Beyond IRAs: Planning for Financial Health in the Retirement Years
Whether you’re a Baby Boomer close to retirement, are already retired, are just starting to plan ahead for retirement, or you’re helping a retired parent deal with money issues, consider this a friendly wake-up call: your financial comfort during the senior years depends on careful planning and consideration of your total financial picture now.
Savings are just one key factor in retirement planning. You also need to consider housing, medical needs, insurance and your lifestyle.
We’ve spoken with several Honeck-O’Toole clients and vendors to touch on a few important aspects of preparing for the golden years. Of course, we advise you to meet with an estate planner or personal financial specialist (like those at Honeck-O’Toole) to map out a detailed, personal plan that fits your life. MORE >>
Exploring your housing options: senior residences, assisted living and full nursing care
Maine is an attractive retirement destination that offers a wide range of housing choices for seniors, including condo neighborhoods, assisted living apartments and complete medical-care nursing homes. Your choice will depend primarily on your lifestyle and health. It’s a great idea to begin exploring your options early to plan for future expenses and decisions.
One type of senior housing is Ocean View, a popular retirement community in Falmouth. Resident and Honeck-O’Toole client Arlene Clifford recently made the transition from her single family home to Ocean View. She said, “I made it because I had developed bronchitis and was housebound in my single home. I had to depend on my neighbors to bring my meals, and I thought—I really should live somewhere where this kind of service is provided. Ocean View offers meal delivery, nursing care, etc. when I need it, but I’m still fully independent in one of their private duplex cottages. Then eventually, if I need to, I can move into their lodge that offers more services. We have a lot of activities available and they furnish vans to take us to the symphony. I’d recommend it to anyone looking for this kind of living space.”
Linda McLoon, Honeck-O’Toole client and Executive Director of Kaler-Vaill, a residence for retired women in Scarborough, described a different kind of senior living facility. “It’s a unique place. Kaler-Vaill is well endowed and we can offer a very high-quality program for an extremely low price, and financial status does not affect a woman’s ability to live here. The residence is strictly for independent living because we are not licensed to provide medical services. With just 15 private rooms, it’s very personal here—almost like a family situation. We offer all kinds of amenities like a large solarium with a piano and activities, including musical programs and a wellness exercise program. Best of all, three home-cooked meals each day are served in a common dining room. We’re located close to Scarborough Beach, with a private roadway for access. It’s an ideal place for women who still want to lead a somewhat active lifestyle, but also want to enjoy the comfort, security and convenience of having all the services available here.” Visit www.kalervaill.com to learn more about the Kaler-Vaill home.
Funding alternative housing and medical costs
Long-term care (LTC insurance)
Today, a growing number of people are realizing the value of LTC insurance as they see their parents or peers develop a long-term need for medical assistance. Paul Allen, CLU, ChFC of The Buckley Group, sells LTC insurance to people from all over the country and maintains office hours at two premier retirement communities, The Highlands in Topsham and OceanView at Falmouth. Both of these retirement communities boast state-of-the-art assisted living facilities that are predominantly private pay, and LTC insurance is an integral part of their residents’ financial plans.
Paul recommends purchasing LTC insurance beginning in your 50s. “Right now, the average nursing home in Maine costs approximately $5,100 per month,” said Paul. “The cost of in-home care or assisted living care can often be as much as a nursing home. The younger you are when you start buying LTC insurance, the cheaper your rates will be and you’ll be in good shape to prepare yourself for the ever-increasing cost of housing and care.”
There are two basic types of plans: indemnity (per diem) and reimbursement. An indemnity plan is the simplest form of insurance because whatever you purchased for a daily benefit is what you get at claim time, regardless of what you spent for care. If your policy provides $100 per day in benefit for home care and you spend only $25 , you still receive $100. With a reimbursement policy, you get reimbursed for only what you have spent, up to the daily benefit you purchased, and benefits are reduced by any Medicare benefits received (unlike indemnity plans). Paul prefers indemnity contracts, but they tend to cost more than reimbursement contracts.
To determine the right amount of coverage for your future lifestyle, you’ll need to meet with an expert and review your income, housing costs, projected care costs, etc. Paul recommends, “Lock in an attractive LTC plan and rate when you’re younger and make sure you purchase an inflation rider. Look into a limited payment policy that is paid-up before you retire, so you can eliminate the drain of LTC insurance premiums on your retirement income.” There are new tax-advantaged vehicles to help you pay for LTC insurance. For example, premiums paid through the new Health Saving Accounts (HSAs) can be deducted from your taxes. For more information, you can reach Paul at email@example.com or 1-800-974-5153.
Lifelong learning continues in retirement
The practice of Tai Chi, Medical-ese 101 and Ancient Greek Literature are just some of the courses offered by the Osher Lifelong Learning Institute at USM. Their mission is providing "intellectually stimulating learning opportunities to seniors." The Osher Institute is a senior college, which means you need to be 55 or above to join, and is one of fifteen senior colleges in the state. The Web site, www.maineseniorcollege.org, lists all the courses offered in the state, along with schedules and fees. Kali Lightfoot, director of the Osher Institute, told us, "We at the Osher Institute were the first senior college in Maine and we started in 1997. The Osher Institute offers 38 8-week courses per semester (2 semesters per year plus 4-week winter and summer sessions) and we currently have 700 students enrolled this spring. Our courses tend to be in the liberal arts, but we also include specialized courses such as estate planning, taught by James Houle, Esq., partner at the law firm of Bernstein, Shur, Sawyer & Nelson." They're non-credit courses taught by high-quality volunteers who are experts or have a lifelong passion in their field. Course fees are reasonable. Fees in Portland are $25 per year for membership and then $50 for the first course and $25 for the second, which includes all books and materials.
Finding affordable, exciting travel opportunities
Retirement often means that an individual finally has the freedom to travel anywhere, at any time. The good news is—there is a wide range of travel bargains available to seniors who have a limited budget. Stan and Connie Kent of Falmouth have been traveling through elder travel program for 22 years, visiting exotic locales such as South Africa, southern England, Costa Rica, the Columbia River, and the Snake River in Idaho. In February, the couple embarked on their 18th trip with Elderhostel, a low-cost, not-for-profit educational travel program for seniors. Connie told us, “We love Elderhostel because its educational aspect makes the travel much more interesting. There are programs for every interest—nature, art, drama, music, history, gardening, etc. I highly recommend it; we travel two to three times a year.” For information, visit www.elderhostel.org or call 1-877-426-8056.
Campobello Island, once considered “the queen of summer resorts,” is a popular spot for Elderhostel travelers, thanks to The Atlantic Leadership Institute of Eastport, Maine. Program director Linda Godfrey said, “2004 marks the fifth anniversary of offering Elderhostel programs on Campobello Island, the summer retreat of the Roosevelts and several other prominent families from New York City and Boston. It is the Roosevelt connection and the early 1900s’ high society ‘Rusticators’ that form the theme of our programs—allowing guests to experience life at the glorious edge, as the Roosevelts lived it.” The six-day programs feature lectures, a one-woman theatrical show, field trips to favorite Roosevelt beaches, trails and picnic spots, a day of sailing in the Bay of Fundy, time with a naturalist at Eagle Bog, a tea party in the beautifully appointed Hubbard House, demonstrations by area artisans, musical performances, and much more. The six-day program costs about $800. To learn more about the Campobello Island program, visit www.elderhostel.com or call 1-800-483-2233.
Our financial articles are presented by Honeck O’Toole, Maine-based certified public accountants. If you ever have questions about your finances, email us or call 207-774-0882.