Plan for less happy part of retirement
There’s the retirement that looks like the commercials: biking, travel, enjoying the family.
And then there’s the one where you can’t get up the stairs anymore.
Most of us happily plan for the first, when our health is good and energy high. The second can be hard to contemplate, when health falters and medical crises change lives in an instant.
Yet a focus on just the active part of retirement can shortchange your quality of life once you begin to decline, which is why financial advisers suggest you also look at how you’ll live in that later phase.
Here’s what you should consider for that second stage.
Certified financial planner Dana Anspach of Scottsdale, Arizona, doesn’t want her clients to prematurely give up their homes or make other moves that may not suit them. One couple she advised, for example, moved into a continuing care community — one that includes independent living, assisted living and nursing home care — in their 80s and moved back out again a year later because they couldn’t entertain or decorate their apartment the way they wanted. (They used their refunded deposit to buy a condo and had enough money to pay for in-home care.)
Anspach also has heard horror stories of elders who stayed too long in unsafe conditions until health crises propelled them into the hospital — and left their families scrambling to deal with the costs, their care and what to do with the family home.
The key, planners say, is to start thinking and talking about how you want to cope when your health begins to fail.
“You have so many more options if you plan earlier and set up the trajectory of where you’re wanting to go,” says Danielle Howard, a financial planner in Basalt, Colo.
Howard starts with the somewhat easier decisions, such as whom the clients want to make medical and financial decisions should they become incapacitated. Then the discussion moves to the harder topics — imagining life when they can’t navigate stairs or handle daily activities such as dressing or bathing themselves.
Could they stay in their home? Who will provide their care, and how will they pay for it?
Anspach advises clients who don’t have long-term care insurance or family members willing to provide care to save their home equity for such expenses, rather than using it to boost their retirement income.
If parents do expect children to help, Anspach says, they need to make sure the kids are on board and that those kids’ lives are stable enough to provide care if the parents move closer.
Parents also should consider how they can make things easier for their caregivers, says Ed Vargo, a financial planner in Cleveland.
His mother-in-law, Rose Forrester, understood those dynamics well. Before she retired three years ago, Forrester was a physical therapist who provided in-home care to older patients. Forrester and her husband, Dan, began to talk about what they should do to make things easier for themselves and their kids in coming years. Neither wanted to leave their home of four decades, but both realized its stairs and layout would be tough to navigate someday. The couple moved to a one-level, ranch-style home three years ago, when he was 68 and she was 66.
Vargo is now talking with his father about moving closer.
“There’s a tendency for people to tell other people what they should do. That doesn’t really work,” Vargo says. “Have a discussion, share your concerns, but be patient.”
Single, childless and 68, Steven Gold has begun to think about future mobility and independence. Although in good health, he can foresee a time when he won’t be a confident driver, if he can drive at all. While he hopes to continue to live in his suburban Detroit home, he wonders how he will be able to get to places like his doctor’s office and the supermarket if his driving becomes impaired.
For Gold and other older adults, self-driving cars might be a solution.
The number of U.S. residents age 70 and older is projected to increase to 53.7 million in 2030, from 30.9 million in 2014, according to the Institute for Highway Safety. Nearly 16 million people 65 and older live in communities where public transportation is poor or nonexistent. That number is expected to grow rapidly as baby boomers remain outside of cities.
“The aging of the population converging with autonomous vehicles might close the coming mobility gap for an aging society,” said Joseph Coughlin, director of the Massachusetts Institute for Technology AgeLab in Cambridge.
He said that 70 percent of people older than 50 live in the suburbs, a figure he expects to remain steady despite a recent rise in moves to urban centers. Further, 92 percent of older people want to age in place, he said.
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Coughlin said on-demand services like Uber and Lyft were viable alternatives to autonomous cars, but are not available in many areas where older adults live. Although these companies offer limited appfree services, some older people are wary of riding with strangers and being able to identify the right vehicle. Gold said such services were too expensive for regular use.
A recent study led by Maria Torroella Carney of Northwell Health in Great Neck, New York, found that 22 percent of baby boomers are now or at risk of becoming elder orphans, with limited access to transportation.
Along with other firms, automakers including Audi, General Motors, Ford Motor, Nissan, Honda, Mercedes-Benz, Volvo and BMW are all in the race to reduce or eliminate the amount of time a person in a vehicle is actually driving.
There are several levels of autonomy, going in stages from driver assistance to full automation. For example, by 2020 Honda is aiming to bring to market a vehicle with a high level of automated capability in highway situations. By year’s end, Volvo plans to put highly automated XC90 vehicles in the hands of real-world drivers in Sweden as part of its Volvo Drive Me program.
Within the next four years, BMW hopes to have cars on the street with mid-level automation. BMW and other companies are also working on driverless prototypes that have no steering wheel, brake or gas pedal.
Still, a world in which fully automated cars are common remains many years away.
Steven Gold, 68, is beginning to think about his future mobility. He wonders how he will be able to get to places like the supermarket if his driving becomes impaired.