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Gates Pass Advisors Real Client Stories
Just this last week I met with the heads of two households – one who has been a client for over 20 years and one who is just coming to me for the first time at age 91.
In each case, life has dealt them some significant blows – cancer, stroke, dementia diagnoses, and loss of a spouse, as well as granting them strong relationships with family and successful careers.
We all want to live as long as possible, happy and clear-minded. We put effort into exercise and eating well. We also need to ensure that our finances are healthy and balanced too—that they can support us for as long as we need.
Financial planning is not a crystal ball. It is a monitoring tool to spot trends in the ability of our nest egg to support us over time. The earlier we accustom ourselves to the habit of monitoring our financial direction, the sooner we can make course corrections.
Client Case Study
In the case of the clients, there is a likely need for increased care in the coming years. If you are facing this possibility, we recommend that you gain some clarity sooner rather than later about your ability to weather that storm for yourself or a loved one.
Because we have spent decades working together, through a variety of personal and market challenges, a strong foundation of trust has been built. We reviewed scenarios of the need for home care for one, for both, and, if needed, how a move to Assisted Living with Memory Care would impact their asset longevity. Importantly, this review enabled the discussion about the difficult topic of health decline and future needs.
First Time Client Case Study
The second person I mentioned is one I just met this week. He had been widowed in the past 12 months. While he had known about the reverse mortgage on their home, he hadn’t been tracking the balance very carefully. He recently learned that the balance had risen to 70% of his home’s potential worth and the interest costs are compounding at a high amount monthly. Assets outside of the home are not adequate to cover deferred maintenance and his own year-to-year needs.
Besides dealing with the loss of his wife, he worries about his finances constantly. If he needs to sell his home to pay off the debt, he is unsure where he will be able to live for the net amount after the loan is paid off. At age 91, understandably, he would prefer to stay in his community.
At this age and with the level of debt, choices are more limited, and significant decisions will need to be made sooner rather than later, perhaps bringing in adult children to help provide support.
What is Longevity Risk in Financial Planning?
Longevity risk refers to the risk of outliving your savings due to increased life expectancy. Financial planning plays a crucial role in mitigating longevity risk by accounting for uncertainties associated with life expectancy.
In an era of extended life expectancy, addressing longevity risk is vital for a secure and comfortable retirement. Financial planning offers numerous benefits, including ensuring a sufficient retirement income, mitigating longevity risk, diversifying income sources, adjusting investment strategies, and planning for healthcare costs. By engaging in sound financial planning practices, individuals can proactively manage their finances and enjoy a fulfilling retirement without the fear of outliving their savings.
Conclusion
It is generally recommended to start financial planning early in life to maximize the benefits and ensure a more secure retirement. We offer financial planning to those who haven’t yet accumulated a large asset base. Additionally, seeking professional advice from a financial planner can provide individuals with personalized guidance and strategies tailored to their specific needs and goals.
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