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“I Think I Can, I Think I Can”
Don’t Be in Denial: Start Preparing for Your Future!

Many of us grew up listening to our parents read Watty Piper’s timeless classic, The Little Engine That Could, hoping that we would learn to look life’s challenges in the eye with confidence and work hard to overcome them with guts and determination. It’s time to get out that dog-eared book and reread it a few times. Growing older is one of those life challenges, although I don’t imagine it was what our parents were thinking about when they read this book to us. It is one that does take some courage to confront but also one where research tells us we can prevail, IF we start soon enough.

These are the questions we need to be asking and answering:

Planning for the Future

Clearly, we will be living longer than any generation before us. I know from my work at Friends Life Care that there aren’t very many 95+ year olds who do not have some chronic condition that limits their functioning in some way.

Historically, financial planning for retirement was based on the three-legged stool of Social Security, pension and retirement savings. Gone are those days. The boomers will stretch the Social Security system; eligibility age is gradually increasing and future benefits may offer lower lifetime value due to the financial demands on the system.
Many employers have already moved away from defined benefit pensions and health benefits for their retirees in favor of providing opportunities for employees to save on their own through employer sponsored retirement plans.

The private retirement savings leg of the stool has become the backbone of financial planning for retirement. And yet, Social Security now keeps 40% of people over the age of 65 out of poverty; there is also a 40% chance that an American will be poor at some time after the age of 60. And according to a recent online survey conducted by Fidelity Investments, 77% of respondents use their Social Security funds to pay for basic living expenses such as food, utilities and housing. Many are unaware of the complexities of the Social Security system and of the need to pay attention to the ins and outs of the decision of when best to start collecting benefits.

The New Reality

As a nation, we are also acutely aware of what is happening with health care costs in this country. Some financial experts recommend that baby boomers set aide $250,000 or more to pay for long term care services during their retirement years. The old rule of thumb projected that retirees would need 70%-80% of their pre-retirement income to live on in retirement; the rising costs of healthcare and long term care services may well demand a greater portion of retirement incomes.

All this makes the questions of “will I have enough money to retire?”; “what happens if my health changes?”; “who will care for me?”; “how will I pay for this care?” and “what can I start doing today to improve my health and vitality both now and in my later years?” crucial quality of life questions. It is not surprising, then, that a whole industry has emerged to help address these issues. Educators, entrepreneurs, philanthropists and policy makers are all involved in the effort.

In order to pursue our dreams for retirement, the three-legged stool of Social Security, pension and retirement savings has to be replaced with a new three-legged stool:

Retirement Savings

When it comes to retirement savings “start early and save often” is probably the best advice. Most financial planners recommend investment in a variety of asset classes and retirement savings vehicles such as individual retirement accounts and employer retirement plans. Don’t underestimate your life expectancy; and think about the legacy you wish to leave.

Still, Social Security should still be considered as part of the retirement savings package. Retirees need to become more informed regarding the impact of decisions they make regarding collecting these benefits, however. In addition to the obvious, an immediate need for money, factors such as how long you expect to live, whether you want to continue working, your marital status and tax bracket all have implications.

Long Term Care Protection

Long term care protection includes a comprehensive plan for paying for your long-term care needs and figuring out where you will turn to have these needs met. Will your spouse or children be able to care for you? In most situations, this is highly unlikely.
Unfortunately, many people will not be able to save the $250,000+ recommended by most financial planners to cover their long-term care needs in retirement. The recently passed Healthcare Reform bill includes provisions related to long term care, the most significant of which is the Community Living Assistance Services and Support (CLASS) Act. Originally introduced by the late Senator Edward Kennedy, this program will make long term care insurance available to all Americans; individuals will pay a premium through their employers and, after five years, those with functional limitations will receive a cash benefit of $50 per day that can be used to offset long term care services. While this is a step in the right direction, with nursing home costs and 24 hour care in the home averaging close to $200 per day, the CLASS Act benefit will cover only a percentage of the costs individuals are likely to incur.

Serious consideration still needs to be given to planning for balance of these expenses. Options include private long term care insurance, continuing care retirement communities (ones where health care is included in the fee structure) and continuing care at home programs such as Friends Life Care. These policies and programs allow you to avoid spending all your hard earned assets on your care, or leaving your spouse impoverished. As with retirement savings, the mantra “start early” applies. The sooner you enroll in one of the programs or purchase this insurance, the cheaper it is.

While retirement savings coupled with some form of financial protection help answer the questions “how will I pay for the care I need?”, they do not answer the question of who will provide the care. Do you have family that lives nearby? Does their lifestyle permit them to care for you up to 24 hours per day? If the answer is no, you need to think about alternatives.

Groups such as the National Association of Geriatric Care Managers can help you to find a professional in your area who can assist with assessing the type of care you might need and making all the arrangements for that care. They can also serve as your advocate if you are hospitalized or need to reside in a nursing home or assisted living facility. Some religious organizations such as Jewish Family Services will also step in to assist in accessing care.

Life Care programs also exist across the country; these programs pay for the long term care services that you need but also include care management as part of the fee structure. In these programs, the care managers develop a relationship with you when you first enroll and are there to make all the arrangement for your care should you experience a change in your health.

Vitality

The most exciting leg of the 3-legged retirement financial planning stool is vitality. It was not until recently that I began to fully understand that health and vitality are not just about looking and feeling younger. Nor is it just about being healthier in order to engage in meaningful activity in our lives, whether that’s paid employment or some other venture, as important as our health will be for these pursuits.

Maintaining vitality is a financial strategy. It’s about changing habits today so that when I’m 95 or 100 years old, maybe I won’t need a full $250,000 in savings for my long term care needs. Maybe I won’t have to depend on my spouse and children to care for me. It would be unwise to remove the long term care protection leg from my retirement financial planning stool, but science is beginning to tell me that I CAN have an impact.

The University of North Carolina – Chapel Hill, has conducted research on how exercise helps prevent age-related brain changes in older adults. The results of this study showed that the adults who participated in aerobic activity for three or more hours per week over a ten year period had improved cerebral blood flow. The difference in the blood flow could help to explain how exercise may prevent cognitive decline (EurekAlert).

Posit Science, formed 6 years ago, is a private investor-owned company that strives to help people flourish throughout their lives. They do this by providing effective, non-invasive tools that engage the brain’s natural plasticity to improve brain health. Leveraging the collective knowledge of a large and growing global team of more than 40 leading university-based researchers, their staff scientists and other specialists collaborate on programs that improve the cognitive performance—and change the lives—of everyday people.

Andrew Newberg, M.D., director of the Center for the Integrated Study of Spirituality and the Neurosciences at University of Pennsylvania, has published encouraging research on a variety of ways to exercise the brain that have been shown to have a positive impact on cognition (How God Changes Your Brain: Breakthrough Findings from a Leading Neuroscientist, 2010).

The list goes on and on and on….

The simple fact is credible research exists to substantiate the positive effects on longevity of exercise, nutrition, friendship and stress management. Dozens of studies estimate that as many as 90% of major diseases could be delayed or avoided through optimal habit choices. “According to the World Health Organization, 80% of heart disease and 40% of cancers could be prevented with a healthy diet and lifestyle” (Newsweek).

You may have seen the Fox Searchlight movie, Young@Heart, about 24 singers whose average age is 80. Several scientific truths were actually included in this inspiring movie (USA Today).

I don’t pretend to think that habits are easy to change or once made, easy to sustain. But if you can manage to look the idea of aging in the eye with an “I think I can” attitude, it will be well worth the blood, sweat and tears. You can indeed have an impact on the quality of your life.

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