Planning a Secure Future for You and Your Family
Four steps to take today to make tomorrow easier.
By Janet Rivera Mednik
For many teachers, planning is as natural an activity as swimming is to a fish. Yet too often the steely focus on task completion and appointment scheduling that a teacher possesses comes to a grinding halt when life in the classroom ends. Somehow life’s most important checklists of “things to do”—obtaining long-term care insurance, making a will, creating a financial plan for retirement, and grasping a firm understanding of what to do in the face of a life-threatening illness—get put off until tomorrow. Problem is, tomorrow comes before we know it.
Consider Long-Term Care—It’s Not Just for the “Sandwich” Generation
Unquestionably, today’s retirees are living longer and are more active than seniors of the past. Perhaps this makes it understandable why someone spending his retirement competing in local triathlons or traveling the world can fail to see the need for long-term care insurance. However, even those who fill their days of retirement in more subdued ways can mistakenly think that long-term care insurance is for their parents, not them.
Not so, says Allison Payne, a long-term care expert. “The time to think about long-term care is when you’re younger,” says Payne. “It’s ironic that the people who are healthy are the ones that will likely need long-term care at some point in their life. If you live a long life, long-term care can help you maximize your independence at a time when you’re not equipped to do so.”
More than 50 percent of baby boomers mistakenly believe that Medicare will cover their long-term care. Generally, it doesn’t. Medicare is health insurance for people older than 65 who require skilled medical care; long-term care insurance is not. Rather, long-term care is designed to provide care when you need help with the activities of daily living (such as dressing, eating, bathing, and going to the bathroom). Put simply, skilled care is about “curing” while long-term care is about “caring.”
Long-term care, whether it’s in-home, at an assisted living facility, or at a nursing home, is expensive and, usually, it’s an out-of-pocket expense. At an average cost of $85,775 a year, using savings to pay for long-term care can be a daunting proposition.
Long-term care insurance can help cover these costs, but premiums can vary significantly. It is certain, though, that premiums will be lower if you get coverage when you’re in your 50s and healthy. Long-term care plans are customized, but, typically, a combined monthly premium for a healthy 55-year-old couple would be about $125 a month, while a 65-year-old couple in good health would pay $225 for the same coverage.
“There’s a misconception out there that you’ll save money if you wait to purchase long-term care. It’s not true. The older you are when you get long-term care, the higher your premium will be—and you’ll run the risk of being denied coverage,” explains Payne.
Payne backs up her assertion with telling numbers: Twenty-three percent of applicants in their 60s are denied coverage, while that number is only 14 percent for applicants in their 50s. Compounding the problem, individuals with a pre-existing condition—such as diabetics requiring insulin—are often quickly dismissed by insurance carriers.
There’s a lot to consider before you purchase long-term care insurance. Payne recommends that you start by having a “courageous conversation” with yourself and your partner about what kind of life you want for yourself and your loved ones. Dettmann agrees: “You don’t want to wait until you’re in a highly emotional state to have an honest conversation with your partner about legal and medical matters. It’s not easy to sit down with your partner to discuss the ‘what ifs,’ but it is important to do.”
When it comes to long-term care, tough questions to consider might include: Where would you want to live if you needed care? Who do you want to care for you? Do you want to burden your family with the cost of care? Will your savings be drained by the cost of long-term care?
Long-term care, which is spurred by physical or cognitive impairment, can be administered in several settings, including:
Home Care—Most people want to stay in their home or a relative’s home for as long as possible, but long-term care is often still needed. Care can be provided a few hours a day, or—in certain cases—around the clock.
Adult Day Care—These programs, privately or publicly administered, offer socialization, assistance, and supervision to adults who cannot function fully on their own.
Adult Family Homes—Homes in which a handful of adults in need of assistance live together and take advantage of facilities like regular meals, transportation, housekeeping, and social activities.
Assisted Living—Assisted living facilities have staff members to help residents with such daily tasks as taking medicine, bathing, dressing, meal preparation, and housekeeping. In addition, assisted living facilities usually offer social activities.
Nursing Homes—Nursing homes offer round-the-clock care for those recovering from illness or injury and provide a home to those who are unable to care for themselves. Nursing homes also offer end-of-life care.
Continuing Care Retirement Community—Some retirement communities offer various options of care to meet the ever-changing needs of seniors. Such a community offers apartments for independent living, assisted care for those who need help with daily activities, and nursing home care for those who need constant care.
Clearly, adding a monthly expense to one’s budget is never easy, but purchasing long-term care insurance can ultimately preserve your savings in the future. “The most important issue is to plan. You don’t want to rely solely on your income, assets, or savings to pay for long-term care—it can be financially draining and end up placing a huge burden on your family. Long-term care coverage may not be for everyone, but you owe it to yourself and your family to look into it,” says Payne.
Plan Your Estate Because Where There’s a Will, There’s Peace of Mind
The presence of a will and a good attorney allowed Dettmann to focus on grieving, rather than legal issues. “I was in a fog when John died,” she explains. “Having a will gave me peace of mind, and my lawyer was a big help to me with simple questions that came up.”
A will, in simple terms, explains what actions you want to be taken when you pass away or if you become mentally or physically incapacitated.
The main portion of the will outlines one’s wishes for assets, explains Betsy Clifford of the law office of Jones, Sneed, Wertheim, and Clifford, PA in Santa Fe, N.M. The directive(s) can be broad (i.e., splitting assets between your children) or specific (i.e., making a list of specific items to be given to a specific person). Failure to have a will can tie up the estate in the courts and/or lead to bitter family squabbles.
Additionally, it is important to choose a personal representative/executor who will execute the provisions of the will when the time comes. The personal representative/executor is often the spouse, an adult child, or a trusted friend. Designating a back-up personal representative/ executor is essential.
A person will also be designated to have power of attorney. The designated person gains the ability to make legal decisions for you if you become incapacitated due to poor health or injury. Again, this person is often a spouse, adult child, or close friend.
An individual will also be named to carry out a health care directive, which allows the appointed person to make health care decisions for you should you become incapacitated, including making critical decisions about end-of-life care.
You can name the same person to handle all of these important roles, or you can divide the duties. Be sure, however, to include a back-up person for each designation.
Clifford, whose firm participates in NEA’s Legal Benefits Program, which offers NEA members, retirees, and their families free legal consultations and discounts on legal services, says that the people you designate as your personal representative/executor, agent with power of attorney, and representative with health care directive should be made aware of your decision to name them to these roles. Not everyone feels comfortable with the level of responsibility that is required to carry out these legal and/or medical decisions, so try not to feel hurt if someone declines the role. Clifford also suggests that you let your representatives know where your will is located.
“Making a will makes things so much easier,” says Clifford. “For most people, it doesn’t take a lot of time and it’s affordable for most families.”
Obtain an Honest Assessment of Your Finances
Often one spouse knows the answer, while the other is in the dark. Like many couples, Diane and her husband John, divvied up household responsibilities. He, a financial officer for a major company, took control of the finances and most major maintenance jobs, while Diane handled the traditional chores around the house. “When John died, I had to gain control of the checkbook, our files, our safe deposit box, and everything else regarding our finances. It was hard, and I struggled. Everything reminded me of John, and I felt like I was imposing on his system.”
Dettmann recommends that spouses learn each other’s jobs, especially when it comes to financial matters. Couples, working together, should consider working with a reputable financial advisor to plan for retirement and to stay financially secure.
“An annual review of your finances by a trusted advisor can give you a snapshot of your current financial picture and can help you identify if steps need to be taken to avoid an income gap between what pensions and Social Security will provide, and what is needed to have your desired retirement lifestyle. To sustain a nice retirement lifestyle, you need to make sure that income is being generated through investments,” explains Jim Kiley, vice president of Security Benefit, the provider of the NEA Valuebuilder Program. The Valuebuilder Program is designed to help NEA members plan for and maintain a secure financial future.
Most educators, paraeducators, and school system employees are fortunate to have defined benefit pensions. However, such a benefit, warns Kiley, does not guarantee a comfortable retirement. “One of the problems is that pensions no longer have cost of living adjustments (COLAs), so it’s more difficult for retirees to keep up with inflation.”
Fortunately, product solutions, such as annuities, can help generate more funds for retirees—and contrary to popular opinion, you don’t have to be wealthy to tap into these services. “Our company takes pride in serving a nice cross section of professions,” says Kiley. “The bottom line is that everyone needs a good financial plan, but you have to constantly assess that plan. By doing so, you’ll avoid financial pitfalls.”
Gain a Firm Understanding of Hospice, A Graceful Goodbye
It’s the dreaded words that no one ever wants to hear a doctor say, “We can’t do anything more to prolong life.” Panic and depression cloud the mind, while the body is often ravaged with pain. To instill calmness and sensibility to a usually chaotic situation, you should first consider calling one of the 5,000 hospices located across the country.
Malene Smith Davis, CEO of Capital Caring, located in Northern Virginia, says that the goal of hospice is to make the terminally ill “feel as well as possible for as long as possible” by tending to the patient’s medical, emotional, and spiritual needs. Since its inception in the 1970s, the number of people who have used hospice services has grown (1.6 million Americans used hospice in 2011), but misconceptions about what hospice is and what it isn’t continue.
Myth #1—Hospice is for those whose lives are “touch and go.” Far too many people believe that hospice is for individuals who have only weeks to live. The truth, according to Davis, is that the terminally ill or their families can and should tap into hospice services as soon as possible. “Hospice services are designed to alleviate pain so that the person can enjoy their life for as long and as comfortably as possible. When pain is controlled, patients are better able to visit with their loved ones, eat their meals, sleep comfortably, and do the things that matter to them.” Hospice team members include physicians, social workers, nurses, home care aides, and dietitians. Importantly, hospice also provides critical linkage with professionals outside hospice, including pharmacists and those in the hospital system.
Myth #2—Hospice is only for cancer patients and the aged. Though many cancer patients use hospice for end-of-life care, anyone with a terminal diagnosis—Amyotrophic lateral sclerosis (Lou Gehrig’s disease), Chronic Obstructive Pulmonary Disease (COPD), heart failure, and those in the late stages of Alzheimer’s disease and Dementia—can take advantage of hospice care. Terminal disease can inflict anyone, of any age, and hospice can provide valuable services to these patients and their families.
Myth #3—Hospice requires you to leave your home; hospice services are carried out in a special facility or hospital wing that is dedicated to the dying. Hospice services are generally administered at the patient’s home—where most people want to be. However, should a patient’s condition warrant it, hospice services can be provided at a hospital or hospice facility.
Myth #4—Unless you have private insurance, hospice is expensive. The truth is, hospice is accessible and affordable. Hospice often is covered by private insurance, by non-profits, and through Medicare. In fact, hospice services—visits, medicine, equipment, etc.—are completely covered by Medicare Part A with no deductible or co-payment. “It’s one of the best kept secrets in health care,” says Davis. “One of the problems is that medical professionals don’t feel comfortable discussing the end of life, so many people don’t know that they should even [be] considering hospice.” For her part, Davis has a note in her own medical chart reminding physicians in charge of her care not to shy away from the topic. It says gently, but pointedly: “When it’s time, don’t be afraid to speak to me about hospice.”
Myth #5—Hospice is only for the dying. In truth, hospice treats the patient and his/her family as a unit. Support—social services, medical, home care, etc.—are aimed at helping the unit as a whole. In fact, hospice is mandated to provide services to the family for 13 months following the death of the patient. “We can help the family in many ways following the death of a loved one. In one case, we helped a widow in her 50s obtain a driver’s license for the first time in her life. It was an important way that she could take control and improve the quality of her life,” says Davis.
Dettmann fell victim to these myths when her first husband died, but years later she came to understand and appreciate how hospice services can bring peace to the dying and those they leave behind. “John and I definitely could have benefited from hospice services, but no one told me about it. Years later, I saw what a difference hospice made in the life of my 94-year-old mother-in-law (Dettmann remarried in 2007). She received music therapy, extra baths, and wonderful care. It would have been so nice to have had that kind of support when John was dying.”
Just as the years of working in the school system had unique challenges, so too does retirement. But by using the talents that were showcased during the years of working in the classroom, on the bus, or elsewhere with the school system, you can be prepared for the months, years, and decades ahead.