What are we doing to our elders?

Have you ever been in a situation where you have been working really hard to navigate some new challenge or to work towards some high personal goal, and then midstream find yourself pausing and thinking: “Something’s not right here. We need a reset.”  I have had that feeling lately as a financial advisor helping people plan for their later years. I’m wondering if you agree that as a culture we need to press the reset button. Here’s why:

In our society senior citizens are asked to navigate some really challenging personal finance tasks as they age, without much help or clear explanation. No one rang a bell, but it is a sobering turn of events.

Consider these core financial planning areas and what we ask our older citizens to navigate:

SOCIAL SECURITY:

Isn’t this odd:  Only people who are by definition heading towards old age and eventual cognitive decline are the ones who by law are allowed access to their Social Security account information online. On the one hand, that’s appropriate. Web access to your Social Security account gives you the ability to specify where monthly payments will be electronically deposited. But if there were a safe view-only portal, advisors could do a better job helping clients figure out their optimal claiming strategy, which by the way, if you are or have ever been married, is not an easy task.  Like most advisory firms, we use special software for this task. If there were safe view-only access, adult children could help their aging parents understand their daily cash flow and retrieve tax data easily. Before online access became available, you used to get paper statements, and then you did not, and now you do again unless—whoops—you are under age 60 and have already set up online access to your account, and then you don’t. This is crazy.

MEDICARE:

By policy, in our country, there is general access to government health insurance at your age 65.  Are you aware of the associated multiple deadlines for capturing standard premium rates and avoiding preexisting condition limitations?  Did you know that you must sign up for Medicare Part A—you know what that is right?—during a specified time around your age 65, but you don’t have to sign up for Medicare Part B if you or your spouse continue to work for a large, (more than 20 employee) company?  If you get prescription drug coverage through Medicare Part D, do you know how, when, and why it is important to reshop coverage every year?  If you are on Medicare and have high adjusted modified gross income this year (> $170,000 joint filers, $85,000 for other filers), did you know that your Medicare Parts B and D premiums will spike upward two years from now, unless at that time you file an appeal, and follow through as the appeal process bogs down?  (Every older person has a Medicare appeal file that they are carefully managing, right?)

When you shop for a new physician, as an older person you probably know to inquire if the physician accepts Medicare patients. Did you know to also ask “Do you accept assignment?”  If not, you might be surprised by an unexpected bill for the difference between what Medicare pays and what the physician charges.  Not all Medicare physicians accept what Medicare reimburses. Did you make an appointment for the initial and then subsequent annual Medicare “wellness” visits?  Those appointments are paid for by Medicare—unless your physician comes into the examining room and offers you some advice and so potentially turns the free wellness visit into a regular physician visit for which you might have a balance due.  Did you have a recent colonoscopy, one of the free screening tests paid for by Medicare?  I hope they didn’t find a polyp that had to be removed!  That can change the “free” screening to a billable event.  If you go to the hospital, do you know why it matters to your pocketbook whether you are admitted or held in an observation status, and what to do about it? That’s the first issue you want to address with your medical team upon arrival at the hospital, right? Who is able to be on top of these kinds of details at any age or health status?

CUSTODIAL CARE EXPENSES:

As a society, we’ve made a policy decision to provide a safety net for the costs of acute illness in old age primarily through the Medicare program.  But the costs of chronic care, which all but those of us who die suddenly will experience, are left to the individual to figure out. Common strategies are complicated and subject to change.  For example, long term care policies as originally configured required close comparison of fine-print language to discern the better policy.  Now, tax-qualified policies have standard language, but also rapidly increasing premiums. Purchasing coverage is no longer a slam dunk, no-brainer decision, and neither is responding to the periodic premium increases.  Nontraditional solutions are emerging, and they are typically also complicated insurance products.  How well equipped are you and your family to evaluate a hybrid life/long term care insurance policy? Advisors are scrambling to be on top of the important details—and on other emerging strategies, e.g. reverse mortgages, as well.  These are planning tasks that in our culture we expect older people to address on their own, competently, without stress and anxiety, and without massive error.  Really? For most older people, at some point just paying regular bills is challenging, and figuring out how to make a claim on a long-term care insurance policy is challenging no matter your age.

INVESTMENT MANAGEMENT

Since fewer and fewer people have pensions, more and more people are left to self-direct their retirement portfolio.  Deciding upon and implementing an investment strategy is not something most people learn in school or from their parents.  And who learns in school about the optimal way to safely convert portfolio wealth to lifetime income?  Perhaps a few economists?  But we ask seniors to manage these tasks on their own, everyday, far into old age. What do we think the result will be?

RESIDENCE

It used to be you lived at home and/or moved in with your children in your later years.  These days you have a wider array of choices.  But who among us, young or old, is naturally adept at discerning the right retirement community, figuring out the optimal time to move in, choosing the appropriate financing strategy, and then monitoring the community for ongoing quality? In our society, we leave those decisions to the aged, with sporadic help from their well -meaning, typically very busy, and also often out-of-state and sometimes also comparably ignorant adult children. Wow.  This isn’t a scandal?

Perhaps not a scandal.  No one is trying to do harm. But collectively we have much to ponder about what we are asking our elders to manage in their later years.  It’s not a situation that will change quickly.  Perhaps the best take away message at this time is to be aware that as you age there are some important financial planning challenges that will be new to you and arranging to get help with these decisions sooner rather than later might be a good idea.  Then from a cultural point of view it’s interesting to think about the idea that how we treat our elders is the best guess of how we will be cared for ourselves in old age.

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