The expenses associated with the continuation of care for your loved will not simply go away at your passing. They will simply be transferred to someone else. Recognizing this, many caregivers choose to plan for funding these expenses prior to their death.
An SMI caregiver that is planning to fund expenses for their loved one has a non-traditional retirement planning arc.
The first consideration is the dynamics of single generation versus multi-generation asset planning. Most retirement planning methodologies account for twenty to twenty-five years of distributions out of financial accounts. These methodologies break down when they are asked to provide distributions for double that or longer.
The second consideration is that a spend-down is not an option. Most planning methodologies build in a “cushion” so that if returns do not live up to assumptions, the client still has funds left, albeit just not as many. For SMI caregiver planning to fund continuation of care, this cushion is smaller or, in some cases, non-existent. At the very least, the traditional cushion should built on top of the capital that has to be left to fund care expense after the death of the caregiver.
Finally, the caregiver will likely need to use investment strategies that have the potential to continue to grow and outpace inflation well into their retirement. They will likely need to at least consider risk management strategies and products that will mitigate the erosion of their assets in the event of a death, disability, or long-term care need.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and Advisory services offered through LPL Financial, A Registered Investment Advisor, Member FINRA/SIPC. For informational purposes only. Integrated Financial Group and LPL Financial do not provide legal advice or services.