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Long-Term Planning 101: When to Start and What to Consider

A senior couple shake hands with a financial advisor

We’ve all used the phrase, “Timing is everything.” Nowhere are those words more meaningful than when it comes to long-term planning for your senior years. To put it another way, the longer you wait, the less you’ll have saved, the fewer options you’ll have, and likely the more unknowns you’ll face.

Growing older is expensive. Even the healthiest seniors tend to visit the doctor more often, have more conditions, and take more medications. If you add in the need for a higher level of care, it can be astronomically expensive. Today, the median cost for a room and care in assisted living is just over $4,000 a month or over $48,000 a year. A nursing home will cost twice as much. Think staying in your own home with a home health aide is a better deal? At an average cost of  $20/hr., 8 hours a day, seven days a week, you’ll be paying $4,480 a month – and you’ll still have all the responsibilities that come with homeownership.

The time for long-term planning is right now – before you’re any older. But where do you begin? This overview will walk you through some of the key steps to take. First up, it’s important to have the right experts in your corner.


The Experts Everyone Needs.

Two key experts everyone should have on their long-term planning team are a professional financial planner and an attorney skilled in estate planning. 

Financial Planner –  Long-term financial planning is critical to a comfortable, successful retirement life. A qualified planner has the expertise to assess your current financial situation, review your investments and savings accounts, help you set goals, and recommend the best strategies for reaching those goals.

Additionally, as you age, you’re going to need advice on retooling your investment strategy to best protect what you’ve accumulated in your nest egg and continue to help it grow. This often involves changing up the balance of bonds to stocks. Your financial decisions can impact your estate and tax liability. A financial planner can show you how. Financial planning is a complex and important part of setting up the best retirement possible – working with a planning expert is a wise move and, of course, you’re never under any obligation to follow their advice to the letter. This is your life and your decision.

Estate Planning Attorney – Estate planning is another key piece of the long-term planning puzzle. Your assets, extensive or modest, need to be protected from legal snags. This is especially critical if you own a business of any kind. Part of the estate planning will be to draft a Will to protect your financial assets, designate who will care for children or pets, and how your assets will be distributed or liquidated. 

An estate attorney will also draft other legal documents that help protect critical decision-making freedoms. These can include:

  • Designating a Healthcare Power of Attorney – Detailing who can make healthcare  decisions on your behalf if you become incapacitated)
  • Designating a Power of Attorney – Who will handle your finances if you’re  unable to do so or die)
  • Setting up a Living Will – Detailing your wishes about whether to use life-prolonging treatment if you have a life-threatening condition) 
  • Creating an Advance Directive – Established in advance of a potential healthcare crisis (such as a coma, late-stage dementia, traumatic injury, etc.) when you cannot communicate your wishes) detailing your care choices to doctors and other caregivers.


Preparing for 1,000 Possible Scenarios

It’s one thing to save for that retirement vacation around the world. But how prepared are you to pay for a devastating illness that requires long-term care? What resources will you have to cover the expenses? The best kind of financial planner helps clients prepare for all kinds of life scenarios. In fact, many now use applications that can take a client’s data, run it through up to 1,000 positive and negative scenarios, and let the algorithms determine if that client has the financial resources to handle them.

The general rule suggests you need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses. So, for example, if your projected retirement expenses exceed Social Security and pensions by $20,000 a year, you might need a nest egg of $300,000 to $400,000 to bridge the gap.

Medicare may help with some expenses. Other insurance can provide some relief. But these won’t pay for everything, which leaves you to rely on your own assets to cover the remaining costs – costs that will continue to soar each year, if the current pace continues.

For standard health care alone in retirement, today’s average 65-year-old couple will spend $285,000, according to an estimate by Fidelity Investments. Long-term care expenses would be on top of that amount.


What Income Sources to Shore Up

If you’re still working, your financial planner will help you set a savings target, i.e., how much you’ll want to set aside each month to meet your retirement needs and goals. Keep in mind, today’s retirees are living longer – your nest egg may need to last for 30 years or more.  If you’re still employed, growth stocks are a good option.

As you near retirement or are in retirement, it’s wise to begin to shift toward more conservative investments, such as bonds,  to protect what you’ve accrued to date. At this point, a good financial planner will likely recommend a mix of cash accounts, some stocks and some bonds. Your goal of course is to maximize your returns while minimizing your risk.


Your Worry-Free Retirement Begins Here.

Moving to a Life Plan Community in the earlier years of your retirement is a smart way to prepare for the increasing healthcare needs that might come as you age. This video can give you a look at what it means to live in a Life Plan Community like Crestwood Manor. Here you can enjoy predictable healthcare costs, along with access to a continuum of care without having to move again, sell a house, and manage other financial planning headaches.

If you’d like to learn more, complete our contact request form; we’ll be in touch to answer questions and, if you like, set up a tour.

Need information? Right this way.

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