Planning for the Eventuality

What’s the biggest problem you are likely to face in the coming years? Most likely, it’s health—either your own or that of relatives. Just a couple of statistics out of many possibilities make the point.

• Nearly 50% of all men and more than 33% of all women will have cancer during their lifetimes.
• More than 50% of the population is expected to have elder-care responsibilities within 10 years.

What’s this have to do with financial advice? Well, security and certainty in an uncertain world is a core reason for getting financial advice and help. Health problems—yours or your family’s—are the wild cards in everyone’s game, disruptive to aims and hopes for security. Most of us are going to have to deal with major health and care-giving issues, almost all with significant financial implications and consequences.

A problem even ample net worth doesn’t help you avoid
But addressing the problem is not a matter of your net worth. Whether you are worth millions or thousands, you will deal with it. Having plenty of money may increase your options, but the problem isn’t something you avoid by having more…or less money.

A real-life example will give you a sense of what’s involved.

One family’s story
Christine and Karl (I’ve changed their names) have lived in the Pittsburgh area for their entire adult lives. Both are professionals: Karl in heavy industry; Christine in telecommunications. They have three children, two still in college. Late last year, the family agreed that for reasons of safety and security Christine’s 88-year-old father, Richard, had to move from out of state to a senior-living facility in the Pittsburgh region. In short order Christine and Karl had to deal with selling Richard’s house, reviewing the agreement with the facility he is now in, managing the move of his personal belongings, changing his banking relationships, changing the address of record for his pension and Social Security, Medicare, and Veterans Administration benefits, and for his insurance policies, as well as transferring his burial-plot agreement.

As you can see from this partial list, the time commitment is substantial, not to speak of the emotional-energy cost.

And a few estate tasks
As is commonly the case, Christine’s father had not updated his will and powers of attorney since her mother died. And with a move across state lines, updating was necessary.

The current will directed assets to a spouse no longer living. Yes, there were contingent beneficiaries, but issues for them changed, too. With the use of investment assets for income needs over the last decade and now the sale of the house, the assets had changed dramatically.

The financial power of attorney was too general in scope to accord with Pennsylvania laws, which have changed recently.

The healthcare power of attorney was held by one of the children living out of state, potentially troublesome in an emergency.

The family finances needed another look, as well, to assure that they fit the change in family circumstances.

There were a number of administrative and financial responsibilities, to be sure, but with a little guidance and help, Christine and Karl did not have to disrupt their lives.

Some gains
As Richard has gotten comfortable in his new surroundings, there have been benefits. He often eats Sunday dinner with Christine and Karl, and spends holidays with them, things he hasn’t done in over a decade. He has updated his computer and learned how to use some of its tools—to receive pictures of his grandchildren from far away and to find and play music he likes over the internet.

As time goes on, new problems will arise, of course. Richard’s back is not what it used to be, and he already needs a walker. Before long, it is clear, he will need to move into assisted living, with its higher expense. But because of proper planning, Christine and Karl already know the family can handle it financially. For example, Richard is a war veteran, making him eligible for Aid and Attendance benefits, including significant income, that many people are unaware of. (Did I mention the benefit of financial advice?)

Thinking ahead
Thankfully, as he approaches 90 Christine’s father is still sharp and active. But eventually he will need more help. Some form of mental decline is just one of the possibilities. For example, one out of eight people age 65 and older (13 percent) has Alzheimer’s disease or age-relation dementia, and the number is expected to rise dramatically in coming years. Alzheimer’s triples healthcare costs, on average, according to the Alzheimer’s Association.

I’ve discussed extensively with a local expert the rising need in an aging population for maintaining mental fitness. Dr. Paul Nussbaum, Clinical Neuropsychologist and Adjunct Professor of Neurological Surgery at the University of Pittsburgh’s School of Medicine, sees five essentials—socialization, physical activity, mental stimulation, spirituality, and nutrition. I gave a copy of his book, Save Your Brain, to Christine and Karl for its value in their care for Richard. Dr. Nussbaum provides invaluable information that can be accessed at www.paulnussbaum.com.

The point is simply this: readiness is vital to handling life’s contingencies. Family discussions early on, planning begun soon, and research about available resources will do a great deal to help with the choices and decisions to be made. And it helps to have help…from professionals who have dealt with similar situations before. It’s smart to start thinking now about what you may be facing later.