The New Finance Of Longevity

Financial Finesse: Planning Late In Life Decisions

Do retirees have the information they really need to make critical choices throughout the stages?

New research from the Society Of Actuaries and Financial Finesse, The Late In Life Decisions Guide, looks to help older retirees – and those who care for them – make informed decisions about their financial future. Excerpts are presented below. Access the full report at www.soa.org/resources. Also, look at the Financial Finesse savings-calculator, How Long Will Your Savings Last?, at www.ffccalcs.com.

Much of retirement planning focuses on financial, investment, and estate planning needs. Earlier research, such as the SOA’s Retirement Health & Happiness brief, showcases how this retirement planning overlooks some challenges of late-in-life retirees.

Retirees have access to more than 200,000 personal finance professionals, 10,000 senior centers, and approximately 28,000 assisted living facilities. Still, do retirees have all the information they need to make critical decisions throughout retirement, particularly in the latter stages of retirement?

In collaboration with Financial Finesse, the SOA Aging and Retirement Strategic Research Program prepared this guide as a resource to help older retirees and those who assist them. This guide will help the reader ask impactful questions to make informed decisions.

Limitations

No matter how well we prepare, things can change. Situations beyond our control drive change. Sensory loss, cognitive decline, mobility loss, death or disability of a loved one, and general frailty can occur gradually or at once. But, just because there are some timelines we cannot know does not mean we should simply wait for it to happen. It is crucial to have a flexible plan and access to resources that help address needs as they arise.

This guide uses a holistic approach to identify resources and best practices. Such an approach helps connect critical health care, housing, and other financial choices with practical life management decisions during one’s later years. Readers will address financial management assistance and explore key questions. This guide will address special housing needs, recognizing the need for assistance, finding help around the home, avoiding scams and fraud, and building a local support network.

Aging encompasses a dynamic spectrum of issues. Therefore, one cannot successfully approach it as a static issue with carefully prescribed solutions. Instead, readers are encouraged to carefully consider their own needs and options as personal conditions change.

Note: This guide focuses on four areas: Health Care, Housing & Transportation, Managing Finances and Creating A Support Network

Health Care – Five Key Considerations Along The Retirement Healthcare Timeline

It’s important to maintain a healthy lifestyle throughout retirement, but you should still plan for healthcare
expenses. This section will provide an overview of important considerations to make along the way.

Medicare & Medicaid

By the time they reach age 65, most seniors are familiar with Medicare, but enrolling in Medicare is not a one-time decision. Open enrollment runs annually from October 15th to December 7th, giving seniors the opportunity to change between original Medicare or Medicare Advantage. Reviewing your options annually is a great way to control out-of-pocket medical expenses throughout retirement.

Just because there are some timelines we cannot know does not mean we should simply wait for it to happen. It is crucial to have a flexible plan and access to resources that help address needs as they arise...

Keep in mind, Medicare does not cover 100% of healthcare costs. There are premiums, coinsurance, prescription drug coverage, and non-medical items like vision, dental, and hearing not covered by original Medicare (though Medicare Advantage and supplemental plans may provide these coverages). Long-term care (e.g., nursing home) is limited to short stays and only if part of skilled nursing care following a hospital admission. Medicare will not cover a lengthy nursing home stay that requires custodial care only.

Cognitive and Physical Decline

As we age, the risks for both physical and cognitive decline* increase and threaten our independence and quality of life. Diminished physical and mental agility also present numerous challenges for individuals, family members, and health care providers. A key concern can be distinguishing between what may be “normal” levels of decline due simply to age, and
more serious levels of decline caused by Alzheimer’s, dementia, or similar conditions. Declines in cognitive capacity may leave seniors open to social, physical, and financial exploitation. Most people will notice some measure of cognitive decline as early as age 60, and more substantial amounts of decline by age 75. Catastrophic cognitive and physical decline associated with aging is not inevitable. Numerous studies support the notions that physical activity and social engagement can significantly reduce the rates of both cognitive and physical decline. Helen Hayes said it best when she reminded us, “If you rest, you rust.”

Long-Term Care

As life expectancies increase, so does the potential need for long-term care. Family and friends may help, but you may need professional care at some point. This care can be costly, especially in addition to other housing costs like rent or mortgage. For example, a home health aide for eight hours a day can cost $55,000 or more a year, and a private room in a nursing facility can cost twice that. Therefore, it’s critical to have long-term care insurance benefits and savings to help with these costs. If you exhaust these options, you may have to apply for Medicaid or rely on family assistance to cover ongoing financial obligations

End-of-Life or Hospice Care

Care provided at the end of one’s life may include a combination of comfort care, palliative care, and hospice. All forms of care are designed to improve comfort and ease pain for the patient, though there are some subtle differences. For instance, palliative care helps manage the physical and emotional discomfort of a disease or condition, although treatment to help cure the illness may still be taking place. Hospice, however, works exclusively with patients who have been diagnosed as terminally ill with fewer than six months to live. Hospice does not provide treatment for disease but instead focuses on quality of life by managing pain and the physical, psychosocial, and spiritual needs of both patient and family.

Read the full report here.