Most “Baby Boomers” (those of us born between 1946 and 1964) learned about living a very long life from our parents. Most of our parents didn’t plan on a long retirement or running out of money. We’ve experienced their aging issues right along with them or listened to our friends talk about their parent’s aging issues. We’ve seen or heard about the ravaging effects of dementia. The “Boomers” parents spent their lives saving for their retirement and in their final years we watched as they spent a significant amount of their assets on medical and nursing home expenses. Some of us worked through the process of applying for Medicaid. What have “Boomers” learned from their experiences? And more importantly, what are “Boomers” going to do to prepare for their own aging issues? Here are several suggestions of things we should do before we call it quits to the earning years.
1. Get a power of attorney executed. A power of attorney (POA) document appoints an agent (individual or institution) to act for us when we are no longer able to make the best financial decisions for ourselves. Most estate planning attorneys insist on completing power of attorney paperwork when they prepare a last will and testament. Your power of attorney agent should be savvy about finances. Send a copy of your POA to the institutions with whom you do your business. These institutions need to have the POA on file before they can act on any instructions.
2. Create and update an asset/liability inventory. Have an up-to-date inventory of your financial assets. Generally, financial planners recommend that an inventory is updated at the end of every calendar year. This should include account numbers, current balances, and ownership. We provide an Estate Planning Worksheet on our website (www.wflains.org) under the heading Money Matters to assist you. This information should be shared with your POA. It’s also a good idea to introduce your POA to your financial advisors so that they can build a relationship.
3. Plan for later life living facilities. If you plan to stay in your home, make plans for accessibility needs in your home. If your home isn’t designed to accommodate needs in old age, make plans for changes now. Don’t wait until you are forced out of your home to make other living arrangements. If you determine that it is not going to be the safest and most logical place to live out your final years, plan now for additional expenses of living in a senior independent or assisted living facility. The services you may need can cost a lot of money. The 2014 national median average monthly cost for a 1-bedroom assisted living apartment (and all of the extensive services they provide) is approximately $3,500 for one person and $4,800 for two people.
4. Protect yourself from fraud and elder abuse. For many aging Americans, home is where the fraud is. A new nationwide elder abuse analysis conducted by the American Association of Retired Persons (AARP) has led to a surprising conclusion that could cause us to think twice about trusting our money to those nearest and dearest. Ninety percent of elder financial abuse is afflicted by family members and trusted care givers. Community banks with trust departments may be the answer for protecting yourself from family members using your funds for themselves. Talk with your bank trust officer about the services they provide. Generally, banks charge a 1% fee to manage your assets. That’s very fair compensation when compared to the cost of having an unqualified or abusive family member in charge of your money.
5. Credit Protection is also important to financial health. Services that monitor and alert you periodically of changes in your credit report are reasonably priced between $100 and $200 annually. That’s a small price to pay to keep predators away from your assets. They will notify you if an application for credit was made or a credit report was ordered by a lender. Western Fraternal Life offers its members a 10% discount with one of the leading identity protection agencies: LifeLock. To take advantage of this discount go to: www.wflainsbenefits.org.
Baby boomers need to think long-term when preparing for retirement. Stephen Covey, author of the Seven Habits of Highly Effective People coined two very prophetic phrases, “Begin with the end in mind” and, “Your life doesn't just ‘happen’, whether you know it or not, it is carefully designed by you.” Those who have planned for their final years and communicated their wishes to their family not only have peace of mind, but give their family a sense of contentment as well.
CFP®, FLMI, Annuity Product Manager