Former financial planner offers outlook on markets, senior living
How you feel about your finances, what you want from your senior years and the legacy you want to leave behind all influence the choices you make about how you live your life, according to Brad Breeding, a certified financial planner and senior living industry expert.
Breeding offered his perspective in a virtual seminar hosted by Aberdeen Heights August 18.
Financial confidence is influenced by three key factors – perspective, objective and plan.
Perspective is all about how you look at things. 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.
“There was a big drop in the market in 2016,” Breeding said. “But the market has increased 62% between then and now. Sometimes, by taking a little wider view, there’s less reason to panic.”
And 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.”
You and your financial advisor will review your fixed or stable income sources outside of your investments and subtract your living expenses, both discretionary and fixed. That’s your surplus or shortfall, and that tells you whether or not you’ll need to rely on your investments to meet your basic living expenses.
Armed with that information, you can look at your retirement plan. That 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.
There are many retirement living options, and the easiest way to determine what’s right for you is if you can categorize them in some way that helps you to evaluate them.
A continuing care retirement community or life plan community offers the most stability and care options of all the senior living 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 Heights 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.
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 higher levels of care,” Breeding said. “The impact has been felt most in health care and assisted living facilities. It’s important to recognize, however, that the vast majority of senior living communities have not had outbreaks.”
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.
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.
Today’s seniors can expect to live a long life. Have a clear objective, and then plan accordingly. Keep perspective. Don’t let your emotions drive your plan. Keep it simple. Retirement planning is more than just financial planning. Housing plays a role in your retirement plan. What senior living is learning now is only going to help in the future. Challenges of aging in place are really magnified right now.