Many of my clients and regular readers are already aware that my father, John Beule, is nearing the end of his long life journey.
As I look back on the past 4 ½ years – the period of his final decline – I am amazed by how much I have learned by being with him as he made his way down his path.
Everybody’s circumstances are, of course, different. Nothing happens the same way twice. Yet I am convinced that much of what I have learned through the process of caring for my parents over the past several years is generally applicable. And while some of my experiences confirmed what I thought I knew, other aspects surprised me.
As we all try to envision our lives in the future, I believe it helps to have had some concrete experiences to shape our thinking. I would therefore like to share some of what I have learned with my readers. I hope it will both help and comfort readers as they consider not only their own but also their parents’ and children’s lives and future plans.
Even those of us who plan for a living sometimes suffer a disconnect between the future we’re planning for and a sense of reality. But if there’s one thing that I have had confirmed over the past few years is that good planning pays off.
Although it wasn’t written down in a formal sense, my Dad had a plan for everything in his later life. In the parlance of our industry, he had a great cash flow plan, good contingency plans, and a robust asset transfer plan. With very few exceptions, all of those plans worked as intended. His forethought resulted not only in far better outcomes for him and my Mother than would otherwise have been the case, but also made the process more manageable for my sister and me.
I’d like to highlight two parts of that overall plan that I came to particularly admire.
Cash Flow Planning For A Long Life. My Dad always said that he thought he was going to live to be 92 – largely because his parents and grandparents had reached similar ages. Instead, he has made it almost to 96. That’s the good news, of course. The bad news is that those last four years have been more expensive than anything he could possibly have imagined.
Those unanticipated expenses would have destroyed a cash flow plan that was less robust than my Dad’s, yet his stood up fairly well. It did so because my parents followed a few simple financial rules.
First, they minimized their ongoing cash requirements in retirement. They paid off their mortgage long before they retired. And though they never denied themselves anything that was truly important to them, my Dad just knew how to conserve cash. They did things for themselves that other people pay for. They wasted nothing. (“Recycle, reuse, repurpose” anyone?) They bought things they needed, but never went shopping just “for fun.” These behaviors were so natural for them that I hardly noticed them before I was well into middle age and got formally involved in their financial lives. My parents had less useless stuff in their lives than anybody else I have ever known. Their ability to lead full and happy lives sans stuff was undoubtedly a byproduct of their formative years in the depths of the Great Depression, but what amazed me was realizing how useful those skills continued to be for them. The fact that their committed expenses were so low gave them a tremendous amount of financial flexibility – without sacrificing their sense of fulfillment.
Second, my Dad had created secure funding for basic retirement expenses through a combination of old-fashioned pensions, annuities, and Social Security. In their early retirement years, in fact, my parents needed very little supplemental income from their portfolio in order to maintain their lifestyle. As a result – and also I suppose due to the life-long habit of saving that they couldn’t shake – their portfolio continued to grow until very recently, when a combination of the financial crisis and my Dad’s medical needs finally conspired against it.
Third, my Dad knew the value of growth. I was, in fact, shocked when I first examined my father’s portfolio. It seemed to break all the rules for a portfolio that an 80-something should own; it consisted almost entirely of stocks. When I asked my Dad why he didn’t own any bonds, his answer was simple: “Bonds don’t grow,” he said. As someone who had been investing for more than a half a century, he truly knew the value of growth. And what I eventually came to realize was that the fixed income component of his financial strategy consisted of the pensions and annuities described above. This freed up his managed portfolio to hold more volatile growth assets. And it was portfolio growth that eventually gave us the means to meet his medical needs over the past several years. The beauty of this approach is that it left a reserve for unexpected expenses toward the end of Dad’s life. Most people, of course, try to avoid this; I’m just glad my Dad wasn’t one of them. We needed most of it.
I find it a bit annoying that the financial planning industry has been congratulating itself recently for inventing such secure-against-market-downturns-but-flexible-on-the-upside financial strategies. Yes, it’s a good thing for all of us to be thinking about more than simple, long-term return maximization when we consider the role of cash flow in the arc of our clients’ lives. But it’s also a mistake to believe that all good things are new inventions. Perhaps that’s a conceit of the Baby Boomer generation. Sometimes what you need has been there waiting for you to simply rediscover it.
Planning To Pass It On. About ten years ago my Dad asked my sister and me to sit down with him and take a look at his estate plan, including his living trust. At the time he was fit, active, and in his mid 80s. He had everything laid out, including some things that he wanted one or the other of us to end up with, along with a suggestion for how to ‘make it up’ to the other one. As usual, his suggestions were rational and well thought out. There were only a couple of things that we, as the recipients of his largesse, asked him to adjust, but not many. In the end, giving us adult children the time and opportunity to have some input into the asset transfer process was one of the best things he ever did. I don’t think we would have ended up having serious issues with what he had proposed in the first place, but knowing in advance made the transition a family project, not just something that our parents did and that my sister and I passively or grudgingly accepted.
We also talked about the possibility of my taking over the management of his financial affairs if something were to happen to him, since I am the numbers person in the family. At the time, such an eventuality seemed remote. Little did I realize that, as co-trustee of my parents’ revocable living trust, I would end of working within the framework that he set up for four and a half years and managing all of their financial affairs. If either of these things had not happened – if I hadn’t been familiar with my parents’ financial affairs, or if I hadn’t been empowered to act on their behalf – I can’t even imagine how much more difficult my life would have been beginning with my Dad’s first major stroke at age 91.
While it’s possible to think of a trust only as a more flexible kind of a will, i.e., an instrument used to efficiently transfer assets upon the death of its maker, in my experience one of its key – and frequently overlooked – advantages is its ability to deal with the incapacity of its beneficiaries. In many ways incapacity is a more difficult situation to deal with than death. It is open-ended and can persist for a very long time. What’s more, incapacity is frankly far more likely to be financially devastating than a simple death. And so it was in our case. Thank goodness Dad had given us a good set of tools to work with.
Things I Learned That Don’t Surprise Me In Retrospect
Old Age Is Incredibly Expensive. How many financial plans call for decreased spending toward the end of our lives? Lots of them do. And while that is always a possibility, the greater likelihood is that most of us will spend dramatically more for care in our later years than we anticipate.
The difference between what we plan for and what is likely to happen is the cost of the personal care that is necessitated by extreme old age. We don’t anticipate this because, as capable adults, we can’t envision a time when we can’t feed or dress or bathe ourselves. What’s more, we don’t realize that we will begin to need such support services long before our need is complete enough to trigger a long-term care policy or force us into a nursing home (see also below).
The Elderly Need Advocates. Every elderly person needs at least one adult who will advocate for him or her. All the agencies and government programs in the world do not substitute for a person who cares and who is willing to get involved. Why? Because the world is impossibly complex; you just can’t make up (or write rules to anticipate) the kinds of situations that need to be dealt with.
Even if you don’t personally care for an elderly individual in your life, just playing the advocate role takes tremendous time and emotional energy. If you have an aging parent, think about how you and your family members may want to address and share this task. Preparing for it won’t make it go away, but it will make it easier.
For yourselves, think about who you might wish to advocate for you one day. Do you know someone whom you would literally trust with your life? You will need one.
Change Is The Only Constant. Every time we thought we had succeeded at stabilizing our parents’ situation, the situation changed. Indeed, the process of final decline is just that – a continuous process. I now wonder why I didn’t see this coming because it is analogous to its counterpart, the growing-up process, which also seems never to end.
One of the reasons that managing an elderly individual’s care can be so emotionally draining is that one is constantly fooled into thinking that the job is done. What we finally learned – after a couple of years – was to anticipate and prepare for the next phase wherever possible. Getting out in front of the planning curve was our only defense against being forced to constantly play a panicked game of catch-up.
Things I Learned That Did Surprise Me
There is No Such Thing as a Good Nursing Home. I used to think that there were “good” nursing homes – the kind where we would send our parents – and “bad” nursing homes – the kind we would avoid. But my experience with actual nursing homes has changed all of that. It would now be extremely difficult to convince me that the former exist at all, including those associated with posh, continuum-of-care type retirement communities.
The reason for this is simple. Nursing homes are, by definition, institutions. They are tasked with the efficient care of a group of elderly patients, each of whom requires a different kind and amount of personal attention. The fact is that, in every nursing home situation I have seen or can imagine, the need for efficiency always sabotages good care at an individual level. Patients are awakened when the staff has time, not when it makes sense for the patients. Baths and therapy must conform to an external schedule, not be undertaken when the elderly individual happens to be alert and ready for it. Food is seldom fresh or appetizing or appropriate for each individual being cared for. It must be mass produced and conform to institutional standards. The list goes on.
None of this happens only if the managers or staffs in nursing homes are incompetent or uncaring. It happens, in fact, in spite of some truly remarkable caregivers in facilities because the problem is structural, not personal. Add to that the likelihood that at least some of the staff in even the best homes are less-than-wonderful, and you have a recipe for disaster.
You Can Go Home Again. After my Dad’s last major stroke landed him in a nursing home, we debated whether or not we could move him and Mom back to their home with personal, full-time, care. I was shocked by the number of professionals who told us that we were crazy to even consider such a move. Luckily for both my parents and me, I have seldom been deterred by folks who tried to convince me that I couldn’t do something that I had decided was the right thing to do.
The complete story of our quest to move our parents back to their home is too long a telling for the Update. Suffice it to say that, after months of planning and home renovation and staffing – including our share of false starts and hiccups – we succeeded in bringing them back to their beloved home, where they will stay until the end.
I can’t begin to express how different and how wonderful it is to see them back in their own surroundings. I often wondered during the months of planning and construction and outfitting whether it was all going to be worthwhile. But I know now that the answer is a resounding “yes.”
Old People Need Young People, But Young People Need Old People Too
One of the reasons my mother always hated the nursing home is that there were too many “old people” there. At 92, you see, she just doesn’t identify with those other, slightly loopy, individuals who sit at the dinner table and simply stare into their food. Even though she is slightly loopy herself at this point, she doesn’t want to be around other people who are – and come to think of it I can’t blame her for that. She wants to be around life, not constant reminders of death.
As for my sister and me, I think I speak for both of us when I confess that, despite the frustration and stress and work involved, it has been a privilege to interact again so frequently and so purposefully with our parents. In a very strange way it has actually been a good time. (I admit, this is somewhat like remembering the endless sleepless nights after one’s first baby is born as a ‘good time.’) It has not been ‘fun,’ but it has been deeply satisfying. Neither of us will ever regret having done it, not just because we believe it was the right thing to do but because we actually got something out of it ourselves. We gained a deeper appreciation of and love for our parents, learning more about ourselves in the process. We consolidated much of our memory of early family life, something that will stay with us from this time forward. And as siblings we now have a deeper and more robust relationship. All told, I think we got a fair shake.