In this episode of Connecting the Community, Affinity CEO Chris Zayid speaks with Financial Advisor Cara Gardner from North Coast Wealth Management about the importance of financial planning for Seniors and essential discussions you should have with your family members.
In this episode, you will learn:
– Why should you start family conversations around caregiving at the earliest?
– What questions should you ask a wealth management expert about preparing for the later years?
– What considerations should you consider when investing in your 60s, 70s, or 80s?
– Why should you have a Power of Attorney or Medical Durable Power of Attorney?
– Should you consult an attorney to prepare your Will?
– Who should be involved in the financial planning decision-making process?
– Why should you have a Financial Power of Attorney, and what are the different types of Power of Attorney?
– Why does quality of care matter in your caregiving decision for later years?
To know more, watch the episode above or read the edited transcript below.
Chris: Welcome to our show Connecting the Community with Chris. I have an exciting podcast today – it’s Cara Gardner from North Coast wealth management. It’s so important to make financial decisions, especially during these times and economic challenges that we have currently right now.
So, we wanted to have that discussion with you today and with Cara as well. So, you could listen in about these type of situations that possibly you might be going through with your parents and these decisions that you have to make when it comes down to care in your home and also making financial decisions.
Welcome Cara!
Cara: Thank you Chris, thanks for having me. Glad to be here.
Chris: It’s so valuable to have this interview today because I know all of us in different ages will probably go through the challenges that we will be discussing today and also important discussions you should be having with your own family members as well.
Cara and I are part of an organization called the Senior Compass Group, where our focus is to provide resources in the community for our aging population.
Today I wanted to discuss – what changes are you actually seeing Cara, in the marketplace that are affecting investments in the senior community.
Cara: Actually, there’s a lot going on as you are probably aware in the markets these days, but with a lot of my older clients one of the repetitive conversations I seem to be having right now is surrounding inflation. When you get to that older stage in life or of your planning, oftentimes you’re in a more conservative investment mix, which would include cash or cash equivalent type of Investments and unfortunately inflation even when it isn’t as high as it is right now, is still a very real factor and something we need to pay attention to. And so, if you have too much of your mix of investments in some of those Uber conservative investment types, you may have purchasing power risk in the future.
We have to pay attention to the fact that costs of goods and services are going to be higher down the road and certainly right now everyone is feeling that. We’ve really been having a lot of conversations with some of my aging clients surrounding that type of thing.
Why should you start family conversations around caregiving at the earliest?
Chris: Coming into the point of where they have to make decisions about caring for their parents at home, whether home is going to be the right place. Have you noticed people having this conversation early on with their parents, about their financial situation, and how will they be funding the possibility of assisted caregiving?
Cara: Well, I hope they are. I have some clients that are actually doing a great job of this, but certainly there are families out there that maybe are uncomfortable having the financial talks with their parents. Parents perhaps are more private about their financial matters, especially while they’re still in full control of them. But it’s great to have those conversations now. As the older parent or grandparent, you’re lucid and you’re with it, and you have your goals and your wishes straight forward, and you want to make sure your family is aware of that. So having those conversations surrounding finances as a full family unit is very important.
Chris: That’s great. I think for example being transparent with your siblings and your family members way ahead of time makes a lot of these choices and decisions a little bit easier and especially so during these economic times right now, where it is kind of challenging, and it’s good to know where everybody’s at right now. That way they can prepare for themselves.
Cara: Yeah, and hopefully you’re having those conversations with your advisor. Most advisors do a great job of the accumulation phase in our earlier years, getting you to retirement, and maybe even those first few years after retirement, planning appropriately for all of that. But you got to run through the finish line. So that plan really needs to go all the way till your later years, to those years where maybe you’re not in full control and you need some care or your family members are maybe now helping with some things, God willing we get to that point.
You want to make sure you and your advisor are having those conversations as well and then looping in the family along the way so that everyone’s on the same page about what mom or dad or both wish to have happen when it comes to their care in the later years, and here’s my financial situation, here’s how we plan to pay for things, whether it’s the family caring part of it or service like yours Chris, caring for part of the loved one. You definitely want to make sure that you an advisor is having the conversation all the way into those later years in life as well.
Chris: I can see it’s a really good idea having a discussion with a professional about this topic because some family members sometimes might not agree on the choices and decisions they have to make for their parents. So having a middleman in this situation to organize and say hey let’s make up a plan and then make a decision.
Cara: Obviously it’s up to my clients to make their goals and their wishes known, but I am there to guide or to give realistic information, like the costs of care, what does it really cost for someone to come into your home per hour per week to help you with things around the house, what does a facility cost if you so need that or choose to go that route someday. I can at least provide all of the information in a hopefully non-threatening setting for the whole family, to then hear it and perhaps come to those decisions together.
What questions should you ask a wealth management expert about preparing for the later years?
Chris: So, let’s say, we as a family are all sitting with you Cara, and we want to ask you some questions. What questions should we ask you about wealth management and preparing for the later years?
Cara: One of the things I try to do with clients is make sure that their full planning, from start to finish is efficient. You only have the assets you have; some people have a lot of resource and some people have less. So, depending on your situation, what are the things we can do to maximize what I can get out of what I have saved.
We’ve discussed how much it’s going to cost, what our plans are, what our goals are, but now how do we get there. Make sure you’re in the proper diversified mix of investments. Make sure if we’ve chosen to try to fund up front some long-term care costs, discuss the options there, whether its insurance based, annuity based, or straight long-term care insurance coverage, things like that – how have we chosen to solve that piece of our problem, of our puzzle. You definitely want to make sure you’re asking your advisor about those long-term things and not just the “How do I get to retirement and then I’m good.”
There are many stages of life, and it keeps going past retirement.
Chris: We all want to feel comfortable in the later years of our lives, at the same time we want our kids to feel comfortable about making choices and decision. It can’t always just be about us, about how we’re going to feel. We have to look at our next generation, how they’re going to feel comfortable to help make those decisions.
When you are in the middle of taking care of your parents and you talk to somebody who has been through that experience, they might shed some light on and say I might have done something different with my own kids, I might have not done the same, or make the same decisions and choices for my own parents. That’s why we want to have these conversations with you and talk about how important it is to be able to sit with your family, with professionals, and talk about it way ahead of time.
Don’t wait for a stressful situation. Because when it’s a stressful situation, emotions are high and it’s much harder to decide.
What considerations should you consider when investing in your 60s, 70s, or 80s?
Chris: So, I know that there are unique considerations for someone investing in the market during each specific decade. The 60s, 70s, 80s and all can be different decisions and choices that they have to make and I’m assuming you go through this on a daily basis.
Cara: Absolutely. A personal decision is what age I want to be when I retire or what I want to do on retirement and things like that. The longevity of my family is per individual, but there are certainly things to note based on age milestones.
We have Social Security that can be collected at 62, maybe 67, 70 and things like that. 65 is when Medicare kicks in. The law used to be 70 and a half for required minimum distributions from your IRAs, but it’s now 72. Certainly, the age will matter and that is a part of our planning, and we have to think about if we are going to take distributions from our IRAs at 72 or if we need them sooner or don’t. What can we do in the meantime to make that a little bit more tenable from a tax standpoint. Do we look at rough conversions or different tax investments that are tax favorable, that will perhaps help us when we when we get to those milestones or those certain age groups.
Then in the 80s and in the later years, sometimes people forget that we may lose one of our spouses, our partner. We don’t always pass at the same time.
Why should you have a Power of Attorney or Medical Durable Power of Attorney?
Chris: I have never felt educated and confident about making choices and decisions going to my later years, or even help my parents about what choices they’re going to make in the next 10 to 20 years.
Cara: You and I are proud to be a part of our Senior Compass Group and I think fortunate that we have that group of professionals that we work with as well, including estate attorneys, and other people that care for seniors.
You and I were talking a little bit ago about things that affect our clients in their estates and some of those conversations we need to have surrounding Power of Attorney or Medical Durable Power of Attorneys. I think a lot of people have misconceptions of what they’re allowed to do as a spouse or a family member without the legal backup of some paperwork and whether you have a large estate and you have a business, and if you have a business, you’ll have a succession plan or things you’ll have to consider down the road.
A lot of times people with a lot of resource think about those things or perhaps are guided down that path, but pretty much everybody should have some kind of Power of Attorney medical directive, maybe a will, possibly a trust. A lot of times people forget about the fact that their investments with an advisor often are designated to beneficiaries. But if you have a trust, have you funded it, did we put it on your bank account, did we make it the contingent beneficiary of your investment accounts.
Chris: Do you find that a lot of your clients have Power of Attorney? I find that in the last 10 years a lot of clients do not have this in order.
Cara: Yeah, I’m harping on them all the time if they don’t. So yes, pretty much they would because we have that conversation. Again, hopefully you’re getting the proper guidance down all paths. Even though I’m the financial advisor we talk on topics that I don’t necessarily do the business for myself. I’m not an attorney, I’m not a CPA, but I work closely with professionals like that to make sure that all those pieces of the puzzle are put together for my client and a Power of Attorney and trust and wills and things like that are definitely important.
Chris: Preparing for those unique situations when it comes down to assisted living or having Home Care in the home, there’s a lot of financial decisions to be made. I’m assuming that a lot of the families and clients that you deal with have to make these decisions.
Cara: Absolutely. Like you mentioned, that’s the question – are you going to be cared for in your home, for how long, if at all possible, the longest time or do you want to look at facilities, and like our inflation conversation earlier, the cost of that is very real and it has been increasing. There are new facilities out there and those have real costs associated with them. The quality of care you’re getting from a company like yours isn’t inexpensive perhaps. And hopefully it isn’t because you’ve got quality caregivers and you’re paying them real wages and all those good things.
There are things like long-term care insurance, there are also insurance type – life insurance type products, annuity type products, there are other ways to create resources to care for that specific type of care for you in the future. Some people will fund it from their investments as well. So having that conversation and then when do we plan for that.
Unfortunately, pure long-term care insurance can be pretty costly, but it’s different depending on your age. If you’re a 60-year-old woman, reasonable health, that may cost $200 to $300 a month for $2500 to $4000 a month in care. Now, if you wait till you’re 70 to get the same type of coverage, that may be $300 to $500 a month. Age matters when you’re making those decisions as far as what types of products will be available to you and will be cost effective to you.
It’s your preference as well and just understanding what the real costs will be, I think that’s the challenge today. Because in home is one thing if you need a few hours, if the family members are doing some, or they’re hiring services like yours to perform some of the care. But once you go to a facility, that’s thousands and thousands of dollars a month depending on the amenities and the care offered in conjunction with your housing. Those are real dollars, those are real numbers, and different age points to consider which types of products might be best for you.
Chris: There’s a decision to be made emotionally and also financially and so those are really important to just zero in on with your family members.
Do you believe that a husband and wife should have combined investments in their later years?
Cara: There are some benefits to being a spouse. If you’re married, there are some tax considerations like we mentioned earlier as far as the tax brackets are concerned. Depending on your level of wealth you may with an estate attorney discuss having separate trusts or a combined trust. There are ways to protect additional assets based on your plans or your goals, legacy charitable contributions to your family, what have you.
Certainly, if you have a spouse, that is something to consider as far as protecting one or the other. If you are in a spend down situation, the opposite effect, if you’re in a spend down situation perhaps headed to Medicaid, there are ways to protect some assets for a spouse – a home and things like that. So, you definitely want to pay attention to that. But generally being married is more your personal choice and we can work within whatever parameters there are based on your options.
Should you consult an attorney to prepare your Will?
Chris: Do you recommend that seniors consult with an attorney and have a Will prepared?
Cara: Yes, I do think that everyone really should have a few basic things like the Power of Attorney for financial decisions, for broader base decisions. The medical directive or the Durable Power of Attorney is something separate. Oftentimes people think just because you’re married or you’re a family member you can make those decisions, but there will be hoops to jump through and there may be time sensitive matters in someone’s health that you don’t want to wait for. So, you should have things like that prepared. A general will is always great, a trust in some other documents really will depend on the person. If you have property in different states or a lot of times people forget about their primary residence. We’re often really good at ensuring that our investment accounts especially with an advisor has the proper beneficiaries, but if you do have a trust – did you put it on your bank account, did we make it a contingent beneficiary, what about the home – do we have a ladybird deed or something that transfers title.
So, there are certainly stipulations that will come up for most of us. I would say working with a state attorney at least on the minimums and perhaps a more complicated plan, especially if you have larger amounts of wealth or businesses, things like succession planning, you definitely want to work with an attorney.
Chris: Why and when do you need a trust?
Cara: That’s really more of a specific conversation for you and your attorney, honestly. It’s perhaps about protecting assets, maybe it’s about providing for children. I have some clients that have adult children with needs.
Chris: So specific situations depending on what’s going on with your family is most likely why you want to consult with an attorney.
Cara: And they will help guide you further on the exact documents that will be best for your family.
Who should be involved in the financial planning decision-making process?
Chris: Who do you think should be involved in these decision making at this meeting? Talking about financial wealth advisement and then having the attorney involved, which family members should be there?
Cara: As my clients age, oftentimes they will bring their kids in or one child or somebody that will just kind of help be involved in the process and like you mentioned when you’re meeting with people and they’re talking about care, typically it’s a multi-generational kind of setting. Sometimes there’s a CPA or someone else, another professional that my client utilizes that I may be in conversations with as well. I work closely with those types of professionals. It really depends on the situation.
Chris: Primarily, when we deal with this, if a family member is going to be there – who’s going to be making the decisions, that’s what we want. We always invite other family members to come, but some are not involved with the financials and the health care delegation.
Sometimes, when it comes down to financial situations, it doesn’t come with the Home Care health care provider. Usually that’s going to come from a wealth advisor.
Cara: Having things written down or documented from a legal sense really makes it easier on your family for all of those situations. Whether mom fell and then needs rehab, or in the final stages, in the state of Michigan, next of kin is technically in charge of cremation, but if you have four kids and two live out of state, now they all have to be contacted just to do your final wishes.
There are things that you can prepare for and plan ahead and get some documents in place, that will just make it easier and prevent perhaps infighting, and not for lack of love but just because they have different opinions perhaps on how they thought things would go. So, if you make those choices and you document it, it alleviates a lot of that pain.
Why should you have a Financial Power of Attorney, and what are the different types of Power of Attorney?
Chris: Do you recommend that your clients have a Financial Power of Attorney in the event of a crisis, or when they are going through an emergency with their parents?
Cara: Yeah. Financial Powers of Attorney, or broader Powers of Attorney are useful for a variety of reasons. Sometimes the parents are no longer real confident in making some of those decisions. They don’t want to pay all their bills or deal with the refinancing of the house or whatever it is and so they allow the significant other or the child or whoever it is to start making those decisions. Sometimes it’s more of a medical need. So, it’s good to have those in place before you have the need and before you’re no longer capable of making those decisions and then we’ve already decided who can step in and help us out.
Chris: The Power of Attorney could be for health or for finances. Is it separate or can one person be delegated for both?
Cara: It can be the same person, but they are two separate things. Typically, it’s a separate type of situation and you want to address them.
Chris: A lot of family members don’t have that. Obviously, they have to be advised that these are two separate documents.
Cara: A lot of times a broad Power of Attorney will not properly address the medical situations, so you just want to be careful and make sure you don’t just go online and pull down a Power of Attorney and assume everything’s fine. You really should talk to a professional and make sure that whether it’s one large document or separate and that everything’s being addressed.
Why does quality of care matter in your caregiving decision for later years?
Chris: Do you anticipate any changes in the market place this year?
Cara: Obviously, there’s a lot going on in the investment side of the marketplace. Also, just in the marketplace of what’s being offered, I know that you’ve probably had some hiring challenges with caregivers. I know you’re fully staffed, which is great, but because of the sort of lingering global pandemic, there are facilities that have made different decisions on their protocols. I’m sure you probably get some questions about your staffing and how they handle coming into their loved ones homes and the protocols they follow from a hygiene point of view and how quickly they get back to work after testing positive for Covid or the Flu.
I know that with clients out there looking at all of their options, it’s important to probably pay attention to, obviously, there are state regulations and things affecting overall health of our community, but you may need to go a little deeper into what that facility or what that company offers and I’m sure you could share with people what you do for them as well.
Chris: You’re saying, the quality of care has to matter in order for you to make sure that you make a good decision. Educate yourself on what stage, whether it’s going to be assisted living or home care, the quality-of-care matters in the marketplace right now, because of staffing.
Cara: I think quality of care, paying attention to where the costs have gone and where we are today with respect to the cost and then also new protocols, making sure you understand all of those pieces when it comes to care and aging loved ones and how to make the best decisions.
Chris: That’s great! Thank you so much for being here with us. I know this will not be the last time that we’ll be visiting this conversation.
Cara: Happy to help. Glad to be here!