section 1 - The American College Online Learning Center

8. Other strategies that help to cope with the risks associated with the aging process(long-term care risk, frailty risk, health care expense risk). Note these “universal solutions”work well for almost all types of risk, but often for different reasons for each type of risk:a. Recommend that the client delay starting retirement. It is often a good idea topostpone retirement until Medicare begins. A client who retires is only entitled to18 months of COBRA coverage. And the coverage is typically expensive sincethe employer is no longer sharing the cost. Health care lapses prior to Medicarestarting at 65 cannot only be costly, but they also can be deadly if the client leavesa medical condition unattended while he waits for Medicare to kick in.b. Recommend that the client go back to work full or part time. Reemployment maygive the client the extra income needed to offset long-term care risk, frailty riskand health care risk. Some medical professionals will even go as far as to say thatcontinued work activity stimulates the brain and can lead to a postponement of theneed for long-term care or the onset of frailty. However, others point to the stressof work as causing frailty risk to visit the client at an earlier age.c. Ensure that the client is receiving professional advice by working with a financialplanner or planners. Choosing the proper Medicare and Medigap coverage canbe a complicated task.d. Monitor the retirement income plan and lower spending if necessary. (Plannersshould monitor at least annually and adapt expenditures to make sure funds areavailable to offset long-term care needs, frailty expenses, and uninsured medicalexpenses.)e. Relocate to an area with a lower cost of living. This will work best to hedgelong-term care and frailty risk since some areas carry a much lower price tagfor caregiving services, home maintenance services, and other service needsbrought about by frailty.9. Recommend an appropriate strategy to convert assets into income.a. In a later competency we will discuss in detail the systematic withdrawal strategy,the so-called “bucket approach” strategy, and the income floor strategy as a wayto turn the client’s assets into a stream of retirement income.b. These strategies can go a long way toward addressing client risks. We will revisitthe impact of each strategy on retirement risks in a later competency.c. It is important that the planner coordinate the risks and solutions discussed in thissection with the strategies discussed later (and vice versa) in order to allow for acomprehensive solution for the client.Retirement Income Checklist: Does Your Client’s Retirement Plan Consider these Post-Retirement Risks andSolutions?Concern/RiskConcern:Inability to pay for healthcare costs related to oldage.Long-Term Care Risk–the possibility of needingsignificant resourcesfor custodial or medicalcare if dementia and/orphysical impedimentsrestrict the ability toPossible Solutions1. Purchase long-term care insurance.2. Capitalize on the house. Institute a reverse mortgage program, downsize to aretirement community, choose to reside in a continuing care retirement community(CCRC), or take a home equity loan.3. Create a separate portfolio that is reserved until the later years of retirement.4. Implement a Medicaid spend-down.5. Have the client create advanced directives.6. Select effective health care coverage including the most appropriate Medicare,Medigap and retiree health care policies.5.20