Finances can be tough to manage in old age when there are so many unknowns. Running out of money is actually on the list of the Top 10 Senior Fears. Even those who diligently saved can have unexpected expenses. This blog will help you or your loved ones with financial solutions for a variety of situations including:
Five Tips for Age-proofing Your Finances
5 Things to do Before Filing a Claim for Long-term Care Benefits
Can Life Insurance Help Pay For Longterm Senior Care?
Five Tips for Age-Proofing Your Finances in West Seattle
The AARP magazine reports on a recent study by Michael Finke and Sandra Huston of Texas Tech University and John Howe of the University of Missouri-Columbia, that indicates financial acuity scores drop by about one percentage point every year after age 60. Even worse, according to the study, as we grow older the gap between our perceived and actual financial decision-making proficiency widens.
If you want to test your financial acuity, here is a short quiz created by the study’s authors to measure basic financial skills and understanding of financial terms.
Be Mindful Against Financial Predators
That gap between actual and perceived financial skills can make older Americans prime targets for financial predators, and also slightly more at-risk to make run-of-the-mill financial blunders.
Telemarketers target senior citizens relying on the potential that their memory may not be as good as it used to be or they may not have easy access to a computer. Telemarketing scams involve offers of free prizes, low or no-cost health care products, or inexpensive vacations.
Another common way people try to scam seniors is through funeral and cemetery fraud. Becoming an informed consumer is important to protect your assets and avoid making the wrong purchases.
Finally, be mindful of your loved ones finance and monitor them to protect against fraud. If you suspect that your parent has become more forgetful, has made some questionable financial decisions or unwise purchases, or seems overwhelmed by on-going daily tasks such paying the bills, it’s probably time to take a closer look.
Related: Be Sure to Steer Clear of These 7 Latest Senior Scams
Keep on Top of Senior Budgeting
But according to the study’s authors, declining financial skills don’t have to lead to damaging decisions. Here are five tips to help you stay the course.
- Get moving. Many studies have found a link between physical exercise and improved cognitive functioning. Scientists say, the more you move, the better you think.
- Buy a bigger safety net. Finke, one of the authors of the study, suggests a single-premium immediate annuity. There are various payout options, but the basic idea is that you make an upfront payment to ensure that you will have a monthly income for the rest of your life.
- Get help. Keeping it all in your head isn’t the best way to make complicated financial decisions. Though it can be hard to talk with family members or even close friends about financial matters, it’s important to talk with someone. A financial planner might be a great resource and sounding board.
- Consider a trust. This might be a bridge too far, but the authors suggest older Americans consider a revocable living trust with an incapacity clause which would give control of your assets to a trustee in the event that you make a disastrous financial decision such as giving all of your savings to an unfamiliar charity.
- Keep it simple. Complicated financial portfolios might be fine when you are young and can afford to take risks, but as we age, we need the stability that comes with straightforward, mostly predictable financial plans. A low-cost index fund from a major financial institution can manage risk for you by buying stocks in down markets and selling after surges.
Retirement is the time for many things—traveling, enjoying friends and family, pursuing a lifelong hobby or learning something new. Retirement is not the time to let fuzzy thinking undo a lifetime of care planning and saving.
Moving to a retirement community can be a liberating experience. There are seniors who look forward to getting rid of roomfuls of “stuff” that they no longer have to clean, organize and care for.
For others, it’s a wrenching move that feels more like loss than liberation.
In either case, the downsizing transition will be smoother with advance planning.
At Daystar Retirement Village, there are many different floor plans to choose from, depending on which part of the community you choose to live in and whether you are interested in assisted living, independent living, or over 55 living.
Scale Back for Worry-free Living
The floor plans range from a studio at 324 square feet to a two-bedroom, two-bath apartment with 966 square feet.
In theory, downsizing makes a lot of sense for seniors who want more time for leisure activities and fewer things to worry about. In practice, moving from a three-bedroom house with a living room, dining room and a family room, to a one- or two-bedroom apartment can be a daunting task.
Here are some suggestions adapted from Wiki How that will help you get started:
Assess your actual needs.
What clothing, furniture, supplies or equipment do you need to live comfortably day-to-day? Make a list of what you need to bring with you to your new home.
Assess your new storage areas.
If you have a realistic idea of your storage space, you can better plan for how much you can bring with you.
Measure your furniture and compare it against the floor plan of your new apartment.
Decide which furniture will fit in your new space and whether you actually need it. For instance, it might be that your four-piece bedroom set is just too big and a single dresser will do just fine.
Gather together family keepsakes or memorabilia.
Keep those items that bring you special joy and offer the rest to other family members.
Decide how to dispose of everything else.
Do you have family members who need furniture, kitchen items or yard equipment? Now is a good time to give it away.
Sell your stuff.
If you’re in need of a pre-move windfall, you might want to hold an estate sale or garage sale. If you have the time, you could try listing valuable items on Craigslist or eBay.
When you walk into your new apartment, everything in it should be something you truly love, need or use. When you aren’t spending time cleaning, organizing or caring for your stuff, you’ll have more time for those activities you really enjoy.
5 Things to Do Before Filing a Claim for Long-term Care Benefits
If you or a loved one needs long-term care and you have a long-term care insurance policy, that’s fortunate. Unfortunately, filing a claim for long-term care benefits can be both frustrating and time-consuming. Every long-term care insurance policy is different and it’s crucial that you understand exactly what your policy covers and what documentation you need to file a claim.
According to APlaceForMom.com, the process will go more smoothly if you take these five steps before you start the process of filing a claim:
1. Designate a Family Coordinator
While there may be several people involved in your loved one’s care, it’s important to designate one person as the family coordinator. If possible, choose someone who is extremely well organized and has a flexible schedule (to be able to make and take phone calls from insurance companies and doctors as necessary). The coordinator should keep detailed notes about every conversation and track all correspondence.
2. Read the Entire Policy
Know what the policy says before you call the insurance company. If you can’t find a copy of the policy, call the insurance company and ask for the duplicate copy.
3. Understand the Benefit Triggers
Long-term care policy payments are typically triggered when the insured person needs help with two or more activities of daily living and/or when the insured person is suffering from dementia. Activities of daily living typically include bathing, dressing, eating, toileting and transferring. Different policies use different definitions and set different triggers, so make sure you understand the triggers in your policy.
4. Understand the Policy Benefits
Some policies are easier to read than others. When going through your policy, try to focus on answering these questions:
- What is the benefit for different care settings? (Assisted living, home care, nursing home
- What is the benefit period? (How long do the benefits last?
- What is the total benefit pool? (Is there a maximum lifetime benefit?)
- How long is the elimination period? (This is the number of days you must need care before the benefit kicks in. It can vary from 0 to 180 days.)
5. Follow Up
If you are the family coordinator, make sure you are the durable power of attorney for healthcare and are authorized to help your loved one through the process. Remember to keep a log documenting every phone contact, email message or letter. Keep track of doctors, any care received and medications that might affect your claim.
For more information on filing a claim for long-term care insurance, go to APlaceForMom.com.
Can Life Insurance Help Pay for Long Term Senior Care?
Moving into a long term senior care facility such as assisted living at Daystar, can be scary if you don't know what to expect. Learn more about assisted living at Daystar and alleviate some of your fears. When you hear "long-term care" many people assume it refers to medical needs but that's not what the phrase means. Most long-term care is for basic personal needs, which are referred to as Activities of Daily Living (ADL) by medical professionals. ADL means the tasks of everyday living such as:
- Caring for incontinence
- Getting dressed
In addition, long-term care can refer to Instructional Activities of Daily Living (IADL) which refers to normal independent living chores such as:
- Managing medications
- House cleaning
- Money management
- Food prep
- Personal shopping
- Pet care
Activities of Daily Living Cost
According to the U.S. Department of Health and Human Services ADL and IADL is costly: in 2016 the average cost was $20.50 per hour for a health aide and almost as much for a homemaker service. If you're faced with the burden of paying for long-term senior care it's a good idea to take a close look at your life insurance policy because it may help pay for your long-term needs. On the other hand, if you want to use Medicare to pay for long-term care any life insurance policy valued at over $2000 is considered an unqualified asset and must be included in your spend-down before you qualify for Medicaid.
If you have a specific long-term care insurance policy you should check with your agent to see exactly what services are covered and how much the policy will pay. Other types of insurance policies such as hybrid life insurance may also cover the cost of care, so you should read the policy carefully or ask an advocate at your county Counsel on Aging to help you decipher the policy.
If your insurance policy doesn't cover long-term care you may be able to convert the policy to a long-term care benefit plan, which is a different type of insurance policy. Basically, a long-term plan converts your life insurance to a pre-funded account that disburses a monthly payment to pay for long-term needs. Because the plan transfers ownership to a benefits administrator your insurance policy will no longer be considered a qualified asset by Medicaid so it won't count against you in the spend-down.
A long-term plan can be used in a variety of ways such as:
Nursing home care
If your policy doesn't cover long-term care and can't be converted you still have a couple of options. Many seniors surrender the policy or just stop making payments in order to remove life insurance from their Medicaid spend-down.
Steps You Can Take to Pay for Long Term Senior Care
Take a loan from the cash accumulation. You can usually take a cash value loan from your life insurance policy and then pay the loan (with interest) back to yourself. This may free up money for health care while leaving a portion of the death benefit intact.
Surrender the insurance policy for cash value. This means you give up the death benefit and ownership of the policy in return for the cash it has accumulated. You may have to pay taxes on the cash and it may count as an asset against your Medicaid spend-down so you should determine these factors before surrendering your policy.
Here are some more resources that can help you financially plan for retirement living:
Cost of Living in a House vs. Retirement Community: An Interactive Cost Comparison Guide
Retirement Community Living in West Seattle: What Can I Afford?
Genworth 2018 Cost of Care Survey