Tag Archives: SENIOR LIVING

Three Ways to Stay Financially Healthy Well into Your 90s

Image result for living to old age picture

According to government statistics, the average 65-year-old American is reasonably expected to live another 19 years.  However, that’s just an average.  The Social Security administration estimates that about 25% of those 65-year-olds will live past their 90th birthday.  We were reminded of these statistics when we recently received the unfortunate notice that a long-time client had passed away.  He and his wife were both in their 90s and living independently.

People often guesstimate their own life expectancy based on the age that their parents passed.  Genetics obviously has a bearing on longevity.  Modern medicine has also become a big factor in how long we can expect to live.  Diseases that were considered fatal 50 years ago are treatable or curable today.  For many people facing retirement and the end of a paycheck, the thought of someday running out of money is their biggest fear.  And there is no question that living longer increases the risk to your financial well-being.

The elderly typically incur costs that the young do not.  As we get older, visits to the doctor – or the hospital – become more frequent.  There’s also the onset of dementia or Alzheimer’s that so many suffer from.  And, as our bodies and minds age, we may not be able to continue living independently and may have to move to a long-term care facility.

As we approach retirement, we should face these issues squarely.  Too many people refuse to face these possibilities, and instead just hope things will work out.  As a wise man once said, hope is not a plan.

So here is a three step plan to help you remain financially healthy even if you live to be 100:

  1. Create a formal retirement plan. Most Financial Planners will prepare a comprehensive retirement plan for you for a modest fee.  We recommend that you choose to work with an independent Registered Investment Advisor who is also a Certified Financial Planner™ (CFP®).  Registered Investment Advisors are individuals are fiduciaries who are legally bound to put your interests ahead of their own and work solely for their clients, not a large Wall Street firm. CFP® practitioners have had to pass a strenuous series of examinations to obtain their credentials and must complete continuing education courses in order to maintain them.
  2. Save. Save as much of your income as possible, creating a retirement nest-egg.  Some accounts may be tax exempt (Roth IRA) or tax deferred (regular IRA, 401k, etc.), but you should also try to save and invest in taxable accounts once you have reached the annual savings limit in tax advantaged accounts.
  3. Invest wisely. This means diversifying your investments to take advantage of the superior long-term returns of stocks as well as the lower risk provided by bonds.  While it’s possible to do this on your own, most people don’t have the education, training or discipline to create, monitor and periodically adjust an investment strategy that has the appropriate risk profile to last a lifetime.  We suggest finding a fee-only independent Registered Investment Advisor to manage your investments.  They will, for a modest fee, create and manage a diversified portfolio of stocks, bonds, mutual funds and/or exchange traded funds designed to meet your objectives.

The idea of saving for long retirement should not be avoided or feared.  With the proper planning and preparation, retirement gives us the opportunity to enjoy the things that we never had time for while we were working, and, can indeed be your Golden Years.

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How safe is your long-term-care policy?

A guarantee is only as good as the people who stand behind the product. It turns out that when long term care policies were introduced, insurers misjudged a number of issues.

Executives misjudged everything from how much elder care would cost to how long people would live. Result: these policies are costing insurers billions.

Today those problems are a financial headache for insurers who are losing billions. Tomorrow they could be a problem for the insured. Long-term care Insurance premiums are already rising steeply and several insurers including MetLife Inc. and Prudential Financial Inc. are no longer offering new policies.

“I was mad as hell,” says Arthur Mueller, an 83-year-old former real estate executive who lives in Dallas. Over the past 15 years, his annual Genworth premium has roughly doubled to $6,879.

As the cost of insurance has risen, the number of people buying these policies has decreased. Price is one reason. If long-term care insurance is relatively cheap, people will pay for it. As it becomes more expensive, they will explore other options for the elderly. Family members are going back to providing care and government programs cover much of the rest.

Meanwhile, seniors who have long-term care policies generally continue to pay the premiums, having invested years in these policies and hope that the coverage will be there when they need it.

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