When it comes to what I call financial gerontology, yes – you can avoid the most common mistakes. While an extensive discussion about taxes, insurance, savings, and longevity planning is certainly beyond the purview of a medical book about aging, I can point out the kinds of financial difficulties or disasters that I see again and again in my practice. Arm yourself and/or your loved one with financial advice to avoid these kinds of mistakes. There are significant lessons to be learned from the rapidly growing field of financial gerontology.
Here are recommendations from some of its experts to get you started:
- Begin a family dialogue about money sooner rather than later. Discussing finances is best done when everyone’s able to think calmly and clearly, before a health or financial crisis has you frantically trying to understand where a parent’s assets are stashed and how you’re going to pay for any number of unexpected and unpredictable needs that could arrive like a tsunami. If you’re the parents and you have a bashful adult kid, by all means, take the bull by the horns. If you’re a kid and Mom or Dad won’t speak up about these issues, you’re just going to have to find a way to start the conversation. Or if the word money is not an acceptable icebreaker in your house, start by beating around the bush, perhaps using “housing” as the conversation starter. Discussions about money, dwelling and health regularly come together when the issues are broached properly.
- The time to start understanding Medicare and Medicaid is now. Not knowing what Medicare does and doesn’t pay for can get you into trouble at any age when it comes to making decisions to extend or keep private health insurance. Understanding how the programs reimburse for various expenses, such as rehabilitation or a nursing-home stay, can influence your decision to buy long-term insurance; and it can help you assist a parent wade through the issues they are facing in the here and now. My favorite unbiased Web sources for information on the programs is the Kaiser Family Foundation’s sites: www.kff.org/medicaid and www.kff.org/medicare
- Become your own health and financial guru or find someone knowledgeable about financial gerontology. The resources for getting a good do-it-yourself financial education are limitless, but make sure you get your information from someone who’s not trying to sell you anything. My favorite starting point: Eric Tyson’s Personal Finance for Dummies and any of his subsequent books on mutual funds, investing, real estate, and other money matters. Another great resource is his Web site, www.erictyson.com , which offers non-nonsense approaches to money and shows you how to identify the people who are trying to get at yours for the wrong reasons.
Or, you’ve decided that working the stock market isn’t your “thing.” That means you’ll need to get sound financial help from an expert but be careful! First, be sure whoever you choose is a certified financial planner. A highly credible organization that certifies investment advisors in financial gerontology is the American Institute of Financial Gerontology; their Web site (www.aifg.org) provides links on how to find a registered financial gerontologist or RFG. On the opposite side of the spectrum, the Securities and Exchange Commission keeps a list of fraudulent financial “advisors” on its Web site: www.sec.gov.
- The several other criteria when discussing Financial Gerontology 101:
- Pay for financial advice by the clock, not by commission.
- Understand that your risk tolerance has changed with age.
- Rethink everything you’ve ever thought about life insurance.
- Keep in mind, in some circumstances, if you have enough savings to retire you may not need life insurance anymore. Alternatively, if you are leaving behind a younger dependent who will have ongoing medical expenses, you may want to continue your policy. The bottom line: Life insurance isn’t necessarily a “buy and hold” proposition as we get older. It should be revisited.
- Long-term-care insurance: not “if” but “when”
- LTC policies pay for nursing-home care or care in your home, should you need it. It usually goes into effect when you develop two or more impairments in activities of daily living. And an additional bonus: many states offer significant tax benefits for those who hold these policies.
- Consider supplemental health insurance.
- Estate planning becomes increasingly important as we age.
- Estate planning should not only include directives about how you want your assets used and where you want them directed. Estate planning must include provisions about end-of-life care and advance directives – as well as the legal aspects of aging, such as end of life guardianship.
But despite all the concrete advice that I, or anyone else, can offer – you should always be aware that retirement is a major life transition. It can be stressful. Throughout the years of my practice, I have found the most successful retirement transitions are incremental in nature – slowly reducing hours at work, retiring but taking on consulting jobs, finding activities to avoid transitioning ‘cold turkey.’ The goal here is to wind down in such a way that nobody notices. Not even you.
Mark is the Co-founder, Executive Vice President and Chief Gerontological Officer at CompassCare. He is MD, MPH and Co-Chief of Geriatrics at NY Presbyterian Hospital and a Distinguished Professor of Medicine at Weill Cornell Medical College. Mark is a bestselling author and is internationally recognized as an expert in aging.