Going Beyond Retirement Planning

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A Pew Research Center study released this month revealed that living to an age that is substantially longer than current life expectancy isn’t what most Americans really want. More than two-thirds of adults 18 and over say that they would like to live somewhere between 79 and 100; the median ideal age is 90. In comparison, the U.S. average is 81 for women and 76.2 for men. One has to wonder how much cultural bias is factored into the respondents’ answers. Most of us don’t know many people who live past 90. Moreover, our culture has drawn a diminishing picture of those who do.

According to the study, the majority of people (54%) indicate that medical treatments these days are worth the costs because they allow people to live longer and have better quality of life, 41% say they often create as many problems as they solve. Of interest to us financial advisors is that 57% say they either do not worry too much or at all about outliving their money. We repeatedly warn our clients about the Flaw of Averages in planning for their future. Just as the combination of health risks that each of us carries is unique, so goes our financial circumstances.

Now for a book review: David Solie, a geriatric psychologist and an expert in intergenerational communication, has written a book, How to Say It® to Seniors. We have found it useful in communicating with our parents and elderly clientele. Early in the book, he reframes the cultural bias that seniors be seen as only diminishing and asks the reader to consider that seniors have developmental tasks, not unlike those development tasks of other stages of life. Drawing upon the work of Erik Erickson, Solie calls it “the secret mission” of older adults. “Seniors’ developmental tasks compel them to maintain control over their lives in the face of almost daily losses, and simultaneously to discover their legacy, or that which will live on after them.” In my opinion, he is a bit too repetitive in making this point. For those of us who serve this population, communication is key and the barriers to effective communication between the elderly and those of us who are middle-aged can sometimes be huge. Appendix I, “A Note to Professionals,” is worth the price of the book.

In chapter 6, Solie introduces what he calls the predictable dilemmas of getting old. While predictable, we have found that when left unattended these dilemmas often become crises. We therefore see part of our job as financial advisors to help mitigate, if not eliminate, those predictable dilemmas long before they have a chance of reaching crisis stage. We can do this in two ways: 1) developing solid financial plans that can be adjusted to changing lifestyles and 2) becoming legacy coaches for our clients. The Predictable Dilemmas identified by Solie are:

Where will I live? We all need a place to live, even at age 100. Most of our clients tell us that they want to “age in place,” meaning that they want to stay in their present residence for as long as possible; yet, what we find when we probe just a bit is that often they live in a rather large house that is equipped for a healthy middle-aged person with a growing family, not someone living alone who is unable to climb stairs. Many financial advisors only see one other option: assisted living center or nursing home. We see many alternatives, but nearly all require some prior planning to pull off with minimal disruption.

How can I best manage my health? Most financial advisors are only interested in how a client will pay for his or her healthcare. We believe that how a person pays for health care is the second question. The first question is to think about the plan of care itself. In visiting their physicians with my aging parents, I have witnessed just how difficult it can be for them to talk about the expected outcome of certain treatments and to consider how a certain illness or treatment might affect their financial plan.

How will I cope all by myself? If communication difficulties haven’t come up before hand, they almost always will in the moment of grief. Resistance to change is often heightened when faced with a loss. In preparing to relieve this dilemma, we delve deeper than simply calculating the need for life insurance; we often explore what life will be like in the absence of the significant other.

What should I do about money? Just as many physicians may think that they only have to deal with dilemma 2 above, many financial advisors will only consider finances in what they do. Additionally, he or she will do so only from the perspective of a much younger person. The health plans developed by you and our financial plans make complete sense to us, so why is it that our elderly client cannot see it as we do? Solie contends that how we present the plans can make an enormous difference.

What is the right way for me to say good-bye? In the third trimester of life, legacy starts to emerge more clearly and usually with a greater sense of urgency. Solie says that our predictable response to the end of life messages expressed by our elders might be “Don’t worry, everything will be okay.” He suggests that part of the right good-bye is giving the person control over the form that the good-bye will take. Expressing legacy goes well beyond estate planning, it is being clear about how you want to be remembered.

In my role as financial planner, I want to be remembered as one who saw beyond the numbers of a person’s financial life and helped them to navigate the uncertainties of life through thoughtful planning.

Scott Neal, CPA, CFP is president of D. Scott Neal, Inc., a fee-only financial planning and investment advisory firm with offices in Lexington and Louisville. He can be reached at scott@dsneal.com or by calling 1-800-344-9098.