Aging Options

Are You Getting the Right Retirement Planning Advice?

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Traditional Retirement Planning Advice Isn’t Getting the Job Done

In my book, my seminars, my radio show, and my workshops, I cite statistics about the effectiveness of traditional retirement planning advice that many people find shocking.

Here are just a few examples:

Even though most retirees hope to draw their last breath in the home they know and love, only 30 percent will achieve that goal.[1]

Nearly every retiree hopes to avoid becoming a burden on family members during their later years, yet more than two thirds of retirees say they feel like a burden.[2]

Despite a lifetime of saving money, nearly every retiree loses assets paying for unplanned medical and long-term care costs. Some retirees lose everything .[3]

I’m not making this up. These are published research findings, and they point to a question that more people need to be asking.

Why are Americans getting such poor results from traditional retirement planning advice?

As an elder law attorney who has spent the last two decades serving as a first responder to people whose retirement plans have imploded, I have a few theories.

As I see it, the problem starts with the “system” that has grown up around retirement planning. When you set up your first 401(k) deduction, you had your first encounter with this system, but it’s not until you start thinking seriously about retirement, that your interactions with this system truly begin.

You were probably told that the process would require working with several different types of professionals. You may have been told to consult a financial advisor or financial planner for help accumulating a nest egg and making investments. You may have been advised to call an estate planning or elder law attorney to create your Last Will and Testament, Financial and Healthcare Powers of Attorney, Living Wills, and other legal documents. You may have been told to work with a CPA on tax issues, a realtor to find that perfect retirement home , and an insurance agent to purchase a long-term care insurance policy. You may have been told to seek help from a professional when you sign up for Medicare when you turn 65.

This is the traditional approach to retirement planning. I call it Bumble Bee planning. You work with many different professionals, flitting from expert to expert, from topic to topic. You think you have a good plan for retirement, because you did everything the professionals told you do to.

Despite the advice you’ve been given, your plan is flawed. You just can’t see it.

How can that be?

First, each professional you consult for retirement planning advice comes to you with their own unique perspective on what needs to be done to help you prepare. This perspective was formed by the way each professional was educated. Which industry would teach its practitioners to advise on issues that don’t create a revenue stream for the professionals in that industry? Only information that can bring money to the industry is taught to professionals of that industry. How do I know this? Before I became an elder law attorney, I worked as an insurance agent.

Second, each professional has a profit motive. Don’t misunderstand me. There’s nothing inherently wrong with making money. Everyone has to make a living. The problem occurs when the profit motive limits your options for services, support, and advice. The options you are shown may not be all the options that are available, but they may be the only options the professional is allowed to present.

Third, your professional’s goal for your retirement is probably not the same as yours. They may seem the same, but they align only partially. Let’s say that your ultimate goal is to stay out of institutional care, not go broke paying for care, and not be a burden on your family. How do the goals of the professionals you are working with align with your goals for your retirement?

Consider these examples:

Your financial advisor helps you accumulate assets. Yet you can have all the money in the world and still end up forced into institutional care as you age. You can have a large fortune and still become a burden on your family. You can be wealthy and still be a victim of retirement plan failure.

Your insurance agent sells you long-term care insurance. That policy may defray some of the cost of long-term care if you need it, but will it pay for everything? Will it keep you out of institutional care? Will it keep you from becoming a burden on your family? Probably not.

Your attorney drafts legal documents that lay out who gets what when you die, who manages your affairs when you’re incapacitated, and how you want to die. Will these documents keep you out of institutional care if you get sick? Will these documents keep you from going broke paying for care? Will these documents minimize burdens on your family? As an elder law attorney, I can say with authority that the answer is NO across the board.

Out of all the professionals you’ve consulted for retirement planning advice, which one has ever promised that if you work with them, you won’t end up in a nursing home, die broke, or become a burden on your family?

THESE are the gaps and holes in traditional retirement planning advice that lead to so much tragedy for American retirees.

Traditional Retirement Planning Advice Overlooks the Big Picture

Who is looking at the big picture of your retirement plan?

Is it your insurance agent? He gets paid if he sells you an insurance policy.

Is it your financial planner? She gets paid to manage your portfolio whether it grows or shrinks.

Is it your accountant? He gets paid for doing your taxes.

Is it your estate planning attorney? She gets paid for producing your legal documents.

The work you do with each professional is necessary and important. You must do it all. The problem is that none of the plans that your financial advisor, your attorney, your doctor, your CPA, or your insurance agents create in their own little silos will give you a complete plan for retirement. Each professional did their job, but no one did THE job of making sure that you can achieve your goal of not ending up in a nursing home, not going broke paying for care, and not becoming a burden on your family. What you’ll end up with is a retirement plan riddled with gaps and holes, and you won’t realize it until it’s too late.

This kind of retirement planning is a lot like going to the car dealer to buy a new car. You think you’ll drive out with a new car, but you’re given a truckload of car parts that you have to assemble yourself. You were sold on the idea that you would have everything you needed, but you had no idea that you would have to put it together yourself. And you have no idea how.

Eventually, like millions of other retirees, you will be surprised when an illness or injury turns into a one-way ticket to the nursing home, forced impoverishment, and family burdens. You’ll have no idea what hit you, just like the woman in this article , whose life was upended by a stroke.

What if I told you there was a radically different way to approach the process of retirement planning? What if I told you that there was a way to harness what is good in the American retirement planning system so it works for you, while taking control of the planning process (and the professionals you trust to guide you) in a way you never dreamed possible? 

There is a way. It’s called LifePlanning and it bridges every gap in traditional retirement planning advice.

Learn more at AgingOptions.com.


[1] Amos Bailey and VJ Periyakoil, “Where do Americans die?”, Multi-cultural Palliative Care, Stanford School of Medicine, quoted in Michael Long, “Do the math: The chances of a swift, easy death are slim,” Matters of Life and Death, LancasterOnline, August 2, 2020, https://lancasteronline.com/features/do-the-math-the-chances-of-a-swift-easy-death-are-slim-column/article_1f518d60-033e-11eb-949e-03b07ed13985.html.

[2] Amy D. Sullivan, Katrina Hedberg, and David Hopkins, “Legalized Physician-Assisted Suicide in Oregon, 1998–2000,” New England Journal of Medicine 344, no. 8 (February 22, 2001): 605, https://www.nejm.org/doi/full/10.1056/NEJM200102223440811.

[3] Sudipto Banerjee, “Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees,” EBRI Issue Brief, no.411 (February 2015): 1, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2570582.


 

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