It used to be that elder law was confined to individuals in their eighties and nineties. In the last few years, we found that the children of our older clients were so unnerved by what happened to their parents that they wanted to do some planning themselves. Additionally, we were finding that many people in their late sixties and early seventies were coming down with illnesses previously associated with older age — Parkinson's, Alzheimer's — leading to some very interesting and important work.
Some of our boomers are still working, but many are now retired. Many have nice retirement plans, real estate, or other investments. Some have vacation homes, businesses, and life insurance. Most have taken their Social Security. And almost eight out of ten of us will face some form of long-term confinement before we die — so this planning is entirely within reason.
"Most people worry about their retirement, but they focus on the wrong things. Most think they simply must pack as much as they can into retirement plans. We believe that 'planning early' is a better idea."
Is it reasonable to practice elder law for a "younger" client? We think the answer is a resounding yes. Here are the key questions every boomer should be asking:
What is the most beneficial time to take Social Security?
When you take it has a dramatic effect on the monthly amount. And remember — if confined to a nursing home, income must be spent down on care each month.
How should you choose your pension?
Do you have the option of an annuity vs. a lump sum? How does each impact you if you require long-term care? Should you choose a joint and survivor pension option? Keep in mind that income cannot be saved, but assets can.
When should you start drawing on your IRA or 401K?
If you wait until 70 to take Social Security, you'll receive more — but two years later you'll be required to take money from retirement accounts, affecting taxes and exposing assets to long-term care costs.
How are your estate planning documents?
Do you have up-to-date Powers of Attorney and Advance Directives? These are perhaps more important than your Will — they are needed when you get sick, not when you die.
What is your mix of assets?
We like clients to have a balanced mix between retirement and non-retirement assets. Otherwise, if someone gets ill, you might be required to access retirement accounts and incur large tax bills.
Are there assets "available" for long-term care funding?
Vacation homes, timeshares, insurance policies, annuities — these can often be dealt with and protected prior to any long-term care event if planning happens early enough.
Are there family health issues that make planning more urgent?
Is there a history of Alzheimer's, Parkinson's, strokes, or MS in your family? These factors add real weight to planning for long-term care sooner rather than later.
Are there any family members with disabilities?
A Special Needs Trust funded early may be drafted with more favorable terms. Remember — there is a five-year lookback for gifts, and it is always better to plan before a nursing home confinement appears in that window.
Is long-term care insurance an option?
Better yet, is a Life Insurance Retirement Plan with a Long-Term Care rider an option? You may be healthy enough in your early sixties to take advantage of planning options that would not be available later due to health issues.
What about Medicare, supplemental plans, and prescription plans?
Most boomers coming from an employer plan had little reason to think about these issues. Most of our older clients have no idea what their Medicare plan covers. Most don't know the difference between an advantage plan and a supplement — or how skilled rehab is handled. Do not wait until you are in a hospital to find out.
There are many reasons to address these important issues now rather than later. Most people worry about retirement but focus on the wrong things. We believe that planning early — not just packing money into retirement accounts — is the better approach. The families who navigate long-term care most successfully are the ones who planned before they needed to.