By Susan B. Geffen
How To MAXIMIZE Your Elder Care Resources
By now it is patently obvious that I do not want any of you to end up in a nursing home.
When people come into my office to make a
plan and it includes a plan to spend down their money so Medi-Cal will pay for their care in a nursing home, I am perplexed.
I ask them why they are not trying to figure out how to maximize their resources so that they can stay out of a nursing home, not get in one!
There is a big difference between artificial impoverishment for eligibility to preserve family inheritance so that one can "live" in a nursing home and saving an estate from recovery or protecting a spouse from becoming impoverished by a sick spouse's nursing home costs.
I am not going to address estate recovery or spousal impoverishment in this newsletter.
However, if you are looking for those strategies
or if you're worried about your spouse becoming impoverished by the cost of nursing care, I can help you. I will not help you plan to go into a nursing home...at any price!
Consistent with my goal to make sure that one by one I help everyone age successfully, this newsletter will explore how to maximize your resources to do just that.
What issues concern me?
In no particular order:
* escalating costs of care;
* expanding elder population;
* increasingly complex medical systems controlled by insurance companies;
* shrinking families, often with little or no time to devote to the needs of elderly parents; and
* disappearing social services in the community.
Where do solutions lie?
In no particular order:
1. Proactive planning;
2. Creative financing;
3. Utilization of a care manager.
Proactive Planning
Today is the day that you will make a commitment to sit down and ponder how to maximize your ability to live the life you deserve. Well maybe you want to wait until April 16th!
Creative Financing
A) Accumulate Wealth vs. Maximize Income
At some point we have to convert our "we need to accumulate" mind set into "we need to maximize our income" mindset. When that conversion should take place is out of my skill set. However, there are financial planners who can help you decide when your investments strategies should shift to accommodate this new goal.
What I can tell you from experience is that a steady stream of income is extremely important especially if and when you need to replace earnings lost through retirement. For most people, Social Security will
not enable them to continue with their previous lifestyle nor does it help support needs that arise as we age.
You may also want to discuss a longevity annuity, an investment that pays out a fixed monthly sum beginning when the buyer reaches some advanced age, like 80. An individual who puts $100,000 into a deferred annuity at age 60 gets $3,240 a month beginning at age 80.
The generous 39% annual payout is made possible in part by the insurer's return from investing the money for 20 years and in larger part by the fact that many buyers won't live long enough to collect.
B) Long Term Care Insurance
I have it. I have had it since I was 47 and now I am going to up my limits. Last week three sons came into my office concerned about their mother's escalating long term care costs. They told me that she had a pension and an unlimited LTC policy that paid $4000.00 a month.
Other than that she had all of her money tied up in property. They were in an enviable position because between her pension and policy, they
never had to worry about her safety.
Can you say that? For me it is an absolute no brainer. Also, please do not think that because you are "young" (under 50) you should wait the younger your are when you apply the greater likelihood you'll qualify.
Fewer than 1 in 10 of those younger than 50 is turned down for long-term care coverage, compared to nearly 25 percent of those 60 to 69 who are rejected and 45 percent of those ages 70 to 79, according to the American Association of Long-Term Care Insurance.
There is also a life plus long term care insurance policy. A feature included in some life insurance policies that allow you to receive a tax-free advance on your life insurance death benefit while you are still alive.
Sometimes you must pay an extra premium to add this feature to your life insurance policy. Sometimes the insurance company includes it in the policy for little or no cost. There are different types of ADBs each of which serves a different purpose.
Depending on the type of policy you have, you may be able to receive a cash advance on your life insurance policy's death benefit if: you are terminally ill; you have a life-threatening diagnosis, such as AIDS; you need long term care services for an extended amount of time; you are permanently confined to a nursing home and incapable of performing Activities of Daily Living (ADL), such as bathing and dressing.
C) Reverse Mortgages
I had a man come to me who was very depressed. He made some bad investment decisions and was broke. He was the care giver to his wife who was suffering from post polio syndrome. He had a beautiful house in Palos Verdes yet he was fishing for his food off the Redondo beach Pier. A reverse mortgage saved him.
Another man was told that he either needed to go home with a 24 hour caregiver post rehabilitation or go to an assisted living facility.
He had an income of $2000 a month. He wanted to stay home. A reverse mortgage saved him.
A woman and her sons came into my office after her spouse died. She needed to move out of her house since she lost the dual income of her spouse.
She wanted to buy a smaller place, a reverse to purchase mortgage where she does not have to pay principle and interest just might save her.
These are just three illustrations of how this product could save you. I could not be a bigger proponent even if there are costs associated with it.
Nothing is free, but you can gain a tremendous amount of freedom and independence by looking into it.
Care Coordination
Those of you who do not have a person to name as your advocate should look to a care coordinator or a geriatric care manager such as myself to be that person to advocate for you in your time of need and along your journey.
Should you chose to investigate any of these avenues and do not know where to start, I can refer you to professionals that I have come to trust over the years and who I myself use.
If you need a referral for a Reverse Mortgage Company, Long Term Care Insurance or Financial Services, let me know. I have some good people in my rolodex. Just call me at (310) 406-0608 or email me at susan@susanbgeffen.com
I hope you all survive tax time and then some.
All the best,
Susan
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