NavStar Currents

A Very Difficult Choice

Is living a long time in your future?

You hope so, don't you. It's likely that you will, in fact statistics show that of a married couple over 65, the odds are that at least one of them (probably the wife) will live to be at least 90. What would that scenario do to your legacy?

What a silly question, you might say. But just exactly IS your legacy? It simply means how you are remembered by those who survive you. Most would like to think that when they're gone those that are left behind will remember them fondly. We'd like to know that our family's financial needs are taken care of. That's the reason why you use the services of financial professionals, isn't it? Then why is it that so few advisors address the subject of long-term care?

The typical scenario goes something like this: the husband has some type of medical event, such as a stroke or a diagnosis of Alzheimers disease, and now the wife has to make a choice.

Does she use the money that they have set aside to take care of her husband, the money that she needs to live the kind of lifestyle they had always planned for, or does she take care of him herself?

Most of the time she will choose to do it herself. She will then keep this up until her own health begins to suffer, and then she'll begin spending down their assets because she simply can't do it alone anymore. If this goes on long enough both her health and lifestyle will be drastically changed.

For an advisor to neglect this subject is professional malpractice!

Risk Tolerance and Common Sense

My experience as a financial planner has brought me into contact with almost every type of personality. When it comes to the subject of risk tolerance, folks have many different ways of evaluating what they think risk exactly is. Some people don't consider putting their entire portfolio into third-world currencies risky, while others wouldn't go near Wall Street with a dime. If you've been around this blog long enough you've heard my rants on investment risk and not taking more than you need to in order to achieve your desired results. That's why I always attempt to quantify for my clients exactly how much risk they are being exposed to.

There seems to be one subject that is greatly ignored in the financial plans of many people. That subject is how a long term care event will affect your portfolio, and indeed, even your very lifestyle, as well as your family's. When that bubble breaks loose in your bloodstream it can very well rock everyone's world that you are close to. How is it that we give so much thought to the risk in our portfolio, which is internal, and so little to what is perhaps a much greater risk, which is external, and much more likely to happen? In my opinion, this subject needs to be discussed by any reputable planner with his client. Anything else, in my opinion, is gross negligence.

Are you a reasonable person?

What a question, huh? Of course you are!

Why would I even ask such a question of a reader? "After all, isn't the fact that I faithfully read this blog, and am nearly physically ill when I miss one, proof enough that I'm a reasonable person?", you might say. Point taken.

Well then, this blog is for you! The subject is your family....or more specifically, your family and how your need for long term care might affect them, and their lifestyle. Is that important to you?

If so, read on.

A Very Difficult Choice

Is living a long time in your future?

You hope so, don't you. It's likely that you will, in fact statistics show that of a married couple over 65, the odds are that at least one of them (probably the wife) will live to be at least 90. What would that scenario do to your legacy?

What a silly question, you might say. But just exactly IS your legacy? It simply means how you are remembered by those who survive you. Most would like to think that when they're gone those that are left behind will remember them fondly. We'd like to know that our family's financial needs are taken care of. That's the reason why you use the services of financial professionals, isn't it? Then why is it that so few advisors address the subject of long-term care?

The typical scenario goes something like this: the husband has some type of medical event, such as a stroke or a diagnosis of Alzheimers disease, and now the wife has to make a choice.

Does she use the money that they have set aside to take care of her husband, the money that she needs to live the kind of lifestyle they had always planned for, or does she take care of him herself?

Most of the time she will choose to do it herself. She will then keep this up until her own health begins to suffer, and then she'll begin spending down their assets because she simply can't do it alone anymore. If this goes on long enough both her health and lifestyle will be drastically changed.

For an advisor to neglect this subject is professional malpractice!

Risk Tolerance and Common Sense

My experience as a financial planner has brought me into contact with almost every type of personality. When it comes to the subject of risk tolerance, folks have many different ways of evaluating what they think risk exactly is. Some people don't consider putting their entire portfolio into third-world currencies risky, while others wouldn't go near Wall Street with a dime. If you've been around this blog long enough you've heard my rants on investment risk and not taking more than you need to in order to achieve your desired results. That's why I always attempt to quantify for my clients exactly how much risk they are being exposed to.

There seems to be one subject that is greatly ignored in the financial plans of many people. That subject is how a long term care event will affect your portfolio, and indeed, even your very lifestyle, as well as your family's. When that bubble breaks loose in your bloodstream it can very well rock everyone's world that you are close to. How is it that we give so much thought to the risk in our portfolio, which is internal, and so little to what is perhaps a much greater risk, which is external, and much more likely to happen? In my opinion, this subject needs to be discussed by any reputable planner with his client. Anything else, in my opinion, is gross negligence.

An Aging Society

The population of our country is approaching an "aging" crescendo. In the late 40's and early 50's those who had fought in and survived the great second world war came home to build the greatest economic powerhouse the world had ever seen. They also had lots of babies. I'm one of those children, born in 1956, and belong to a group affectionately referred to as "baby boomers."

We boomers have enjoyed an extremely privileged existence. Our parents charged the beaches of Normandy facing certain death. My generation demands free healthcare and insulation from having our feelings hurt. What a difference a few decades make. 

One thing we cannot change, however, is the fact that we're getting older. My knees remind me every day. With those birthdays come declining health, and so we've come to a crossroads: my desire for a comfortable retirement with no financial worries versus the enormous expenses of taking care of my custodial care as medical advances keep my life expectancy ever increasing. Are these two things incompatible?

The Final Option

In previous posts (Funding Long-Term Care ) we have been discussing the ways to pay for extensive palliative care...i.e. that is, when the patient is no longer improving, but is slowly declining, and is losing functionality, such as the ability to feed one's self, to use the toilet, bathing, etc. These things in themselves are not immediately life threatening, as long as assistance is provided by someone else. This level of care is quite expensive, but the bills must be paid in order for the care to continue. There are three ways to pay for this type of care:

1. Long-term care insurance

2. Self funding

3. Government assistance (Medicaid)

In the past two posts we've considered options 1 and 2. Both of these alternatives require some level of available funds, either in the ability to afford LTC insurance premiums, or to shoulder the costs yourself.

The third option is the last-resort scenario; the use of government assistance in the form of Medicaid.

An Offensive Proposition!

A number of years ago I was working with a gentleman in setting up a plan for his long-term care. The plan included a comprehensive LTC policy that would cover his expenses no matter where the care was received, either at home or in an institution. One of my suggestions is to always talk this over with your family before making such a purchase, if for no other reason than to let the kids know that you have the coverage.

Well, in this particular case, when the Dad told his son what he was doing, the young man threw a fit. The client contacted me and said that he needed to cancel the coverage. His words to me were, "my son was really upset that I had gotten that policy. He told me to get rid of it.....that HE would take care of me!" In they eyes of this fellow, the purchase of insurance implied that he wasn't willing to take care of his Dad. Of course that's ridiculous. LTC insurance isn't meant to replace the family as caregivers, it's to help them do a better job of caregiving, and for a longer period of time.

Being a full-time caregiver is very demanding, and you may not be healthy enough yourself to do it. When that happens, outside caregivers will have to be acquired, which can be very expensive. As I mentioned in a previous post ( see LTC Funding Options )  when it comes to paying for palliative care there are basically three options:

1. Long-term care insurance

2. Self funding

3. Government assistance (Medicaid)

In this post we'll look at number two: self funding.

In the blink of an eye

David and his wife Shirley were enjoying their lives together. They'd been married for 53 years, had 3 children and 6 grandchildren, and were active in their church and community. Life was very good, and they had both been blessed beyond measure.

One evening as they were watching TV David noticed that his wife got up to go to the restroom. This wasn't unusual, but something was different this time. She returned, having not found the bathroom, and she seemed quite disoriented. David asked her what was wrong, and what happened next frightened him terribly. When she answered him it came out as gibberish. She couldn't speak! He also noticed that she had wet herself, and the frightened look on her face told him that she too, knew that something was wrong. As quickly as he could he dialed 911.

The prognosis wasn't good. Shirley had had a stroke, which left her unable to walk, there was no mobility of any kind on her left side, there were some cognitive issues, and she couldn't communicate. After several days in the hospital, and two weeks in a rehab unit, he took his beloved wife home.

But his normal life was gone. At first David tried as best he could to take care of her, but his strength and stamina were not up to the task. His children flew in to help, but after a couple of weeks they all had to return home, which wasn't near their parents. He was exhausted, discouraged, and depressed.

What could David do?

He began to bring in home health caregivers. They cost $20 an hour and Shirley needed care around the clock. He was able to keep this up for almost a year, but eventually David knew he'd have to turn Shirley over to someone who could really take care of her. She would have to go to an institution.

In just a few short minutes that night, everything had changed for David and Shirley. Their financial picture had changed too, and not for the better. David was truly worried now about running out of money. * 

Are you a reasonable person?

What a question, huh? Of course you are!

Why would I even ask such a question of a reader? "After all, isn't the fact that I faithfully read this blog, and am nearly physically ill when I miss one, proof enough that I'm a reasonable person?", you might say. Point taken.

Well then, this blog is for you! The subject is your family....or more specifically, your family and how your need for long term care might affect them, and their lifestyle. Is that important to you?

If so, read on.