Coming to terms with the realities of your later years can be one of the toughest challenges of aging. America is geared to youth and even acknowledging the inevitability of aging may be considered a form of cultural disloyalty.
So let's accept and applaud that 80 can be the new 60, that millions of baby boomers will reinvent themselves during their 60s and 70s, and that stereotypes about being old in America will be tossed out in favor of more positive images of vibrant old age.
[See 10 Bargain Retirement Spots.]
Even so, we will still get old. After all, isn't that the goal of today's enhanced emphasis on taking better care of ourselves? To age successfully, however, we also will need to contemplate important aspects of our later years, up to and including plans for our death.
The Longevity Project, a current book on traits of people who have lived long and successful lives, notes that conscientious people are favored to live long and well. One reason is that they do not leave things to chance. They tackle future needs today. Having plans in place, they are more prepared and less stressed about what their futures may hold. Such an approach does not, of course, guarantee successful aging. But it sure raises the odds.
Here are some of the key planning needs that nearly everyone will face as they age and retire. Some are practical and financial; others are very subjective but no less important. In every case, the sooner you begin to build these plans, the better off you'll be in the future. How many of these life "boxes" have you checked off?
Achieve retirement self-sufficiency. Generating the largest possible retirement income often seems to be the only financial goal of retirement planning. But it's really just a very visible element of a more complex set of calculations, many of which are emotional, not financial. The goal of all this work is to produce self-sufficiency in retirement. We don't want to worry about making ends meet every month, and we certainly don't want to be a burden on our families. Reaching self-sufficiency is a process that should begin well before you turn 65. It often can require some very difficult and perhaps uncomfortable admissions about how much money you will have to live on in retirement. While we're balancing future expenses and income, we're also adjusting our dreams to reflect the reality of our likely future circumstances. It is hard work, but ignoring it doesn't make it easier or lead to better outcomes.
[See 3 Steps to Turn Nest Eggs Into Retiree Income.]
Do worst-case planning. Unless you're really wealthy, there are adverse life events that can devastate your finances. Take suitable precautions. For example, I just bought an additional life insurance policy that will be in force until I'm 80 years old. Its sole purpose is to help my wife (and me) sleep better at night knowing she will have an extra cushion if something happens to me. For the same reason—sleeping well at night—we're also going to strengthen our long-term care insurance, adding to our coverage limits (particularly for in-home care) and also getting what's called a state "partnership" policy. Under this policy, if one of us requires extensive care—most likely for Alzheimer's—we would seek Medicaid coverage after exhausting our insurance policy benefits and, most likely, a good portion of our wealth. If this happened, we would not have to deplete our assets totally to qualify for Medicaid. Instead, we'd be able to shield an amount equal to the total of our private insurance benefit payments. In our case, we are fortunate to be able to afford to divert our current income into these insurance payments. But we're also willing to reduce current consumption to do so. You may have your own worse-case planning to do.
[See Don't Take Life Insurance Payouts for Granted.]
Decide where to live. Most people want to age in place in their homes. If this applies to you, take a careful and hard look around your house and imagine how well it would suit you if you were in a wheelchair. That's the reality you need to consider. Further, is your home in a supportive neighborhood? Once you no longer can drive, how would you get out to shops and doctors' offices? If, instead, you opt for a seniors-only retirement community, what's your geographic preference and why? What kind of community can you afford?
Keep solid records. If you died tomorrow, how hard would it be for your loved ones to get access to your key legal documents (will, trusts, and the like) and financial accounts? Do you even have the basic legal documents drawn up? You should have multiple copies of key documents plus account information (and online access passwords). Increasingly, these are going to be computer files. Keep one set on your home computer, and back it up either on an external hard drive or on a "cloud" computing back-up service. Provide access information to the appropriate family members. Then—and this is much easier said than done—regularly update these files so they are always current.
Consider your legacy. There is no common yardstick to use in measuring the impact we've had on the world during our lives. Most likely, however, you have your own yardstick. What does it tell you? How do you measure up to your own standards? Are there things you still believe you should be doing to satisfy your expectations? Believe me, this is not something you want to wait to do until your final days. Maybe a frank look in the mirror will cause you to make some major changes in your life. Maybe it will reaffirm you've been on the right path all along.
Determine your final wishes. Social scientists who have studied people in their final days report how helpful it is when a person has made the key decisions about the end of their life well in advance. Often, people are not able to make sound decisions as they near death. They often have physical and mental impairments that make such work impossible. Their families may have to make these calls for them, adding a lot of stress to what is already a difficult situation. So, would you like to die at home, in a hospital, or perhaps in a hospice facility (you probably can have hospice at home or in a hospital setting as well)? Have you executed the proper documents providing your spouse or a family member with the authority to make medical decisions should you become incapacitated? Does this person know your preferences for end-of-life care? Do you want to be buried or cremated, or perhaps donate your body to science? Is there a final resting place you have in mind? Who's going to provide an obituary to your hometown newspaper, and what do you want it to say? Setting aside time to make these decisions will hardly rank among your happiest memories. But you will be providing your family an invaluable gift—allowing them to focus on the loving aspects of your life, not the hassles of wondering how you'd like things handled when you die.
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