Is Your Parent Afraid of Running Out of Money in Retirement (Part 2)

How much money does a 83 year old need to have in savings to avoid running out of money in retirement?

In a previous post (Is Your Parent Afraid of Running Out of Money in Retirement -Part 1), I described how my 83 year old father was living in abject terror of having his money run out before he died.  While doing research trying to understand what was bothering my Dad, I stumbled across an article about “Bag Lady” syndrome.

The fear of running out of money and being forced to live on the streets is not uncommon. But, it usually affects women who often depend on and defer to the men in their lives. They have a feeling of being powerless to prevent becoming a Bag Lady.  Men’s fears usually have to do with losing jobs, etc.

I tried to reassure Dad that he was comfortably set.  Running summaries of his savings accounts and graphing his frugal spending habits, with colorful charts and graphs showing almost horizontal lines extending ten years, did not diminish his fear.

In spite of all my logical arguments that his finances were in good shape, he continued to worry. My father understood, in the core of his being, that once you start spending principal it’s gone and so is the interest you could earn by investing that money.

Dad was managing to live within his modest budget except for certain hospital and medical bills. He had to use his savings to pay for them. The hospital is especially aggressive about collecting its money. If you don’t pay the bill within a certain period of time, the hospital sends it to a collection agency to hound you until you make arrangements to pay. A delinquency because of hip replacement surgery gets treated the same way as a car loan.

So, how much money does an 83 year old need to have in savings to avoid running out of money in retirement?

Like a zen riddle (What is the sound of one hand clapping?), I have turned this question over and over in my mind looking for an answer.  My extensive research on the Internet  turned up the same cryptic response again and again.

There is no single answer that fits all retirees. 

Because cost of living (New York vs. North Carolina) and spending habits (tuna vs. caviar) vary wildly, every major financial website offers a retirement savings calculator that allows each person to insert the dollar amounts for her unique situation. You can play with a variety of scenarios and come up with charts that provide peace of mind or many sleepless nights.

Even if the numbers are all positive, you don’t have an iron clad guarantee.

The cruel, ugly truth is that– even if all of the other calculations are accurate– no one can predict if you will have a prolonged medical crisis that will suck savings out of your accounts faster than . . . [insert your favorite phrase here].

(This is not intended to frighten you. It is time that someone said it. Now, we can look at the steps you can take to deal with it.)

Figure out your elderly parent’s regular monthly expenses and how to cover them without tapping into the principal. You may need the help of a fee based certified financial planner to decide how to invest the savings.

Here are some additional strategies that can help:

1 . Supplemental medical insurance – Medicare pays 80%. The supplemental coverage picks up some amount between 50-90% of the balance. What’s left is a very small co-pay that is so much easier to manage.

2. Prescription drugs – Ask the doctor to prescribe an older, low cost drug or a generic rather than the latest patent wonder drug. Use the mail order prescription service from your supplemental insurance if there’s one to get the lowest possible price.

3. Regular checkups – The doctor can identify problems early so that your parent does not need a trip to the emergency room. If you are the person named as medical power of attorney (see previous post), become familiar with your parent’s medication. Ask questions. Some doctors ignore a senior’s complaint as just “old age.” Don’t settle for that answer.

4. Exercise – Studies agree that daily exercise , just short walks of 10 to 20 minutes, contributes to better health and faster recovery after an illness. Even 80 year olds can benefit from basic strength training and balance exercises.

5. Sleep – Lack of sleep contributes to decreased immunity. Exercise often helps with sleep problems. If aging has changed your parent’s sleep cycles, encourage her to take a regular nap during the day. (40 and 50 year olds can benefit from power naps, too!)

4. Fruit, vegetables and water – Helping our elders have a regular supply of fresh and tasty produce and non-chlorinated water ready when they are hungry or thirsty is one of the lowest cost ways to boost health and vitality. (Check out Jack LaLanne’s website to see what good nutrition and exercise can do for a 90 year old if you don’t believe me.)

5. Supplements – I personally believe in vitamin and mineral supplements. Ask the doctor or pharmacist for advice. In a future post, I’ll discuss which common prescription drugs deplete certain nutrients from the body. The results can be disastrous but the solution costs just pennies in most instances.

6. Family, friends and fun – Ok, you knew this. Studies show that people live longer, healthier lives if they have regular social contact with family and friends. This is particularly important to remember if your parent is living alone in his own home. Oprah, CNN, even Larry King with his wide range of topics, are not substitutes for real, in person, human social interaction. Pets can help, too, if your parent can manage their care. Help your parent get out of the house on a regular basis. Even adult day care can be a spirit lifter for many seniors.

My father died recently. Yes, he made it to the finish line without running out of money.

The last three months of his life were grueling for both of us. His ultimate medical crisis arrived. 

More about those final months in the next posts.

When Should You Get a Living Will for Your Parent?

One of the Yahoo Groups I regularly read has had an ongoing discussion about health care in the USA. One of the posts talked about the need for a medical power of attorney or Living Will as it’s sometimes called.

K lives in New England. She told us what happened when her mother, who did not have a medical power of attorney, had a stroke and required hospitalization and then rehabilitation.  The hospital was willing to allow K to make the important medical decisions without any legal documents. But, when it came time to release K’s mother to the rehab facility, there was only one that would accept her. And, K was required to go to court to become her mother’s legal guardian for that one to accept her mom!

In my Dad’s case, each time he was sent to the hospital, the hospital would not share details of my father’s condition until I faxed them copies of his medical power of attorney. Then, I was issued a confidentiality code which the nurses would ask me for before telling about his current status.

Both rehab facilities my father stayed at, also required that I fax copies of all of these forms.  The nurses at these skilled nursing facilities didn’t require a secret code, but  my Dad’s chart had information on it about his medical power of attorney and who they were allowed to share information with about his condition.

The medical community takes these documents very seriously.

So, when should you get a Living Will or medical power of attorney drawn up for your parent? TODAY!

And, get one for yourself and spouse while you are at it. We can’t predict when a medical crisis will occur for any particular person.  Being prepared will make all the difference.

Here is a more complete explanation of medical powers of attorney

If your family has an attorney, s/he is the best resource for getting these documents drawn up. Some hospitals and senior centers also provide help in making a Living Will.  You can also purchase forms or software to help in getting one completed. The laws vary from state to state about the requirements for signatures and witnesses so it is a very good idea to work with someone knowledgeable of your state’s laws.

Start today.

I am so grateful that my father had one in place when he was sent to the hospital. It made all the difference.

Here’s additional information that can help:

Wills and Estate Planning Information at NOLO.com

Are Banks Encouraging Teens to Fall into Debt Trap?

My tall, quiet 18 year old is getting ready to fly across country to begin his four year undergraduate adventure. From the time he was a baby, my husband and I have tried to encourage positive financial habits — saving half of his gifts and earnings, comparison shopping, buying only items that he really needs, even selling used video games on eBay before buying a new one.

Number 1 Son has accumulated a small amount of savings, encouraged by the several banks with which we have had accounts. Children’s savings accounts are usually free of charges to get the child into the habit of thrift.

Until your son or daughter turns 18, that is. Then, they are fair game.

My son’s story began a few months ago when UBOC sent him a letter saying that they were automatically converting his student savings into a checking account with monthly fees. He is astute enough to know that those fees would relentlessly eat into his hard earned funds. He went down to the local branch of UBOC to ask if there was a better option. Nope.

So, he began the not so simple task of finding another bank. His original plan involved moving to a bank that also had a branch where he would be going to college. That limited the choices.

A few internet searches later, he found what semed to be the prime candidate, WaMu. The WaMu website was offering free checking and 5% on a savings account with a very minimal balance. Eureka!

He went down to the local branch to get more details. I tagged along to see what would happen. The New Accounts rep reassured my son that he could open the checking account at the branch and still get the high interest on his savings. (The website said the special rate only applied to accounts opened online.)

Being a person who likes to talk with people who take his money, he closed his account at UBOC and went back to WaMu the following Saturday to open the new accounts in person.  A different account rep opened the accounts. Being far too trusting, neither my son nor I questioned this account rep about the rates.

The first statement arrived — 0.25% on the savings account. With inflation running at 4%, this pitiful rate is just like having monthly fees erode the balance.

We went back to the branch. Both account reps insisted that no one ever told us that we would get the 5% by opening the accounts at their branch office. I asked to speak to the manager.  The assistant manager was available.

The assistant manager was friendly and polite. My son explained that he was college bound, needing a checking and savings with the best possible rates. The manager reiterated that the only way to get the best rate is to open the account online and gave instructions to my son on what to do. He would open new accounts online and transfer the money to them. It seemed simple enough . . . until he actually tried to do it.

Online, Number 1 Son discovered that the account rep had put in the wrong email address, accidentally dropping the final letter off of his name. He went into his account to change it.

But when he went to open the new account, it wouldn’t work. Even answering all of the security questions didn’t get it to work. He repeated his attempts several times until the bank computer turned off his active account for potential identity theft activity. Calls to the assistant manager didn’t provide any help. The solution — wait seven days and try again.

“Oh, also, you may want to check your credit report in case someone has tried to steal your identity, ” the assistant branch manager suggested.

Could that be possible? I showed my son how to order his free online credit report. Experian wouldn’t give him anything. Equifax wouldn’t give him anything. TransUnion had the good graces to say that they didn’t have anything on file for him.

Of course not! He hasn’t had any credit accounts or loans  in his name.  This was a clue.

Seven days later, my son tried again to open an online account. After his first attempt failed, I suggested he call WaMu’s online help center before the bank computer did another security lock down. A very pleasant person informed him that the computer wouldn’t open an online account unless it could verify his identity from drivers’ license records and credit verification.

A giant computer rules WaMu making all the decisions and the people just work for the computer.  No one can override the computer.

There was no way for my son to get the high interest account. Why didn’t they tell us that from the start? I don’t think the computer tells the workers at WaMu what the rules are–for security purposes.

Bank of America and Wells Fargo both have special college banking programs. A student can get a checking account with fees waived based on certain criteria. And, they’ll give your college student a credit card in addition to the debit card attached to the checking account. Oh, by the way, BofA and WF would love to consolidate your student loans, too.

Is there an equivalent savings account for college students? Certainly not.

What is the return on a regular savings account with fees? 0.1%

This seems so shortsighted! Who will have saved downpayments to buy homes (and take out home loans) if every college graduate only has loans and credit card debt? Saving money regularly is an important discipline that every person needs to develop. Otherwise, you can fall into the debt trap and not be able to get out.

For the banks, debt means profits. Banks are creating a new generation of debtors without a thought to the consequences. It brings to mind Michael Douglas’ s speech in “Wall Street” – “Greed is good . . .”

Update on Unexplained Anemia

What do you do when anemia keeps coming back?

In a previous post on Anemia, I talked about my 84 year old Dad’s recurring problem with fatigue and anemia. He (and I) thought the doctors had found the problem and taken care of it with medical procedures to stop the bleeding, most recently in his bladder,  and by making changes to his regimen of nine medications.

I was so relieved that the bleeding has stopped! Several units of blood later, my father was starting to look and feel a bit better. His kidneys were failing, though. He would need to start dialysis right away and he was willing to try it.

I believed that Dad could now start to recover some quality of life. For most of his over 40 life, he has been able to bounce back from serious illness with a determination that was ferocious at times. As nervous as I was about his current fragile condition, I felt confident that he would gradually get better like he had in the past.  

And, at first, it appeared that was happening.

Dialysis is an amazingly complex procedure for life support that involves the dialysis machine, doctors and nurses to monitor your blood and provide the right medications (such as Procrit for his anemia), and counselors and dieticians to help you adjust to a new lifestyle. And, Medicare pays for a substantial portion of the costs. It seems like a miraculous new lease on life when your kidneys are failing.

Day by day, Dad seemed to be getting better. He mostly slept through the four hour treatments three days a week. Our phone conversations centered around making the arrangements for my father to leave the skilled nursing home where he was staying. He was tired of being poked and prodded. He just wanted to go home.

But after a few weeks, his condition began sliding downward again. He wasn’t interested in talking on the phone. The confusion and delerium which had plagued him when his kidneys failed came back worse than before.

I spoke with the nurses at the dialysis center. Were his blood tests showing any imbalances? Not really. His electrolytes were within normal range. My father’s red blood cell count was low but seemed to be improving. They were watching it closely. He shouldn’t be having these symptoms but he was.

A few mornings later I got a phone call from one of the nurses at the nursing and rehab facility. They rushed Dad to the hospital. I got on the first available plane flight to be at his side.

In the ER, they doctors determined that my father had a massive urinary tract infection along with extremely low blood sugar (he is a diabetic) that made him unconscious.  He was admitted to the hospital, again.

Once admitted, the doctors ran through a series of tests including a routine chest xray. In his review of my father’s chest xray, the radiologist noted a pleural effusion, an accumulation of excess fluid in the space surrounding the lungs.

The lung specialist called in to consult with Dad’s regular doctor told me there were three main causes of this excess fluid: congestive heart failure, bacterial infection or a tumor. He would draw a sampling of the fluid to have it analyzed.

I spent an agonizing weekend waiting for the test results.

On Monday morning, the doctor reached me on my cell phone as I got to the second floor of the hospital. Test results showed the cells were abnormal – lung cancer.

So, we finally had the answer to the anemia that would not go away. Various tumors are hemolytic. They destroy red blood cells.

Now, Dad’s choices were limited and the outlook bleaker than ever.

I was grateful to have an answer that finally made sense because now I knew what I needed to do.