Planning is key to a secure retirement, former financial planner says

Knowing how you want to live and what your objectives are will help guide your decisions throughout retirement, according to Brad Breeding, a certified financial planner and senior living industry expert.

Breeding offered his perspective in a virtual seminar hosted by Aberdeen Village August 26.

“When it comes to retirement living, there’s no one-size fits all,” Breeding said. “Where you live is incredibly important to your retirement plan. Planning goes beyond your finances and continues throughout your retirement.”

Some seniors hope to stay in their homes as long as possible, but the reality is, even living at home offers a lot of challenges long-term, and it may take even more planning than goes into choosing a senior living community.

There are a variety of retirement living options along a continuum that begins with needing no help day to day through needing skilled nursing 24 hours a day. All senior living options fall somewhere along that continuum, and a life plan community or continuing care retirement community (CCRC) offers the most stability and care options.

A life plan community will offer independent living for those 65 and older, assisted living for those who need help with activities of daily living, and health care services for those who need 24-hour care and support. These communities often also offer memory care and short-term rehabilitation, so you can live in the same community as you move through the spectrum of care.

Life Plan communities offer different financial options. Aberdeen Village offers an entrance fee model, with health and financial entry requirements. By paying the entrance fee, your monthly fees remain predictable as you move through the continuum of care. Although there will be inflationary increases in monthly fees, your fees will be lower because of the initial entry fee. Your financial risk is controlled.

In a fee-for-service model, you may pay less for independent living, but your costs will increase as you need more care. The financial exposure is unlimited.

Some communities offer a modified plan that incorporates both the entrance fee model and the fee-for-service model.

In the rental model, no entrance fee is paid and the costs are higher for all levels of living. Here, you’re paying full market cost for care.

In a survey by Merrill Lynch, seniors gave their top concerns about living a long life:

• Serious health problems
• Not being a burden on family
• Running out of money
• Being lonely
• Having no purpose
• Having nothing left to leave to their heirs

Breeding sees the opposite of these concerns as peace of mind. Choosing the living option that will give you the most peace of mind should be the goal.

Your retirement plan takes into account four factors – finances, preventive health, post-health event planning and family. Your overall health affects your finances, because some health conditions are expensive. Some health events are unexpected, but the after effects may cost you money in the long-run.

“All of these things are interconnected,” Breeding said.

Financial confidence is influenced by three key factors – perspective, objective and plan.

Without perspective, we make decision by emotion alone. For example, if you only look at the stock market when it takes a big hit, like it did in March, you’ll focus on how much it dropped. But if you take a step back and look at a 6-month, 12-month or even 10-year trend, you can see that despite occasional dips, the stock market has actually been on a 10-year climb.

The housing marketing is also on the rise with home prices at an all-time high. Today’s low interest rates are enticing buyers into the market, but there are fewer houses on the market. It’s hard to know whether to sell now, or wait until later. Delaying might mean there are more houses on the market, so a buyer might be in a better negotiating position.

It’s also important to know your objectives. If you don’t know what you want from your investments, it’s hard to know whether you’ve got the right strategy for success.

Your primary objectives are the most important. Maybe that’s never running out of money. Your secondary objective might be to not be a burden to your family.

“You need to define your objectives, and plan for them,” Breeding said. “Your financial advisor can help you with that.”

Aging in place may be attractive, but it also comes with risks, especially during this time. You may need caregivers to come in and out of your home, increasing your exposure risks. You may have difficulty finding caregivers who can provide the monitoring, meals and care that you need. Without support, the risk of hospital visits also increases.

During the COVID-19 pandemic, many seniors have been wondering if senior living is still a viable option.

“The biggest impact has been felt in stand alone nursing homes,” Breeding said. “It’s important to recognize, however, that the vast majority of senior living communities have not had outbreaks. Those that acted early and decisively have fared better. The entire industry is learning, and what we learn will only help make senior living even more safe moving forward.”

A number of factors have contributed to those communities that did have outbreaks – asymptomatic spread, lack of early response, lack of needed resources such as personal protective equipment and tests, and in some cases, a lack of protocols.

“For many independent living residents, those early fears of the virus gave way to comfort,” Breeding said.

Instead of being isolated at home, they were in a community where they could get all their needs met and they were grateful for the measures their communities were taking, and still are, to keep them safe and healthy.

Understanding your objects and knowing what you want out of retirement, will help you determine where you can live your best life throughout the next chapter.