None of us likes the idea of getting older. But getting older, and eventually facing death, is part of the human experience. And it's happening to each and every one of us, including our parents. If you're approaching age 40, or older, that means you have aging parents who will soon be facing a variety of physical and financial needs they may not have considered.
Every day, I see at least a couple of well-intended articles that address the topic of retirement. While it's a good idea to be conscious of and planning for your retirement, the focus is too often on just the accumulation of money. But there's much more to it than that. Here's a summary of what you should be chatting with your parents about. And maybe thinking about for yourself, too!
Income Needs
Nobody, even the rich and famous, can end up with zero bills to pay after retirement. Even if their home is paid for and they have no debt, there's still food, various taxes, health expenses, gas . . . and much more. While each situation is different, taking a detailed look at what retirement might actually look like will give a much more realistic set of expectations. And, make it easier to plan.
Some pointers that I see often overlooked:
- Spending, generally, is LESS after retirement. 23% less, according to Forbes.
- "Retirement" is not a forever unchanging state of being. Needs at age 65 are usually quite different than needs at age 85.
- Contrary to what Hollywood would have you believe, most people do not die quietly and peacefully in their sleep. (See "Long Term Care" below)
- Choosing to take social security early, at normal retirement age, or later depends on the personal situation. Even choosing when to decide can depend on how predictable you believe your future is.
Life Insurance
Life insurance, like most insurance, is one of those things we love to hate. That's almost always because it's not understood. Insurance in general is designed to protect against large losses that would be detrimental or even catastrophic. It provides money to compensate for those losses if or when they happen. With auto insurance, it's an if. With life insurance, it's a when, because you're mortal and you are going to eventually die.
Purchased when you're young, insurance is relatively inexpensive, and has multiple ways of returning value to you. But the older you get, the more expensive life insurance becomes because your life expectancy is shorter. So what if your aging parents have neglected to get any life insurance? Is there a plan for funeral and end of life expenses? Yes, even at that point there are options for final expense insurance.
Long Term Care
You've seen the emotional movie scenes. The loved one is laying in bed, probably at home, facing their last days. Everyone is expressing their love, and the scene is generally peaceful. The ailing person says good bye, and gently closes their eyes. Or, they drift off into the hereafter in their sleep.
For most of us, that's not how it happens in real life.
Only about 12.5% of us die in our sleep. Compare that to the 33% of seniors that, at some point, will be living in a nursing home. So the odds are three times as great that you or your aging parents will at some point need long term care.
Be forewarned: Long term care is painfully expensive, and is not covered by most insurance and is not covered by social security. You must have a means to pay for long term care, or have a separate long term insurance policy in place prior to the need. Just as if your house burned down, you cannot buy the insurance after the need presents itself.
Planning is Key!
I'll be first to say that even the best laid plans can prove ineffective. But planning, with all the facts before you, can eliminate, or at least minimize, a great deal of the stress that comes with having to deal with the challenges of getting older. So whether it's your aging parents, or yourself, start making appropriate plans now.
I'm a serial entrepreneur, with a resume that makes me look like a Jane of all trades. Pretty sure we are all reluctant Messiahs, travelling through life planting seeds where ever we can. Hopefully, most of mine have been good ones! MA from Miami University (Ohio, not Florida), BA from Cal State.
