As a continuation of the Fee-Only Financial Advisor blog sharing group, this monthâ€™s post comes to us from Michael Garry, a Financial Advisor in Newtown, PA.
The Critical Importance of Having a Plan for Aging
As financial advisors, we have seen what happens when people have not planned for the challenges that come with someone that has significant medical issues.
Alzheimerâ€™s disease, Parkinson’s, dementia, or other chronic illnesses have led them to substantially diminished capacity– physically, mentally or both. They come to us trying to put together a plan. When we meet with these families, it is a constant reminder of why we recommend beginning a relationship before the planning becomes overwhelming. The financial planning process helps prepare for many unknowns. That way if and when something diverts you from your original plan it is not as difficult to adjust.
The planning process requires trusting relationships, thoughtful and comprehensive perspectives and diligent record keeping. The complexities involved with healthcare and finances today can make it difficult to navigate. When caring for a spouse, an elderly parent or family member who is suffering from Alzheimerâ€™s, dementia or another disease that has led to diminished capacity, can leave you feeling overwhelmed emotionally, physically, and financially. The burden can become too much to bear on your own if there has been no planning or the planning is insufficient. For those who have not started your planning, hopefully, this article will instigate you to take action and secure peace of mind for yourself or a loved one.
If you donâ€™t do it, someone else will. There are two issues that arise from not doing your own estate planning; you burden another to make a decision about your well being and you take the risk of wrong decisions being made for you. Estate planning involves making health care choices while you are healthy (all relative) and financial decisions before being under stress. Why be a burden or leave it to chance? Planning for later years has become a part of our process with all of our clients and is an essential part of a comprehensive plan.
Your independence depends on the planning you do today. As you age it is important to make sure you have considered the changes that might occur in terms of health, stability, and cash flow. What do you want your lifestyle to look like in the case of incapacity? What do you want your living arrangements to provide? What are you willing to spend? Who do you want surrounding you? Taking into consideration even minor details of your daily routine can have a tremendous impact on the decisions that you make around your living arrangements. They can be affected by:
- The location of your doctors and their distance from your home
- How close you live to grocery stores/restaurants
- Whether your home has been/can be made aging friendly
- Who will be available to assist you with shopping, cleaning, and other daily household activities
- Who will help you manage general financial matters
In addition to these practical elements it is important to consider what your daily acitivity level will be as well as what social interaction will be like as you age. Even for those who are married, having social encounters is important for improved cognitive function and emotional well-being. It is also worth mentioning that studies have shown that those with more physical and social activity as they age are less likely to have as many medical issues both related to cognitive function and otherwise. [i]
Long Term Care
70% of people require long term care at some point. It is no longer the exception, it has become the norm. We are living longer and requiring more care. Planning ahead for long term care is a crucial part of any successful financial plan. The planning does not always lead to buying an insurance product. Having a conversation helps to establish expectations and come to an agreement on what a stable and secure long term care strategy will be for your unique family situation. Doing this type of planning while of sound mind makes the implementation of a strategy that much easier.
Establishing a trusting relationship takes time. It is best to put your team in place while in a good state. Attempting to create relationships while under stress or rushing the process could lead to undesirable outcomes. All parties involved should have complete confidence that the parties selected will do everything in your best interest. Empathy, integrity and excellence are values you should seek in your partner. Conversations will beome difficult and you need to know they are equipped to hear your issues and execute in your best interest.
Family members, spouses and caregivers all must be considered in a holistic plan for aging. For many who are already in the throesof cognitive decline, the rationality necessary to make these decisions in a manner that accounts for all parties and factors may not be there. And the rest of the team is not just handling the care for their loved one and patient, but managing the stress of trying to reason with a person who has lost their capacity to do so. Having the planning done early can allow the family to care for the loved one, not debate.
The Wisdom of Forethought
If you do not yet have a plan for how you will age and no sense of how it might affect your living situation, your finances, or the impact that it will have on the people closest to you, then it might be time to begin the conversation. In many cases, the hardest part is just getting started. Planning for the possibilities of what aging may or may not bring will help you and your loved ones live more secure and less stressful lives.
Michael J. Garry, CFP(R), JD/MBA, is the owner of Yardley Wealth Management, LLC, and an independent Financial Advisor who provides Fee-Only financial planning services and investment management in Newtown, PA, and the author of Independent Financial Planning: Your Ultimate Guide to Finding and Choosing the Right Financial Planner