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
Mike Loo, MBA
April 11, 2018

Not all goals are equal in their achievability. In fact, 92% of people don’t reach the goals they set.1 While goals can be difficult to achieve, they’re not impossible. However, the best way to set yourself up for success is to set meaningful goals.

A meaningful goal sets itself apart from a standard goal in three main ways.

  1. It’s Specific and Measurable

The more specific your goal, the more likely you are to reach it. According to one study, setting specific goals led to a higher performance 90% of the time.2 The reason for this is fairly simple: the clearer the path, the easier it is to follow it to the final destination.

I hear so many people tell me their goal is to save more, spend less, or build a retirement fund. The problem with these goals is that they lack specificity. Saving more could mean saving $10 per month or $1,000 per month. You can’t track your progress or know if you’re on track toward your goal if you haven’t specified it and you can’t measure your progress.

One of the first things I tell clients is to make their goals as specific as possible. For example, instead of “build a retirement fund,” you can specify it to “build a retirement fund of $100,000.” Finally, make it measurable—”build a retirement fund of $100,000 by age 45.”

  1. It’s Relevant to Your Life

A goal is only meaningful if you’re passionate about it. Those who meet their goals do so not just because they’re hard workers, but because they are passionate about what they want to achieve. Their goals reflect their values and interests, rather than being random or something they think they’re supposed to achieve in life.

For example, some clients tell me they want to build their savings account because they’ve been told that’s what they should do. While true, you likely won’t feel very inspired to save more if you don’t have a reason for it that makes sense for your life.

I tell these clients to think of what having a savings account would mean for them. Would they feel they could sleep better at night? Would a savings account mean they could go on an annual family vacation? If they build a savings account up to a certain amount, could they finally upgrade their unreliable and problematic car?

Whatever your goal, you should be passionate about it and it should be relevant to your life, not what you think you’re supposed to achieve.

  1. Frame it Positively

We’ve all heard about the power of positive thinking, and it translates to your goals, too. We are much more likely to work toward something we want to achieve or do rather than what we want to stop doing or don’t want.

For example, rather than a goal of “stop overspending” or “spend $200 less each month,” frame it in a positive light: “spend more mindfully” or “save $200 each month.” This can help you view saving as a good thing you’re supposed to do, rather than spending as a treat that you no longer should do. It’s easy to reverse any goal, so there’s no excuse not to!

Don’t Go it Alone

The process of setting a goal is just as important as the process of working towards it. Think of your goal as the frame of a house. You can’t build a stable home without the proper foundation and a clear blueprint.

If you’re struggling to achieve your goals or aren’t sure how to set ones that are meaningful, an advisor can help. As an independent financial advisor, my mission is to make a meaningful impact on the lives of my clients and the people they love. I help families make informed decisions with their money and pursue a strong financial future, from setting meaningful goals to guiding them along the path toward the finish line.

Contact me for a no-strings-attached meeting to discuss your goals, how to make them meaningful, and what strategies can help you pursue them. Call my office at (949) 221-8105 x 2128, or email me at michael.loo@lpl.com.

1 http://www.inc.com/marcel-schwantes/science-says-92-percent-of-people-dont-achieve-goals-heres-how-the-other-8-perce.html

2 http://psycnet.apa.org/record/1981-27276-001

By
Zach Swaffer, CFP®
May 9, 2019

Whenever new technology enters the world there are two inevitable emotions: excitement and fear. The thrill of new possibilities tempered by fears of new tech failing to live up to the hype. Take, for example: Robo-advisors. A great example of the complexities surrounding emerging tech, Robo-advisors provide automated digital financial advice based upon algorithms and/or mathematical rules.

When Robo-advisors launched in 2008 they were heralded as the dawn of a new era in financial planning. Some experts even believed this advancement signaled the end of financial planning (and real, human financial planners) as we know it. Not so. Over a decade later Robo-advisors are still around; however, they have failed to take over the financial planning world as predicted and in fact many are shuttering their doors or seriously scaling back on size.

So what happened? Why did Robo-advisors fail to eliminate the role of humans in the financial planning process? At the end of the day, it comes down to human connection. While an algorithm can crunch numbers, make predictions, and even offer investment advice, it cannot form impactful and lasting relationships like a real human. Investment selection and management is a part of what financial planners do – but that is only the tip of the iceberg. Real, effective financial planners are there to prepare you for and coach you through life’s unexpected inevitables. What happens when some life event inevitably occurs or you have a pressing question about your financial plan and when you try to get an answer you reach an automated phone tree that leads nowhere? Unlike a Robo-advisor, a financial planner is a real human available to provide advice and support when you need it. Think of them like a coach for your finances!

True, a human financial planner may cost more than a Robo-advisor. But in return they provide much more value. A study conducted by Vanguard found that working with a financial planner can add about 3% to client returns with 1.50% of that coming from behavioral coaching (that’s half the value coming from coaching alone!). When you start working with a planner you are not simply hiring an investment manager. Instead, you are partnering with someone who will work with you as life evolves to achieve your unique priorities. As you progress along your financial journey you form a trusting relationship with your advisor, so whenever you have questions or concerns you know there is a real human you trust who will answer the phone and provide clarity for you.

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