Sandra W. Reed: Can you keep your lifestyle in retirement?

Attorney Sandra W. Reed answers your life planning questions.

Attorney Sandra W. Reed answers your life planning questions.

Likely you’ve seen Tommy Lee Jones posing the question “Can You Keep Your Lifestyle in Retirement?” Jones in asking is touting the services of Ameriprise Financial, but the question is an important one. The ad’s answer, as in life, depends on planning.

A no less important question is, “What are you doing to insure that you can keep your lifestyle in retirement?”

Joan did nothing. Foregoing the responsibilities of marriage and parenthood, she lived an adventurous life, abandoning a secure career for jobs that allowed her time to travel to exotic locales and obsessively attend rock concerts around the country. She saved little and never opened a retirement account.

But Joan never worried about financing her old age. Daddy would leave her plenty. Unfortunately, in her mid-50s, Joan found it difficult to find work. She remained unemployed nearly two years, finally obtaining a part-time job. With her income severely reduced, she applied for Social Security benefits at 62 instead of waiting to her full retirement age of 66, thus limiting her monthly benefits.

Joan’s father died at age 92, but her mother, still alive and relatively healthy at 100, requires nursing home care for mobility issues and will likely exhaust the inheritance Joan expected. Joan will not be able to keep her former lifestyle in retirement. Instead, her financial position is extremely precarious, one disaster away from destitution.

Nick and Nora, on the other hand, were family-oriented parents who gave their three children the best educational opportunities they could afford. They both worked hard in their professional careers to pay for the best private elementary, middle and high schools in their community for all three. Summers they sent the kids to costly camps. The family traveled on vacations to locations designed to expose the children to the nation’s history and geography.

All three children did well academically, two of them attending Ivy League universities. Nick and Nora shelled out the money not covered by scholarships to pay for these expensive schools. When the eldest chose to go to medical school and the youngest entered law school, Nick and Nora kept working into their early 70s so these children wouldn’t come out of their graduate programs saddled with debt. They never worried about robbing the retirement accounts when needed. They were raising successful children who would return the favor of their generosity by taking care of them, if need be, in their twilight years.

When Nora developed rheumatoid arthritis and Nick began to suffer the effects of Parkinson’s, they both needed assistance and preferred to have that care at home. However, they couldn’t afford home health care or even a less expensive assisted living facility. Their children, approached for help, though sympathetic, were too burdened with mortgages, car payments and child-care expenses of their own to offer financial assistance. Nick and Nora had to remain in their home, struggling to care for each other and keep up with household chores they are no longer equipped to handle effectively, thus putting themselves at risk of increasing deteriorating health and injury.

Can These Baby Boomers Do Anything to Regain Their Prior Their Lifestyles?

These scenarios present two of the many ways persons can outlive their resources. The corrections for failure to plan are more limited.

Joan might move to a less expensive location. She might join ex-pats who have moved to South or Latin American countries where the living expense are reduced and good health care is available. However, she may face emotional and social costs, living far removed from family and friends and language barriers in her new home if she doesn’t speak Spanish.

Joan might acquire one or more roommates to share the cost of housing and food, but she will give up privacy in doing so.

Nick and Nora can explore qualifying for Medicaid to pay for their long-term care. If they don’t qualify, they can consider moving in with one of their children or rotating between the children’s homes. Either way, they are giving up the privacy of living in their own home.

What You Can Do to Keep Your Lifestyle in Retirement

This column is not directed at seniors. It is probably too late for those past 60 to preserve the lifestyle enjoyed before retirement if you haven’t already planned. You either have done that planning or you haven’t. So pass the paper along to your children and grandchildren. They are the ones who can benefit from planning to maintain their lifestyles in retirement.

Here are some ways to incorporate into a good plan:

  • Begin planning for life after work by depositing at least 10 percent of your first paycheck and every one thereafter into a retirement account;
  • Establish a budget and discipline yourself to live within your means throughout your life;
  • Chose food and housing that are consistent with your income;
  • Limit eating out;
  • Maintain adequate health and disability insurance;
  • Forego luxury items for their more practical substitutes;
  • Never borrow money for vacations, private school or camps;
  • Purchase used cars in good condition and retain them for at least five years;
  • Consider purchasing long-term care insurance;
  • Plan to work several years past your full retirement age under the Social Security rules and regulations;
  • Be prepared to work part-time after retirement to supplement income;
  • Avoid speculative investments;
  • Don’t borrow to finance your children’s educations; instead assist them in obtaining scholarships and loans for themselves, if necessary;
  • Determine your life expectancy taking into account family history and your own current health
  • Plan retirement needs based on the three-bucket approach: (1) the essential bucket for “I will need” expenses; (2) the dream bucket for “I wish I could” items; and (3) the rainy day bucket for “I didn’t expect” emergencies; and
  • Taylor your plan to your individual needs.

Sandra W. Reed is an attorney practicing in Glen Rose, of counsel with the Fort Worth elder law firm of Katten & Benson. Phone: 254-797-0211; email: swreed2@yahoo.com

 

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