Retirement Planning is More than Just Saving


We all have been advised to save for our retirement, which is sometimes difficult enough, but planning for retirement involves more than scrimping and saving; it involves proactively protecting our wishes.  By taking steps that protect our healthcare choices, property, and beneficiaries as we age, we not only protect what we hold dear, but what is in our pocketbooks too.

Because life is unpredictable, planning for retirement should involve securing various insurance coverages and engaging in legal planning as well as investing.  In addition to homeowners and auto insurance, to protect assets for retirement, individuals should have an umbrella insurance policy in place.   Insurance protects our livelihood and can protect those who depend on us.  Many individuals overlook the need for a long-term disability policy, which can go a long way toward protecting our retirement dreams even if our lives take unexpected turns.

Because long-term care expenses can decimate an estate and not only change the retirement outlook for the individual who needs long-term care but also for the spouse and any dependents, the opportunity to obtain long-term care insurance should not be taken lightly.  Because so many of us do not want the recurrent expense of long-term care policy premiums, several insurance companies are producing policies on smaller, cheaper scales.

One example is Bankers Life & Casualty Company, which now offers broad coverage of long-term care that includes coverage for home care, adult day care, assisted living, and nursing home care but for shorter benefit periods than traditional long-term care insurance policies.  The result is lower premiums.  While the policies can pay thousands during the benefit period, individuals who require years of long-term care may need to supplement their policies with long-term care asset planning through an elder law attorney to protect savings.  While long-term care coverage is a benefit that can make a tremendous difference during our retirement, it is a planning tool that should be secured before retirement age, when the premiums are cheaper.

Those who are approaching retirement and looking into health insurance need to also be aware that there is a limited window when individuals may sign up for Medicare and a Medigap policy, which can cover the gaps that Medicare leaves to the individual to pay.  Individuals who opt out of Medicare may be penalized with a more expensive premium if they seek Medicare coverage later.

Like insurance coverage that can save the day when the unexpected occurs, well-drawn legal documents can prevent loss of control and can help secure a smooth retirement.   A living will and power of attorney are critical to protect individuals’ wishes regarding financial and healthcare decisions.  These documents can also appoint an agent to make decisions on behalf of an individual who can no longer make his own decisions.  These documents should be comprehensive and explicit so that the agent understands the directives that he is to carry out.

When the choice of agent is carefully made under these documents, the documents serve to prevent elder abuse.  The documents should be specifically drawn so that they are in line with the individual’s personal, ethical, and cultural beliefs.  For instance, if an individual would rather obtain care at home than enter a nursing facility, the preference should be written into his legal documents.

Those with intellectual property to protect need to take additional legal planning steps to secure their control over their property.  Those who fail to plan and are later diagnosed with dementia risk losing their intellectual property to predators looking to gain from it.

While Wills can control the future after an individual has passed away, Trusts can help the individual protect himself during his lifetime.  Choice of trustee is crucial, as a trustee has the responsibility of managing and investing assets.  A trust can provide money management to an individual who establishes it during his lifetime, which can help secure financial stability in retirement and also discourage financial abuse of the elder as he ages.  Often, an institutional trustee is recommended to avoid conflicts of interest among children and protect a parent’s assets if the parent becomes unable to handle financial affairs.

Individuals who are already retired or quickly advancing to retirement age should also consider long-range legal planning to protect assets such as their home in the event they or their spouse must apply for Medicaid benefits to cover long-term care expenses.  If any deeds are to be drawn up, they should retain a life interest for the homeowner to prevent opportunities for financial abuse by their beneficiaries.

Many individuals in retirement have the responsibility of caring for an elderly parent or a younger beneficiary with special needs.  In many cases, the caregiver may want to be compensated for services, and a written legal care agreement can be drawn up.

Often, retirement plans themselves are at risk if a spouse enters a long-term care facility and requires Medicaid benefits.  Through legal planning, a healthy spouse who does not require care can often shelter retirement assets from being counted toward the strict Medicaid eligibility rules.

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About Dana Bookbinder

DANA E. BOOKBINDER, ESQ. is the Founder of Bookbinder Law, LLC and has been advising families throughout South Jersey for nearly two decades on legal issues concerning asset protection for long term care expenses, public benefits eligibility rules, disability planning, and estate planning. Ms. Bookbinder has been certified as an Elder Law Attorney by the ABA accredited National Elder Law Foundation.

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