David Disraeli Home Page > Chapter 1 David Disraeli on Aging
Chapter 1 David Disraeli on Aging
The Problem with the Financial Planning Profession
Consider for a moment the construction of a typical financial plan for a married couple. We financial planners assemble a great deal of information and documents listing assets, sources of income, future expenses, and risk tolerance. Once gathered, this information is entered into a software program along with several variables. In order to project future retirement income we assume rates of return on investment, future Social Security and pension benefits, inflation, taxes, and other input specific to the client (i.e., future inheritances, large expenses, etc.).
Suppose that we are right on the money with regard to financial assumptions but one of the two individuals needs unforeseen in-home care or nursing care. An unexpected drain of $56,000 per year, after tax, will cause our picture-perfect financial plan to go up in flames. Even if the investment returns were underestimated, the plan becomes worthless.
In 25 years in this profession, I have never seen nor heard of a financial plan or process that includes a client’s current and future health as a variable, yet it is the one thing capable of wrecking the best of plans.
This book was created based on a six-step process to help smooth the aging process, with less stress and hopefully less financial drain. More specifically, it will address:
- how to anticipate the consequences of having an older family member;
- how to avoid a court-appointed guardianship and retain control of your family member’s future;
- how to safeguard assets against devastation from long-term care expenses;
- which documents an older person must have;
- how to evaluate the living options for a senior citizen who needs some level of long-term care;
- how to prevent disputes among siblings during a crisis;
- how to stay independent longer and “age in place;”
- what “living trusts” are and why they may or may not be right for you;
- what Medicaid is and how it differs from Medicare.
The financial, emotional, and legal issues are inexorably intertwined when dealing with ailing relatives. For this reason, I propose a paradigm shift involving two processes that are woven into my six-step plan:
- Plan ahead and anticipate instead of ignoring the inevitable.
- Create a practical, workable plan involving all family members and advisors.
Do you know what would happen if you had a stroke? Where are your important documents and insurance policies kept? Other than your doctor, who knows which drugs you are taking? Who is your primary “go-to person”? Where would you live if you could not stay in your home? Are your adult children all in agreement on these issues?
The last thing in the world most senior citizens want is to be financially dependent on their children. The generally poor conditions of Medicaid-sponsored nursing homes are reason enough for family members to do everything in their power to prevent their loved one from that fate.
Medicaid, which is available only to certain low-income individuals and families who fit into an eligibility group recognized by federal and state law, covers 50 percent of all nursing-home beds in the United States. Based on that statistic, it can be deduced that 50 percent of all nursing-home residents are financially destitute and have no other options.
Most of those who wind up in a Medicaid facility go where they can find a bed, not necessarily near loved ones and sometimes not even in the same state.