Retirement is one of life’s biggest milestones. But with the celebration comes challenging decisions to make before and during retirement: finances, living situations, healthcare, and insurance, to name a few.
And if you’re helping your parents with their retirement planning, you might already be completing online forms, making calls, and supporting them with these decisions that impact their futures as retirees.
The planning can be overwhelming, so try breaking it down into four buckets: financial planning, healthcare, living arrangements and health insurance.
With these buckets in mind, you'll need to ask things like:
What will my parents' monthly income and budget look like?
Is the money sufficient to maintain a comfortable standard of living?
Are there current or impending health concerns to plan for?
Are there plans for relocation after retirement?
Will long-term care or home health care be needed?
Plan ahead with these four tips
1. Face the facts with financial planning
Though many baby boomers made sound financial retirement plans, nearly 50% did not. And still, the economic crash of 2008 challenged people's savings accounts - even those who planned ahead.
Those who wisely chose conservative retirement portfolios feel a pinch because many will outlive their investments. So inevitably: People are working longer than expected. In fact, nearly 11 million people over the age of 65 will continue in the workforce because they simply cannot afford to retire.
But aside from working longer, your parents may want to improve their financial situation in the following ways:
Downsize their home. A smaller home gives your parents more money back in their pockets. A smaller home is also easier to navigate and keep clean.
Make lifestyle changes. Eliminating a second car or relocating to an area where the cost-of-living is lower are some things retirees are doing to improve their financial situation. Some also find that volunteering helps fill time that would otherwise consume income.
Move in with their children. This generally happens only after they have no alternative. But know that this decision takes careful planning and patience.
Sign up for Medicaid. If seniors have a very low retirement income, they may qualify for both Medicare and Medicaid. This will be especially helpful if they face costly medical care and potential long term care.
Shop for Medicare Advantage and Medicare Supplement plans. There are advantages to both plan types, but a senior can only enroll in one or the other. That said, your parents can make individual choices so that one might have Medicare Advantage, while the other has a supplemental policy. These plans can help seniors to. better manage health care costs.
2. Talk to your parents' about their health
Most people have a pretty good idea of the health concerns they'll face as they age. As examples, it's likely that life-long smokers know they have a higher-than-average risk of developing lung disease, cancer, or heart conditions. Someone who is overweight and inactive knows their risk of diabetes is higher. And people with a family history of certain cancers know their personal risk is higher.
Know that it's OK to discuss potential and existing health concerns with your parents now before they become unmanageable later in life. While the conversation might be uncomfortable, it's a necessary step in the planning process.
3. Discuss living arrangements
When the time is right, you may want to talk with your parents about long-term care, home health care, or other living arrangements, depending on their situation.
The first thing to know: Medicare does not cover long-term care. But some services associated with long-term care may be covered.
Long-term care is for those who are disabled or have chronic conditions, which prevent them from managing many of their daily needs including:
Though Medicare doesn’t cover long-term care, Medicaid does. There are also separate long-term care insurance plans available for purchase. But know that the right time to get this coverage is before it's needed.
Home health care
Home health care includes medical and non-medical assistance in your own home. For instance, bathing assistance and performing simple chores around the home like washing dishes may be provided by home health care providers. Just don't ask them to repair your ceiling fan.
For good reason, home health care is an option that's on the rise and is expected to keep growing. Thanks to the Chronic Care Act of 2017, the Centers for Medicare & Medicaid Services (CMS) has authorized expanding some home health care coverage in 2020 via Medicare Advantage plans - a good step if you or your parents will need these services.
One word of caution: Changes continue to be made to the increasingly popular Medicare Advantage program, so you'll want to pay attention to these important changes.
If your parents are in good health, you may still want to give them food for thought if they plan to relocate to a warmer, sunnier state. For instance, Original Medicare and Medigap coverage will be unaffected as those are not tied to specific service areas. On the other hand, Medicare Advantage and Part D are mostly tied to specific service areas so a plan change may be necessary.
That said, relocation may be beneficial, just be sure to consult with a health insurance agent first.
Ask your parents to move in
Though it can be a sensitive situation, you may opt to have your parents live with you during their retirement. But be sure to think of things like ways to help them with mobility, especially as they age.
For example, you might need to install wheelchair ramps, safety rails in shower stalls, or other safety precautions. Some of these features may be covered by Medicare, so consider these options when looking into Medicare Advantage and Medicare Supplement policies for your parents.
4. Understand health insurance: Medicaid vs. Medicare options
Insurance is all about protection and peace of mind. And although no one can predict the future, having a sound insurance policy in place can protect your aging parents (and you) from potential financial distress. The simple fact is that Original Medicare does not cover everything and most seniors will need more. That is why Part C (Medicare Advantage), Part D and various Medicare supplements were developed.
And some may qualify for dual-enrollment in Medicare and Medicaid. That's because Medicare is federally administered while Medicaid is provided through the state. If a person or couple fall within certain federally-mandated poverty guidelines, they may qualify for both. This will provide them with 100% coverage at no to very low cost.
To see if your parents may qualify for dual-enrollment, visit Medicaid's Seniors & Medicare and Medicaid Enrollees page. You'll find charts that show income levels for qualifying by region. If your parents qualify, you won't have to shop for Medigap plans. In other words: There's no need for a supplemental policy.
So if you're helping your parents, you'll want to first look at their current Medicare plans to see if they're cost-effective and fit with their specific health needs. You will also want to list all sources of income. If they do not have one, help them create a budget so that you can know what they can afford and perhaps where they may need to make changes.
Today there are far more options available. Many seniors are not as comfortable using the Internet as their children are. You can help them in a huge way by simply helping then navigate the web and doing research with them. Another way to help is by making a call for them to a licensed agent who can help.
Talk to an agent about Medicare options
Whether they're months away from retirement or already retired, our appointed licensed Medicare Advantage or Medicare Supplement agents are available to discuss options with you today. They can help you learn about plans in your area or any area your parents may be planning to move.
So why not save time and consult with an agent about Medicare Advantage or Medicare Supplement plans? He or she will help you navigate your options to make an informed choice.
The sooner you help your aging parents plan for the future, the better. After all, you and your parents don't have to be alone when planning for retirement expenses.