Caring for an aging parent
Sometimes it happens suddenly—maybe after a bathtub fall and broken hip. Sometimes it's a gradual, worrisome progression of forgetfulness or mental mishaps. In any case, the realization that you have become the protector of a parent can be gut-wrenching. To start, it's necessary to determine whether your parent's problems are remediable. Many elderly patients rehabilitate nicely, for example, following hip surgery, and can resume independent living. Likewise, what first appears to be dementia, in a surprising number of cases, can be reversed when adverse prescription drug interactions are recognized. If a parent's need for your caregiving is temporary, that's good news—at least for now. But if the need for care arises from a permanent change in health status, the question immediately arises: What combination of living arrangements and caregiving is most appropriate? It's important to pay attention to expenses from caring for an aging relative, since your savings can easily be diverted away from your own retirement account. Especially when limited dollars dictate that you'll be personally involved in a big way, begin by understanding that you're likely to be in a marathon, not a 100-yard dash. Hard as it might be, accept the fact that you, as well as your parent, have entered a new phase of life. Meanwhile, no reminder is necessary that your other life responsibilities (e.g., to your job, spouse, and children) have not disappeared. So accept, too, that you will be of no help to anyone unless you can maintain your own health and sanity through adequate rest, nutrition, exercise, and even a little recreation. Don't feel guilty about being concerned about yourself; it's in the interest of everyone involved. In many situations, folks unnecessarily feel that they're personally responsible for everything. If others are available, try to get as much of the family involved as possible from the start. Don't make it easy for your siblings, for example, to shirk bearing a fair portion of the load. Remember the proverb "Many hands make light work." Asking for the input of others also helps to avoid family tension and the snide question, "Who made you the boss?" First steps For those who have put it off, basic legal decisions need to be made and implemented immediately, assuming that your parent is still mentally competent to sign legal documents. He or she needs a will, of course. But there are also two other documents that are actually far more important while one is still alive: 1. An advance medical directive expresses end-of-life medical choices and names a healthcare decision-maker. These documents go by various names among the states, including the "living will" and "health care power of attorney." Sometimes they are combined into a single document. The health care decision-maker should be specifically authorized to receive the senior's medical information by means of a release from HIPAA, the federal medical privacy law. 2. A durable power of attorney for financial matters allows a trusted friend or member of the family (the "agent") to handle the parent's finances, avoiding the need for burdensome guardianship proceedings in court. Seniors should be aware, however, that this grant of authority can be abused and their resources looted. The choice of agent, therefore, should not be made lightly; naming an unstable child, for example, as a co-agent or as an alternate is a big mistake. If your parent is not competent to sign a medical directive or power of attorney, then someone will, indeed, have to go to court to become guardian. This process is time-consuming, so be forewarned. Avoid the need for guardianship if at all possible. Second steps Gather information. Begin with contact information on your parent's medical providers and health insurance details, including copies of the policies and ID cards. Make a list of all your parent's medications (including over-the-counter drugs and supplements) and compile a complete health history, especially the results of any recent tests. This list will be good to have for anyone who accompanies the parent to his or her medical appointments. With this information in hand, where you go from here will depend on your parent's medical status, financial resources, personal preferences, relationships with potential caregivers, and the distance to needed services, among other things. Become familiar with community resources. Many communities have public senior centers. You'll also want to learn about local adult daycare services, home health agencies, meal delivery, and transportation options. Increasingly across the nation, 211 is becoming the telephone number to call for information and referral regarding community resources. Always keep in mind that your role as a caregiver is to help your parent maintain as much control over his or her life as the circumstances allow. This means standing back and allowing your parent to make independent decisions, unless doing so would be harmful. In that regard, no issue is likely to be as contentious as driving. Taking away the keys Your parent will likely get defensive or angry when his or her ability to drive safely is questioned. If at all possible, include your parent in the decision-making process; making the decision to stop driving on their own allows parents to retain far more dignity than having their children take away the keys. The challenge, therefore, is to convince your parent that he or she is indeed impaired. Often this just won't be possible, but sometimes a discussion based on objective observations can convince an elderly person that it really is better not to drive. After all, everyone will agree how horrible it would be to hurt someone else on the road. Here are a few things to watch for and, in the right situation, point out to your parent: • Night vision problems–difficulty with the glare of oncoming headlights. • Driving either too fast or too slowly. • Having to ask passengers to help check if it is clear to pull out or turn. • Responding slowly (or not at all) to pedestrians, other vehicles, stop signs, and lights. Reach out for help You aren't the first person to be in this situation. Talk to anyone who has experienced caring for an elder—they're bound to know plenty. In doing so, you'll build a fund of knowledge about how to proceed and what to expect. The following Web sites may also be of help to you: • Benefits CheckUp (benefitscheckup.org) is the Web site created by the National Council on the Aging. For free, you can easily find out which benefits your parent qualifies for, and how to get them. • HealthAtoZ.com provides a free drug interaction guide. • The official Medicare Web site (Medicare.gov) provides a variety of useful information. The sections entitled "Medicare & You" and "Long Term Care," including the Long Term Care Planning Tool, are especially helpful. (Caveat: the information is great, but contrary to widespread belief, Medicare DOES NOT provide true long-term care.) • A good, personalized nursing home needs assessment survey is found at nursinghomeinfo.com. While its primary focus is nursing home patients, it is also useful in determining when the needs of a loved one can best be met in an assisted living facility. • A companion Web site, assistedlivinginfo.com, offers a guide to selecting an assisted living facility, retirement community, or other personal care facility, based on a senior's needs, anywhere in the country. • The Care InterpreterTM (v2.tlchoices.com) is another free decision-making resource that allows you to find the best living options for a parent, based on specific personal and health needs. The user is asked a few questions regarding the senior's finances, health, memory impairment, and other considerations. A report is generated outlining the different assisted care settings (including care at home) that are appropriate to the senior's specific needs and situation. © 2007 Employee Benefit News and SourceMedia Inc. Reprinted with permission.

Baby Boomers and Extended Longevity
Baby boomers will soon be addressing the significant task of structuring — or in some cases restructuring — their accumulated retirement assets for the preservation and distribution phases of retirement income management. Can they go it alone? Or will they need the help of skilled, educated financial professionals to help determine how to stretch their retirement assets to meet their anticipated longevity?

While most boomers realize their life expectancy will exceed that of their parents’ generation, remarkably few boomers have done the kind of retirement planning necessary to address this issue. One study indicates that less than one-third of preretirees have accumulated enough retirement money to match income projections based on their life expectancies, and beyond. “Caution should be taken when evaluating life expectancy,” advises Michael L. Wilson, MBA, CFP, owner of Integrity Financial Planning in Orland, Indiana and faculty member of Kaplan College’s Financial Planning Program. Wilson adds, “Only one out of 25 people the same age today will live to their full life expectancy; the other 24 run the risk of exceeding their projected life expectancies.”

Extended longevity

Due to advances made in medical science, baby boomers are the first generation to be confronted with the issue of extended longevity. While life expectancy differs between men and women — with women typically living five to seven years longer — the promise of a long life is even better for couples than individuals. The Society of Actuaries reports that a married couple age 65 today has a 48 percent chance that at least one of them will live to age 90. Also important: the fastest growing age group in the U.S. today is age 100.

Longevity statistics, along with the reality of how much money will be required to maintain the lifestyles to which boomers have grown accustomed — combined with living in an inflation-prone economy with fluctuating market conditions, and do-it-yourself investing — have only added to the boomers’ primary problem of potentially outliving their assets. The importance of building an adequate and continually growing nest egg during the accumulation and preservation phases of retirement planning — which will provide for the 20 to 35 years of income needed during the distribution phase — cannot be overstated. In many cases, boomers will need to generate additional earned income during their initial years of retirement while “growing” their already accumulated assets. But, where will that money come from?

Not only are baby boomers going to be living longer than their parents, but we are seeing that their employer-provided benefits will be much less generous than what has been provided for previous generations of retirees.

Sources of retirement benefits include: Social Security, inheritances, traditional pension plan (which pay a fixed amount on a regular basis), assets in 401(k), 403(b), or other retirement accounts from current or previous jobs, IRA’s, and liquidated or income-generating real-estate holdings, and accumulated cash. However, the fact that many employers have, or are threatening to jettison their employee pension plans should have baby boomers alert and asking questions about their employers’ promised pension packages. We only have to look at what happened with Enron, WorldCom, Delta Airlines, U.S. Air and Arthur Andersen to know that the unthinkable can and does happen. To play it safe, I usually recommend that boomers entitled to defined benefit pension distributions from employers make an effort in their planning to address these potential shortfalls.

Savers vs. spenders: Will the money last?

Ralph Kelman, Chief Executive Officer, Kelmoore Investment Company, located in Palo Alto California, a firm specializing in managed options portfolios, once said to me, “People fall into two categories: spenders and savers.”

As a baby boomer working with boomer clients, I am continually reminded of that. I am part of a generation notorious for its spending habits. Because of this historical behavior, it is usually not recommended to take lump-sum distributions from retirement accounts, but rather use the IRS-rollover provision. Many product choices are available that preserve the tax status of “rollovers” from these accounts and, in some cases, offer the full preservation of principal while allowing for growth and providing for use of the client’s money when it is needed.

As for keeping 401(k) money in a company plan after retirement, most retirees will have more investment options if they “rollover” their money to an IRA or perhaps a series of IRAs outside their company plans using a diversified structure of products.

Another point to consider here is that given the fate of some companies’ solvency, it may make sense to move money (in the form of a rollover) away from former employers, so it is safe from their creditors in the event of potential financial difficulties.

A movement today in the 401(k) plan market recommends immediate annuitization of accumulated benefits immediately upon retiring. This seems to be yet another extreme — a “one size fits all proposition.” Since the distribution phase of retirement sets the stage for the distribution of assets needed over 20 to 35 years, it may not be a wise choice to annuitize immediately upon retirement. Rather, choose products and an investment structure that provide opportunities for growth of the entire portfolio with an option to annuitize five to ten years down the road to guarantee and create income for life.

Do-it-yourself retirement planning: Worth the risk?

As many as 50 percent of today’s preretirees and current retirees are trusting their future financial well-being to do-it-yourself retirement planning, rather than seeking the advice of financial professionals. “It is important to understand that this is the way boomers are used to doing things.” says Michael P. Sullivan, President, 50-Plus Communications Consulting, a Charlotte, North Carolina-based firm specializing in boomer Profiling. Sullivan adds, “Boomers need help and they need it now.”

We are the “me” generation: well-educated, successful, industrious and always thinking we know best. But the truth is, planning for the preservation and distribution phases of retirement income management can be complicated. Access to products needed to do it right is not readily available directly to consumers, so it is vitally important that boomers seek help. Those of us in the financial services industry must step up to the plate — both companies and advisors — and take responsibility for educating and guiding this generation on the real issues of longevity and the importance of planning for the three stages of retirement income management with the ultimate goal of creating income for life.

Copyright (c) 2007 WiesnerMedia Financial Group. Used with Permission.