The image of long walks on the beach at sunset is the stereotypical vision many people have of retirement. It certainly can happen that way – I know that’s what I’m hoping for! But how can we make sure that happens? The answer is to exert control wherever possible. There are key mechanisms that help people establish and maintain control as they age. These levers are; financial planning and stability, legal instrumentation, healthcare security, a progressive living plan, social support and mobility. Understanding how and when to apply these levers are the greatest modicums of control you can pull as care needs and living circumstances change in the Senior years. In this post, we focus on finances, legal framework and healthcare security. Look for part 2 that addresses the progressive living plan, social support and mobility issues.
Financial resources Money, is a powerful lever in any circumstance. Those with means will have more options. Those with more limited funds have to be good consumers in both healthcare and when it comes to cost of living in the Senior years. But here is the reality. Most retirement forecasts are based on certain assumptions such as cost of living will go down in the Senior years because presumably, you would pay off a mortgage on your house or you won’t have children that would be dependent upon you for financial support at that point in your life. But a closer look at reality shows a different picture. Many people rent for life and the reality is that the cost of assisted living is A LOT higher than most rents. Many financially support their grandchildren or have children at an older age. The point is, the notion of traditional retirement saving is somewhat outdated given the rapid evolution of Senior living and the arrival of the retirement wave known as the ‘silver tsunami.’ People are living longer and it is costing more. The best case scenario is for your retirement plan to include allocating for unforeseen costs related to healthcare and Senior needs. This is especially true if you plan to ‘age in place.’ But if you are in crisis now, the best thing you can do is to understand the challenges you face, the sources of funding you have to meet the short and long term costs associated with care,ongoing care needs and cost of living. At the very least, you can try to align your goals with your financial resources. The best recommendation I can make in this situation is to:
- Surround yourself with resourceful professionals who can guide you through the decision making process, helping you to understand your options and the consequences of each
- If in a healthcare facility, ask for a patient advocate or an ombudsman to make sure you understand the decisions you are making
- Avoid making any long term commitments
- Ask questions! Try to understand your situation and what potential outcomes could be.
- Ask about the cost of the healthcare services and for which you will be responsible
Perhaps the most important piece of advice is to be a good healthcare consumer. Readers are referred to other posts on this blog that address how to be a good healthcare consumer in more detail. But remember this – healthcare has long been an industry whose costs and pricing have remained hidden. Regardless of your financial means, the trend is moving toward the consumer shouldering more of the costs, so it behooves you to ask about cost during the process.
Legal planning What happens if you can’t make your wishes known? What happens if you are unable to express your desire for treatment options? Advanced Directives is a term that describes legal documents that outline your wishes and can clarify some of these questions if you are unable to answer them. A Living Will is one kind of Advanced Directives that allow you to provide guidance in a written format that allows your appointed legal representatives to make decisions on your behalf. The technical name for that individual is Durable Power of Attorney (DPOA). Commonly, people will appoint a DPOA for healthcare and for financial decisions. They can be the same person, but don’t have to be. Appointing a DPOA provides an opportunity to have a representative who can make decisions on your behalf if you are unable. Healthcare and financial DPOAs can be but don’t have to be the same person. Every adult should have Advanced Directives and a DPOA. It establishes a single point of contact that you can make aware of your desires ahead of time but who can also use your Living Will as a guide. There is expense to putting the legal framework in place, but it saves time, energy, anguish, money and a whole lot of confusion when things happen quickly. But most importantly, it gives you a chance to make your wishes known, even if you can’t speak them aloud.
Having legal instruments in place can give you peace of mind knowing that your desires are being represented by someone you designate to speak for you. The value that may not be so obvious however is that by appointing a DPOA is that when there is a crisis and emotions run high, there is documentation and a person to make decisions. While this seems trivial, it is not. As a healthcare provider for 25 years, I have witnessed families that have argued about what the patient’s wishes are, leading to tremendous acrimony. This is not what anyone would wish for, but again, emotions are often very raw in these situations. Advanced Directives take the guesswork out of the situation and allow the focus to be on the support of the patient and their recovery.
Healthcare and health insurance are constantly news items and up for debate. The result is a very confusing landscape that includes many for-profit players who craft their messages for the purpose of selling their insurance products. They often use fear and intimidation to then make you feel safe if you have them standing behind you. As discussed earlier, costs have continued to rise and the healthcare consumer is bearing more of that burden, so again being a good consumer is very important to better understand the apparent security you are buying. Securing access to healthcare services needs to be the overall goal while also understanding the financial exposures associated with different health insurance plans. Going into detail is beyond the scope of this post, however suffice to say it is important to understand the language the industry uses in order to fully understand your risk. We have put many of these terms in our glossary on our website. These terms are things like deductibles, co-pays, shared costs, premiums, etc. Most are forms of payment that the patient (or responsible party) pays when care is needed.
Understanding your financial exposure is complicated but directly related to healthcare security. A person’s exposure will depend on their medical history, medications taken regularly, utilization of healthcare services and several other factors. People who take a lot of medications and have a high utilization of healthcare services will have a different risk profile than those who are not requiring the same volume of meds and services. This is an important distinction when looking at securing healthcare access. Financial risk can be stratified into the cost of services, the cost of medications, the cost of housing and the cost of insurance. When evaluating any health insurance plan, it is important to under where the exposure lies.
Healthcare security then is really about making sure you have access to the services and medications you need to maximize your health. For most Seniors, this means a choice between traditional Medicare and Medicare Advantage plans. Again, being a good consumer when making these choices has the potential to have a significant impact on financial resources. Please look for our blog posts related to Medicare and Medicare Advantage plans to learn more.