Financial Planning in the Age of Dementia

By
Jeff Motske, CFP®
May 29, 2018
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We live in a dynamic and inspiring time. Advancements in healthcare are doing wonders for retirees. Many are living longer, in greater physical health, maintaining their mobility and independence. However, there has also been a growing impediment to that independence – dementia. This syndrome that characterizes the decline of cognitive functions and encompasses degenerative diseases like Alzheimer’s, Parkinson’s and Huntington’s is impacting more and more every year. While it can be very uncomfortable to consider yourself or a loved one suffering from such an illness, living in this age of dementia makes planning for its onset a necessary endeavor.

The statistics are sobering. Those who are diagnosed with Alzheimer’s disease can typically live four to eight years after the initial diagnosis. However, there are also those who can live up to twenty years after their first diagnosis. As this is a disease that wrecks the mind, not the body, some can live up to 5 years in long-term care, rather than the typical two years of other illnesses. Needless to say, the costs of care can be staggering. With expenses ranging from various prescriptions, personal care supplies, limited or long-term care services, there is clearly a lot to plan for. Many rely on Medicare to cover the expenses. Yet, Medicare does not cover everything, oftentimes paying up to 80% of costs, only covering fees that are considered “medically necessary” and taking time to determine what falls under that qualification.1 When you or your loved one is struggling daily with the complications of dementia, hope can seem far off or entirely out of reach.

Due to the subtle ways symptoms can first appear, many can go years without a diagnosis. Unfortunately, that does not mean that the illness is not affecting their lives. While there are specific stages of decline with various forms of dementia, financial matters are generally impacted immediately. Memory suffers, with individuals forgetting to stay current with their bills or having issues understanding their bank and account statements. With subsequent stages, financial skills, along with others, decline further. It can be a rapid and steep decline. An individual’s independence, financial and otherwise, can be compromised very quickly.

This is why it is very important to discuss financial and legal matters once a loved one has been diagnosed, regardless of whether it may feel awkward or uncomfortable. The sooner these conversations take place, the better. There is a lot of information to cover and a lot of decisions on the possible future to make. Most importantly, the earlier the conversations are started, the more of a role the diagnosed person will have. At the end of the day, that is what we all want, for our loved one's wishes and desires to be upheld, even when they may no longer be able to vocalize them.

In addition to helping our loved ones afflicted with these diseases, we cannot forget the loved ones providing the assistance. The strain that can get placed on a familial caregiver can often get overlooked. If not adequately planned for, some will dip into their savings and sell their investments to cover the mounting costs to care for their loved ones. Additionally, the stress of the situation can detrimentally impact the physical and emotional health of the caregiver, which can put both individuals at risk.

Clearly, there is a lot to consider, and for many, it is easy to get overwhelmed, flounder in all the unfamiliar information and overlook that which we are not well-versed on. This is where your financial professional can assist you, both in the midst of this difficult time and also well before the actual diagnosis. They can help you make decisions and preparations, as well as educate you on the myriad of things you may not be aware of but need to know. Additionally, Trilogy Financial advisors are trained to not only identify when clients may be exhibiting symptoms of dementia but to continually monitor these behaviors as well. We truly do take our clients’ well-being seriously. Many individuals I have encountered have two distinct fears about growing older. The first is running out of money. The second is becoming a burden to their family. With dementia, those two fears can become a reality. However, with the proper preparation and planning, they don’t have to be.

Sources: 1. https://www.medicareresources.org/faqs/what-benefits-does-medicare-provide-for-alzheimers-patients/

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By
Windus Fernandez Brinkkord, AIF®, CEPA
February 22, 2018

You just realized you need a budget. Whether it's because you'd like to be saving more money, you plan on investing in a retirement plan, or you want to straighten out your current finances, you know that having a reliable budget would make your life easier.

Creating a budget for the first time can be one of the most overwhelming experiences, especially when you're just starting to look critically at your financial situation.

Take a deep breath and don't stress out! There are just a few simple steps that you can take to reach a reliable, stable budget. I have some excellent pieces of advice that I give to all my clients, family members, friends, and even neighbors. Let me guide you on this financial journey.

Ready to get started?

__________________

Step One: Track all of your expenses

The first step to getting figuring out your finances is to figure out what you have been spending. Print your bank statements for the last three months and categorize each item in your statement on to a new spreadsheet. The Federal Trade Commission has a convenient website www.consumer.gov suggests categorizing every expense, including:

  • Car Expenses
  • Food
  • Clothing Expenses
  • Insurance
  • Credit Card Payments
  • Misc. Expenses
  • Entertainment/Going Out
  • School/Business Expense

Once you have your spending history, review your daily, weekly, and monthly expenses. Looking at the big picture and the tiny details all in one place can help you make small changes that have significant impacts on your finances. Reviewing all of this information lets you easily formulate your budget for next month without the hassle of digging through your bank statements.

Step Two: Set realistic goals

Start with a small, short-term goal. Set one finance goal to obtain over three months and use smaller milestones to meet the finish line you set for yourself. Use each week to reassess your goal and make adjustments as needed. When the goal is achieved, make another, and another, and another. Goals may require modifications, but it's an excellent way to set yourself up for financial success. You'll have something to be proud of every time you pass a milestone. And when the goal is reached? Reward yourself with something—that's still in your budget, of course.

Step Three: Make adjustments

I can't stress this enough—once the budget is set, don't be afraid to readjust as needed. There is no shame in making necessary changes to your budget. Situations change all the time, and nothing has to be concrete. Flexibility is key. Being rigid can make things harder for you and your family if something unexpected comes up and you need to spend more in one category than previously thought. Adjust smartly, not just because you want to splurge on a new gadget or pair of shoes.

Step Four: Never stop reviewing your budget

As I said in step three, adjustments are necessary. While you should remain flexible, if you notice that month after month, week after week, your budget seems to need changes, it's time to review. Reviewing your budget monthly will put your mind at ease if everything is going according to plan or allow you to see what hiccups caused you to veer off-course. Remember, no budget is perfect, and we all have to work towards a happy, balanced budget.

This is just a beginner's toolkit that can help you keep your budget in good health. These are my starting points that seeks to help you get to your financial happy place. There's no need to stress anymore. You don’t have to be perfect. I’ve seen too many people give up on budgeting because they made one mistake and got mad at themselves.  Give yourself the grace to be human.  As long as you are making more good decisions than bad ones over a long period of time, you can work towards getting to where get to where you want to be. You have a roadmap, and you can make your finances a priority quickly with just four simple steps.

By Trilogy Financial
June 26, 2018

Created during the Great Depression as a retirement safety net, Social Security now covers an estimated 96% of Americans. These days, a record high of around 167 million people are working and paying into the system that provides benefits for over 63 million people. In fact, the majority of retirees get more than half of their income from Social Security. Security can be complicated to navigate at times, but since it’s so vital to your retirement income plan, it’s important to make wise decisions and create strategies first.

Delay Benefits

Social Security benefits are calculated using complex actuarial equations based on life expectancy and estimated rates of return. Deciding the best time for you to claim your benefits depends upon how you compare to the averages. As of today, a man turning 65 is expected to live until age 84.3 and a woman of 65 until age 86.6.

If based on your health and your family history of longevity, you believe you will live much longer than that, your overall lifetime benefit will be greater if you delay claiming your benefits to increase your benefit amount. If the opposite is true and you see little chance of making it into your mid 80’s, you would receive a greater lifetime benefit by taking it sooner, even though it is a smaller monthly payment.

Several helpful calculators are available on the Social Security Administration website. With the Retirement Estimator at www.socialsecurity.gov/estimator, most people can receive an estimate of their benefit based on their actual earnings record and manipulate the numbers to reflect different strategies. They also have Social Security Benefits Calculators that can be used to calculate future retirement benefits.

Research Investment Opportunities?

While it will differ for everyone, research from Fidelity shows that most people need to replace between 55% and 80% of their pre-retirement, pre-tax income after they stop If you are in a position where you will not be reliant on Social Security to cover your basic needs in retirement, you may be better off claiming early and investing your benefit amount in an effort to earn better rates of return. In this way, although you’d start with a smaller monthly payment, you may end up with more money than if you had waited to receive the Social Security Administration’s increased payment due to the growth from your investments.

Which Coordinate with Your Spouse

If you are married, you have the choice to receive your own benefit or a spousal benefit of50% of your spouse’s benefit. By coordinating properly, married couples can increase their total monthly benefits.

The Society of Actuaries recommends that the lower-earning spouse begins collecting benefits early while the higher-earning spouse waits as long as possible. That way, you can make use of the lower benefit while maximizing the higher benefit. In most situations, it is the husband with the greater benefit and the wife with the lower one. Women also tend to live longer than men. By following this strategy, you not only maximize the husband’s retirement benefit for use while he is alive, but it also maximizes the wife’s survivor benefit when he passes away.

Consider the Effect of Additional Income on YourBenefitsSubmit

Once you reach full retirement age (FRA), having earned income will have no effect on yourSocial Security benefit payments. However, if you begin receiving benefit payments before FRA, your earnings will decrease your payments.

Income Earned the Year You Reach FRA

The income restrictions change in the year in which you reach FRA. That year there is a higher limit; $45,360 for 2018. Once your income exceeds that limit, your Social Security benefit will be reduced by $1 for every $3 you earn. For example, if between January 1 and your birthday you earn $48,360, you have earned $3,000 more than the limit. That $3,000 excess will reduce your Social Security payments by $1,000. As soon as you have your birthday and reach FRA, though, there are no more limits. You can earn as much as you want and it has no effect on your Social Security retirement benefits.

Continuing to work into retirement may be beneficial even if your current benefits are reduced. If your income is within the top 35 years of your earnings, you will increase your aim, which is the average used to calculate your benefit. By continuing to pay into SocialSecurity as a worker, you can increase your retirement benefit even after you have begun collecting it.

Work with an Experienced Professional

A 2015 Voya Retire Ready Study found that those who consult a financial professional are more than twice as likely to have calculated how much income they need to live a rich life in retirement. Working with an experienced professional can help you navigate your SocialSecurity options and optimize your total lifetime benefit. If you have any questions or would like to see how Social Security will impact your retirement plan, I am here to help. Take the first step by reaching out to me for a complimentary consultation by calling (949) 221-8105 x 2128 or emailing michael.loo@trilogyfs.com.

Get Started on Your Financial Life Plan Today