Senior Financial Strategies for Retirement and Long Term Care Costs


LTCAt Regal, our clients often tell us they wrestle with two competing desires. They want to help their children financially, but also want to be sure that they can enjoy their retirement and still be able to pay for any Long Term Care that is needed for themselves. No one wants to be a burden to their spouse or their children. Or run out of money.

Evaluating the true cost of retirement in these financially trying times can be a frightening task. John Ruhl, Managing Director of the Ruhl Group of Northwestern Mutual, points out that, “Retirement is all about cash flow, not about how many assets a couple has, and a portion of that cash flow should be guaranteed to last for life.” The answer to the question, “How much money do I need to retire?” depends on more than inflation rates and the length of your retirement, the answer also depends largely on your health! Retirement may come sooner for those in poor health, and later for those aging well. The higher inflation rates are, the higher healthcare costs will be for those with declining health and serious medical issues. Remember that life expectancy in years is increasing due to new medications and medical procedures, but even so most everyone living into their 80s and 90s will need some type of Long Term Care (LTC) whether in a facility or in their home. Be proactive and have your financial support team help you plan now for LTC for the optimal outcome.

A solid financial support team for Seniors should be comprised of a financial advisor, as well as an accountant and an attorney. There are a wide variety of options your financial support team can present to help you reach your retirement goals, protect your assets, generate cash flow, and be sure you have the money to pay for healthcare, medical needs and LTC.

It is critical that Seniors’ financial planning meetings include conversations about LTC.  With the population continuing to age at the current rate, the need for assistance with the Activities of Daily Living (ADL) such as feeding, bathing, dressing, toileting, and transferring, will continue to grow. What if an individual or their loved one develops dementia? Medicare does not cover long-term care either at a skilled nursing facility, assisted living community, or at home. The government program that can pay for some long-term care is Medicaid rather than Medicare, but remember that Medicaid is mostly available to Seniors who have already spent down most of their assets on care, and that should be a last resort option. Future financial plans need to be made for retirement, and estate planning needs to be done of course, but remember Long Term Care should be a critical component of any plan, and the best financial planners and investment managers will work with the legal and accounting professionals employed by their Senior clients to incorporate it!

Many emotional issues that need to be navigated for Seniors later in life are directly impacted byHappy seniors finances. One of the most important is housing, including downsizing and relocation or the decision to stay at home. Due to declining health, decisions may need to be made about home health and private duty nursing options or transition to an assisted living facility or nursing home. Due diligence and financial analysis of the options can be facilitated by your financial consultant, so it is best to choose one with expertise in financial planning for Seniors. Sometimes the amount of funds needed are substantial, so LTC insurance is a popular option to consider because the premium paid is pennies on the dollar compared to the benefits that are delivered.

In addition, other options to explore that provide money for long-term care are reverse mortgages, buyback plans, health savings plans, and life settlements.

John believes that “providing Senior financial planning demands more than just sophisticated technical expertise, but also requires the emotional intelligence to understand a client’s needs, and the sensitivity to be flexible when those needs change.” John and his team of financial planners and investment managers usually suggest a number of strategies for safeguarding Seniors’ assets and protecting the nest egg for the sunset years, as well as protecting their clients from financial fraud. “Diversification between risk, liquidity, and taxes is critical in this planning,” John emphasizes.

 “It’s never too late to start saving,” counsels John. The percentage of a retiree’s income that will need to be replaced upon retirement will vary according to savings habits.  A person who saves a large portion of their wages while working is used to living on less current income and therefore will probably need a lower replacement rate to maintain their current lifestyle. Good ways to start saving begin with an employer’s 401(k) program. Also consider a traditional or Roth IRA, mutual funds, variable annuities and life insurance. John advises that, “With adequate life insurance, disability income insurance, funding for long-term care and other financial products, individuals can refrain from tapping into savings to cover expenses.”

John says many of his Senior clients have been saving their whole lives and accumulating assets, “…but are not prepared for the complexities and differences in the distribution phase during retirement.” John believes any financial plan should be reviewed periodically to ensure there are enough assets to cover needs, as well as to make any adjustments due to changes in health status or wish lists. Inflation is a key piece to the puzzle of retirement costs, which is why portfolios for retirees need to be optimized to account for inflation. Spending will probably have to be adjusted down as inflation goes up!

Additional Considerations for Seniors:

     ~  Creating a flexible lifestyle and spending plan that balances current income and asset levels with retirement goals;  

     ~  Exploring how Medicare and insurance options will cover potential healthcare costs in the future;

     ~  Making sure there is enough diversification in the portfolio to cover market fluctuations;

     ~  Taking advantage of tax savings by coordinating Roth conversions with IRA required minimum distributions, investing in assets with lower tax rates while maximizing Social Security;

     ~  Understanding many long-term care needs at home are not covered by long-term care insurance especially in the initial phases of the need for care.

Regal has many clients that need only minimal supervision in the home with medication management, assistance with shopping or transportation to and from doctors’ appointments. Many clients also ask for help with preparing meals and need some light housekeeping. Seniors need to realize that these needs alone do not trigger benefits from a LTC policy. LTC insurance usually comes into play further down the road when the individual needs assistance with the ADLs discussed above, or is suffering from cognitive impairment, so financial planning must include options for funding the early stages of care needs.

The best financial planners are aware of their clients’ financial history, net worth and goals for retirement. The benefit of having a trusted advisor with the ability to integrate tax, estate, retirement, insurance planning and risk management, along with investment planning, will give Seniors the ability to fund their retirement and live the kind of life they want to live.

CONTACT US: Regal believes Seniors should have the right to be cared for in their homes and age with independence and dignity if that is what they wish. Financial planning to provide for LTC, whether Home Health or Care Management services, allows elderly individuals to do just that! The Regal team is committed to providing Long Term Care services that exceed industry standards as well as exceed client expectations. Regal clinicians, care managers, caregivers and live-ins all advocate for our Senior patients while providing the best possible care and medical assistance. Regal can tailor a custom plan of care to fit the client’s needs and circumstances, while helping clients maximize their LTC insurance benefits. For more information contact Ferial Andre, RN, CCM, CDP, at 561-499-8382 or ferialandre@regalcares.com.

This article is not intended as medical, financial or legal advice.

John H. Ruhl, CLTC, is the Managing Director of The Ruhl Group, and Financial Advisor with Northwestern Mutual. A graduate of the University of North Florida, he has worked in the financial services industry in South Florida since 1999. John’s areas of expertise lie in risk management and insurance planning, investments, wealth accumulation and preservation, as well as retirement and estate planning.  John is an award winning Certified Long Term Care Consultant, and a member of the National Association of Insurance and Financial Advisors. John is a proud Trustee Member of the Boca Raton Chamber, and a Chairman Level Member of the Delray Beach Chamber. John can be contacted at 561-962-2927 or john.ruhl@nmfn.com.