Advanced Care Planning

By
Jeff Motske, CFP®
August 26, 2018
Share on:

There is one area of planning that gets glossed over, even by the many responsible people: long-term care planning. For so many, it is difficult to plan for something that seems so far removed from their current existence. Many also assume that their current health insurance or Medicare will cover most expenses associated with long-term care. Unfortunately, these mistakes leave them ill-prepared for the expensive reality.

As the US government estimates 70% of individuals who are currently 65 “will require some form of long-term care”.1 Therefore, this is more of an eventuality for most folks than it is a possibility. When an individual’s health starts to decline, hopefully, multiple levels have been put into place. Not only should you be concerned with who will care for you physically, you must all consider who will care for your finances.

Physical Care –The costs for long-term care can be surprising for many, with the average 65-year-old paying approximately $138,000 over his/her lifetime.2 As mentioned earlier, Medicare or private health insurance rarely covers all types and expenses of long-term care. Medicaid assistance varies by state and requires that an individual “must spend down his or her assets and meet other criteria.”3 Additionally, It is important to talk with your loved ones about long-term care options, not only about what one can afford but equally as important, what one prefers.

Ultimately, many end up paying for long-term care from their own finances – 50% according to the Bipartisan Policy Center report.4 To protect your finances and the finances of your loved ones, it is vital to prepare for these possible scenarios. There are many long-term care insurance policies that can provide you the assistance your particular situation needs. The premiums for these policies are much more affordable the younger you are. While some of these policies can get a bit confusing, a financial planner can easily go over these policies and help you determine which one would be best for your particular situation.

Financial Care – The key to financially protecting a client in declining physical or mental health lies in teamwork. The team, which consists of their financial team members (financial planner, tax professional or estate planning attorney), delegates and medical professionals. While we all continue to focus on our own particular role and duties, maintaining a professional relationship does give us the opportunity to share any concerning or unusual behavior concerning our client, as well as execute things quickly and as close to the client’s wishes as possible. Equally important is a Durable Power of Attorney (DPA), which legally allows an individual to designate someone to make financial and medical decisions on their behalf should they become mentally incapable to do so. Having these safeguards in place can save on time and hassle should health matters deteriorate and allow your delegate to focus on more pressing issues.

When so many of us pride our independence and self-reliance, declining health issues can be downright scary. I understand this well as I do my best to set my clients up for financial independence, so they can create the life they want to live. When circumstances step in and disrupt your life, it’s vital to know that you have people to rely on and safeguards to protect you.

1. https://www.usatoday.com/story/money/personalfinance/retirement/2017/11/17/retirement-planning-should-include-long-term-care-costs/866344001/

2. https://www.usatoday.com/story/money/personalfinance/retirement/2017/11/17/retirement-planning-should-include-long-term-care-costs/866344001/

3. https://www.consumerreports.org/elder-care/elder-care-and-assisted-living-who-will-care-for-you/

4. https://www.usatoday.com/story/money/personalfinance/retirement/2017/11/17/retirement-planning-should-include-long-term-care-costs/866344001/

You may also like:

By Trilogy Financial
February 20, 2024

Have you ever envisioned a life of Financial Freedom and Leisure?

Have you ever envisioned a life where the chains of daily grind are broken well before the conventional retirement age, paving the way for a life of financial freedom and leisure? Embracing financial discipline and frugality can pave the way to a comfortable early retirement, answering the pressing question: Can meticulous financial planning and a frugal lifestyle significantly hasten your journey to early retirement?

 

 

What Makes Financial Planning Crucial?

 

Financial planning goes beyond merely saving a portion of your income; it's about understanding and rectifying financial bad habits that may impede your journey towards financial stability. Everyday financial misbehaviors such as impulsive spending, credit card debt, and the lack of a structured financial plan for emergencies often go unnoticed but have a long-term detrimental impact on financial health. Addressing these personal finance habits is the first step in financial planning.

 

  • Why is Debt Management Essential? A key aspect of financial planning involves managing or eliminating debt, which can otherwise consume a significant portion of your income in the form of interest payments.
    • Did you know in the US for 50-59-year-olds the average debt is $23,719 1.
  • How Can Budgeting Secure Your Financial Future? Being unsure of where your money is going is a red flag. Budgeting is crucial to track and control spending, ensuring your expenditures align with your values.
    • Did you know the average individual aged between 65 to 74 spends about $55,000 on living expenses annually​2​.
  • How do Savings and Investments Impact Your Retirement Goals? Setting aside money for an emergency fund and future investments is essential. Automating this process by having a portion of your income transferred to savings or investment accounts can help in cultivating this good financial habit.
    • Americans believe they need an average of $1.7 million to retire comfortably, although many won't accumulate enough net worth to retire​3​.
    • As of 2019, only 11% of Baby Boomers managed to save up to $500,000 for their retirement​2​.

 

 

Screenshot 2023-11-21 at 3.06.25 PM

What Does Adopting a Frugal Lifestyle Entail?

Frugality is about making informed and restrained financial decisions to save money. A frugal lifestyle encourages avoiding unnecessary expenses and finding value in what you spend.

 

  • Examples of frugal practices include avoiding spending triggers like malls or online shopping platforms, utilizing cash over credit to prevent overspending, and finding cost-effective alternatives for everyday expenses.

 

 

Did you know 20% of Americans don’t save any amount of their yearly income, and 42% have less than $10,000 saved for retirement​4​.

 

What are the Key Components of Financial Planning for Early Retirement?

 

  • Emergency Fund: Ensuring you have an emergency fund can help buffer against unforeseen circumstances like a job loss or medical crisis, which might otherwise derail your financial plans.
  • Investment Strategy: Diversifying your investments and aligning them with your retirement goals is imperative for financial growth.
    • 84% of Americans have a higher income than their parents did at the same age, indicating potential for savings and investment if managed wisely​4​.
  • Tax Planning: Efficient tax planning can help in preserving your wealth and ensuring more of your money is working for you rather than going towards taxes.
  • Healthcare Planning: As healthcare costs can be exorbitant, planning for these expenses is crucial to avoid financial strain in later years.
    • Healthcare can be a significant part of living expenses, as seen in the $55,000 annual spending for individuals aged 65-74​5.

 

Which Tools and Resources Can Aid Your Financial Planning Journey?

 

There are myriad tools and resources available to aid in your financial planning journey. Budgeting apps, financial advisors, and online courses are excellent resources. Trilogy Financial, for instance, offers a Decision Coach program designed to provide additional accountability and coaching to individuals seeking financial guidance.

  • 37% of workers aged 25 and older, and 19% of retirees, report not knowing where to go for financial or retirement planning advice​5​.

Easily Meet with a Certified Financial Planner.

 

 

image3-1
 

How Have Others Achieved Financial Independence and Early Retirement?

 

The quest for early retirement often begins with a thorough re-evaluation of one's financial plan, identifying areas of improvement, and capitalizing on unforeseen savings opportunities. The year 2020 saw many Americans saving more, with an average of 10% more money saved compared to 2019, mainly due to lifestyle changes induced by the pandemic. Some redirected these savings towards home improvements, while others saw it as a stepping stone towards drafting a solid financial plan aimed at debt reduction, college planning, or accelerating the journey to financial independence.

 

Various individuals and communities dedicated to frugal living and meticulous financial planning have emerged over the years, showcasing diverse pathways to early retirement. Here are a few noteworthy examples:

 

 

 

  • Juan's Early Retirement Ambition: Juan, an aspiring early retiree, aimed to bid farewell to his federal job by 2031 at the age of 43. His strategy revolved around living off savings, investments, and dividends post-retirement to enjoy more time with family and delve into philanthropic ventures. Though new to the Financial Independence, Retire Early (FIRE) movement, Juan's no debt and $85,000 asset accumulation puts him in a favorable position towards achieving his goal​1​.
    • The FIRE Movement: The Financial Independence, Retire Early (FIRE) community exemplifies the synergy between frugal living and early retirement. Members of this movement, like Juan, embody a lifestyle of extreme savings and frugality, aiming to retire much earlier than the conventional age​2​.
  • Young Adults Eyeing Early Retirement: The allure of early retirement isn't confined to older age groups. One in four individuals between 18 to 34 years old has set early retirement as their significant financial milestone, driven by the principles of frugal living and meticulous financial planning​3​.
  • A 5-Year Transition Plan: A couple outlines their 5-year plan towards financial independence, with one partner continuing full-time work for an additional 3-4 years, demonstrating a balanced approach to achieving early retirement while maintaining a comfortable lifestyle​4​.
  • Frugal Living as a Fast Track to Early Retirement: The narrative of saving 75% of income, a hallmark of frugal living, expedites the journey towards early retirement, allowing individuals to accumulate substantial savings, invest wisely, and achieve financial independence sooner​5​.

 

These cases highlight the transformative impact of frugal living and prudent financial planning to achieve early retirement dreams. They speak to the importance of continuous financial plan evaluation, adapting to changing circumstances, and leveraging savings opportunities to expedite the journey to financial independence and early retirement.

 

Conclusion:

The road to early retirement is laden with challenges, primarily stemming from our own financial bad habits. However, if we create a financial plan, adopt a frugal lifestyle, and leverage available resources, overcoming these challenges and retiring early is an achievable goal.

 

 

 

 

By
David McDonough
March 28, 2023

Financial planning involves thoughtfully outlining objectives and setting goals in your Life Plan. With anything, the possibility of running into obstacles, options, and challenges throughout your financial journey is unavoidable. That’s why it is important to implement some sort of checks and balances to mitigate these challenges. Insurance is one of the best ways to account for unforeseen conditions and events in your financial plan. The thought of utilizing insurance can be daunting. It makes the possibility of losing your car or home due to an accident, flood, or fire a reality. That’s exactly why we create a financial plan – to be prepared for the unexpected. Our team is committed to coaching you through the process, so that you can make an informed and confident decision. There are various types of insurance services available that your Trilogy Financial advisor can help you navigate so you can handle the many uncertainties that life throws your way.

Read on to discover these insurance services.

Insurance Services Provided by Trilogy Financial

Every Trilogy Financial Advisor is committed to helping you build the legacy you have always desired to leave through the following services:

Term Insurance

A term insurance policy is the most common form of temporary life insurance. The term usually lasts for a specific “term” of years. Term insurance is also a form of insurance that is rented. Meaning, you pay a monthly premium for the insurance, but it expires after the allotted time frame. The duration can range from five to thirty years.

Term insurance protects liabilities that will cease to exist after a specific period, such as providing extra cashflow for raising children. It is a simple life insurance plan that protects against the possibility of an untimely death. A death benefit is granted if the insured passes away during the policy's stated tenure.

Because death is unpredictable, term insurance plans are essential. The family may experience a significant financial loss if the family's primary provider passes away. A term plan covers the loss. It benefits the family, allowing them to cover lifestyle costs and continue to address their financial objectives.

Permanent Insurance

Permanent insurance can be considered “owning” insurance coverage. Like term insurance, you pay a monthly premium; however, in permanent insurance, the range is continuous and does not end within a time frame.

For instance, even after your children have moved out and your liabilities have diminished, you may continue to carry some form of insurance to cover your loved ones and compensate for your end-of-life needs.

Permanent insurance premiums are more significant than term insurance premiums because, unlike term insurance, the insurance company may never have to pay out the policy. Permanent insurance can be used as an income and an insurance tool. Both a death benefit and a cash value factor are included. You can access the money as the value increases by taking out a loan or a withdrawal, and you can terminate the insurance by withdrawing the cash value.

Long-Term Care Planning

Long-term care planning, at its foundation, entails ensuring that you or a loved one's needs are adequately met when they can no longer care for themselves. Therefore, as you age, having a practical plan becomes more and more crucial. While many maintain their independence well into their senior years, it never hurts to plan.

Any long-term financial plan should consider long-term care costs, especially if you are in your 50s or older. You are unlikely to qualify for long-term care insurance if you already have a disabling condition. Most over 75 applicants will not be accepted by long-term care insurance providers. Most persons who purchase long-term care insurance do so between 50 and 60.

Risk Management

Risk management entails recognizing, assessing and managing risk. A well-executed risk management program is built on a foundation of standardized risk assessments to assist businesses in prioritizing their risk based on its potential impact. This procedure will inevitably reveal hazards affecting the company's fundamental competencies.

As financial Advisors, it is a part of our job to help you navigate your financial well-being, which includes helping you mitigating certain risks. Identifying your risk factors is your first defense, followed by avoiding or limiting risks to your income and survivors. Insurance is your quality line of defense.

Importance of Insurance in Financial Planning

Here are some factors that make insurance an essential aspect of your Life Plan:

  • Financial assurance: You feel safe knowing that the insurance policy will cover the damages in the event of an emergency.
  • Tax advantages: Insurance lowers your taxable income and provides financial benefits.1
  • Risk protection: Insurance prepares you to deal with any financial loss you might suffer in the event of an unplanned circumstance.
  • Meeting your prerequisites: Several insurance policies are available to cover the various risks you can encounter.
  • Peace of mind: Insurance plans assure you that your funds will not be compromised in the event of an emergency.

*This information is not intended as authoritative guidance or tax advice.  You should consult with your tax advisor for guidance on your specific situation.

Why Choose Trilogy Financial

Your financial plan should be strategically in line with your insurance. Our Trilogy Financial Advisors use a comprehensive strategy to offer insurance policies tailored to your specific needs and Life Plan. We understand the risks you face and how to help improve your financial life. Our Advisors will work with you to develop a deeper understanding of your alternatives, pinpoint practical needs and make plans for the care you and your family deserve.

To help you build the life you’ve dreamed, we collaborate with the most reliable insurance firms with a track record of being financial secure and capable of paying claims.

Get Started with a Financial Advisor Today

Everyone has a distinct level of risk, and before purchasing insurance, it is critical to identify risks and establish how to limit the likelihood of them occurring. We understand that everyone has a varying level of comfort and experience in navigating finances and Life Plans. That’s why our Advisors are committed to being both a partner and coach to support you as much or as little as you need, so you can make the best decisions for you and your family.

At Trilogy Financial, our Advisors will guide you through your daily financial decisions to keep you on track and set you up for your real-life goals. If you have any questions concerning insurance or any other element of your financial life, get in touch or visit our website today to book a meeting with an advisor

 

happily discussing insurance plan after meeting with financial advisor
 

 

Get Started on Your Financial Life Plan Today