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June 30, 2020
End of life planning is often the last thing a pre-retiree wants to do. Also known as advance care planning, it’s not usually a top priority because who wants to think about death? But tackling the topic early on not only provides peace of mind, it also ensures your estate and loved ones will be handled the way you want.
Research shows Baby Boomers are largely unprepared for end-of-life planning.
A 2019 study from the Insured Retirement Institute shows that only eight percent of Boomers say they own a longterm care policy, and more than half believe Medicare will cover all their long-term care costs. But it won’t.
End-of-life care is the broad term used to describe the special support and attention given during the period leading up to death, when the goals of care focus on comfort and quality of life.
“Few Americans have done this thoroughly,” says El Dorado Hills, Calif.-based Scott Draper, a certified financial planner with Thrive Financial Planning. “But, you need to think about what will happen if something bad happens tomorrow.”
Here are three key questions to consider when determining your end-of-life decisions.
Discussing your concerns, beliefs, and values will help people who are close to you to know what end-of-life care you want.
“For example, you could discuss how you feel about using life-prolonging measures or where you would like to be cared for,” says the National Institute on Aging. “For some people, it makes sense to bring this up at a small family gathering. Others may find that telling their family they have made a will (or updated an existing one) provides an opportunity to bring up this subject with other family members. Doctors should be told about these wishes as well.”
In fact, five discussions to have with your doctor include: preferences of care in event of life-threatening illness, your values, prognosis of illness, fears or concerns, and additional questions regarding care, according to a new study published in CMAJ (Canadian Medical Association Journal).
Considering your health care plans should also entail thinking about different health care financial tools, such as long-term care insurance, Draper says. Long-term care insurance helps provide for the cost of long-term care beyond a predetermined period, and for costs generally not covered by health insurance, Medicare, or Medicaid.
“Long-term care insurance gets more expensive the older you get,” Draper says, noting that planning ahead can also be a boon to your savings account.
An estate plan has several elements, including a will. Taking inventory of your assets is a good place to start, says CNN Money. A will, or testament, is a legal declaration by which a person names one or more persons to manage his or her estate and provides for the distribution of property at death.
“Whom do you want to inherit your assets? Whom do you want handling your financial affairs if you’re ever incapacitated? Whom do you want making medical decisions for you if you become unable to make them for yourself?,” CNN Money advises those creating a will ask themselves.
Discussing your estate plans with your heirs may prevent disputes or confusion, Draper says.
“Don’t overlook items that have value in terms of sentimentality,” he says. “The more you can plan ahead and decide who will get what, the less chaotic things will be when the time comes for loved ones to handle your estate.”
Estate planning is far more complicated for people with sizable estates, and having a trusted and competent estate-planning lawyer is essential to making sure your assets are handled correctly, says CNN Money.
If you choose to purchase a life insurance policy, a crucial step is choosing your beneficiary, or person who will receive the cash benefit from your policy when you die. When you designate beneficiaries, you have the final say over who receives your death benefit. If you don’t choose one, your state’s laws determine who gets it, says Nationwide Mutual Insurance Company.
You can name one, two, or more people, a trust you’ve set up, a charity, or your estate as a beneficiary.
“Your primary beneficiary is first in line to receive your death benefit,” says Nationwide Mutual Insurance Company. “If the primary beneficiary dies before you, a secondary or contingent beneficiary is the next in line. Some people also designate a final beneficiary in the event the primary and secondary beneficiaries die before they do.”
While the topic can be unpleasant, a good financial planner should help put you at ease and walk you through this process.
“Small steps make big differences down the road,” Draper says.
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