse, parent, friend or child is a daunting and time consuming task; however, a well thought out elder plan is certain to make you aware of potential and probable issues and allows you the opportunity to avoid an issue or resolve an issue when it arises. The goal of elder planning is to understand the issues then create a plan(s) which when properly implemented positively affects your quality of life and life of others around you.