A Will Isn’t Enough: Preparing for the Hidden “What Ifs” that Can Compromise Your Golden Years

One of the greatest comforts in life lies in the illusion of certainty—particularly when navigating the uncharted waters of retirement. With the security of your old routine behind you and an open sea of possibility ahead of you, it’s natural to find solace in crossing those big life-planning responsibilities off your to-do list, knowing you’re prepared for whatever the future holds.

However, aging is a journey filled with “what ifs.” In addition to ever-evolving personal circumstances, healthcare policies, tax laws, and market dynamics are continually in flux, making it nearly impossible to predict what the future will look like 10, 20, or even 30 years after you stop working.

Indeed, as the years advance, so do the complexities of managing your health, finances, and shifting family dynamics. If you think you’re prepared for what lies ahead because you’ve finalized your will and purchased long-term care insurance, think again.

Preparing for the many “what ifs’ of your golden years requires a far more nuanced approach than most people are willing to take. Yet as unpleasant as it may be to plan for the possibility of injury, illness, or incapacity—not to mention, the certainty of death—these steps are critical to protect yourself, your finances, and your loved ones during and beyond your lifetime.

Planning for Basic Healthcare: What If Medicare Doesn’t Meet Your Needs?

Millions of Americans aged 65 and above rely on Medicare as their primary health insurance post-retirement. However, don’t count on Medicare to cover all your potential healthcare needs.

In fact, Medicare has considerable limitations, especially when it comes to long-term or “custodial” care. Unlike “skilled care,” which requires medical training and is provided by healthcare professionals, custodial care is non-medical assistance.

Specifically, long-term care tends to involve aiding individuals with Activities of Daily Living (ADLs). These ADLs encompass six primary activities: bathing, dressing, transferring (such as moving from a bed to a chair), continence, toileting, and eating.

At first glance, these activities may seem rudimentary. But what if you develop a debilitating condition or cognitive impairment like dementia or Alzheimer’s? For many elderly individuals, assistance with ADLs is crucial.

Further, Medicare Part A may cover skilled nursing facility care, but only under specific conditions and for a limited duration. It doesn’t pay for extended stays in nursing homes or for full-time home health care based solely on custodial needs.

Unfortunately, the cost of long-term care can be staggering, especially if you’re paying out of pocket. Alternatively, the responsibility of your care may fall to your spouse or children, which can be costly in different ways.

However, maybe you aren’t worried about these possibilities because you had the foresight to purchase long-term care insurance. If so, be sure to review your policy carefully to ensure it meets your expectations.

Planning for Long-Term Care: What If Your Insurance Policy Isn’t Sufficient?

Long-term care (LTC) insurance is primarily designed to cover services and ongoing support for individuals with chronic illnesses or disabilities who cannot, over an extended period, perform basic Activities of Daily Living (ADLs). While LTC policies generally pay for a predetermined amount of these expenses, coverage is contingent on the details of the contract.

Like any insurance plan, LTC policies come with a variety of options, clauses, limitations, and potential riders. Here are some key aspects that policyholders often overlook or misunderstand:

• Benefit Triggers. Most policies require a certain number of ADLs to trigger benefits. In other words, the policy won’t pay until you’re unable to perform a specific number of basic living activities. Thus, the number of ADLs you select can significantly affect your waiting period until coverage kicks in.
• Elimination or Waiting Period. Just as traditional insurance has a deductible, LTC insurance has a set period during which you must pay for your care out of pocket before the policy starts covering costs. The length of this period can vary and may significantly affect your premium amount.
• Coverage Limitations. While most LTC policies cover nursing home care, assisted living, and home health care, they may not cover all services within these categories. For example, your policy may not include memory care units if you develop Alzheimer’s. Alternatively, your policy may only pay for a nurse to visit your home a few times per week rather than provide live-in care.
• Inflation Protection. Since you may not need care for several years or even decades after you purchase an LTC policy, inflation may erode the value of your daily or monthly benefit amount. If your policy doesn’t contain an inflation protection rider, your benefits may fall short of your actual expenses.

Long-term care insurance can go a long way toward offsetting the potential cost of custodial care in your golden years. But what if the LTC policy you purchased doesn’t cover your full range of needs?

To avoid depleting your financial resources post-retirement or putting unnecessary strain on your loved ones, a more comprehensive plan may be necessary.

Planning for Incapacity: What If You Can’t Communicate Your Wishes?

Completing your last will and testament can provide a sense of comfort that your end-of-life wishes will be honored, and your loved ones will be financially secure after your death. But what if you can’t communicate your intentions while you’re still living?

Many people falsely believe that a will is all they need to provide for their loved ones after they leave this world. Yet a will barely scratches the surface of most people’s estate planning needs.

For instance, overlooking incapacity planning can lead to serious complications during your golden years. Without clear directives, disagreements can arise within your family over your care, your financial matters, and even decisions like where you should live if you become incapacitated and can no longer manage your own affairs.

This can lead to family strife and, in some cases, contentious legal battles. Moreover, if a judge appoints a guardian to oversee your care and finances, there’s no guarantee this person will respect your values or preferences.

These hazards are typically avoidable with proper planning. However, if you tied a bow on your estate plan after completing your will, you may be unintentionally putting yourself, your family, and your wealth at risk.

Safeguarding Your Finances: Preparing for Life’s “What Ifs”

The multitude of “what ifs” that can affect your healthcare needs and finances throughout your lifetime underscore the importance of a proactive and informed approach to financial planning. While it may not be pleasant, preparing for old age and beyond is something we all must do to protect ourselves and the people we hold most dear.

The earlier you start, the better. Rather than waiting for a crisis or significant event to expose the gaps in your financial plan, work with a trusted wealth advisor to better understand your elder care needs and craft a comprehensive plan for your post-retirement years.

At CornerCap, we provide support for every aspect of our clients’ financial health and well-being. Contact us today for a Plan360 evaluation, so we can help you confidently navigate the various challenges and opportunities that arise as you age and work to preserve your hard-earned wealth for generations to come.