Are You All Set?

Several years ago I was asked to give a retirement seminar to my family at a reunion. This was a little strange for me because, as the second youngest of six children, I was not often asked to share my wisdom. It seemed to go pretty smoothly though and my family actually seemed interested in what I had to say. Perhaps surprisingly, I do not remember any heckling.

One comment I do remember came from the older generation. They were in their seventies and had been retired for several years. They were done planning for retirement and had made all the adjustments they needed. Their pension payments had been determined. They had their Social Security. Their savings were invested appropriately for their situation. Their wills were in place. I later learned that my father even had purchased some long term care insurance. They were all set.

I struggle with the idea of being all set. So many things can change. In this case, it was not even the most discussed change that concerned my parents. The retirement seminar took place before 2008 so you might think their investment strategy changed, but no. My father must have a cast iron stomach, as they used to say. He was invested for future generations so he was all in on equities and the market turmoil did not disturb him. His main complaint about his investment advisor is that they sold so many securities and did not reinvest the proceeds quickly enough. He kept his faith that the market would continue its long-term trend of growth and he was invested for the long term.

For my family, the change that upset their well-laid plans came from their health. I well remember my father canoeing with us in the Boundary Waters at the tender age of 75. We hiked several portages and canoed across many lakes. Although my brother and I discouraged it, my dad even carried a canoe over one of those portages. (Part of the reason the trip stands out for me was that a woman from my local church could not come to church for a one-hour meeting “because she was 75 years old.” The same age my dad carried a canoe several hundred yards through the woods.) By 80 years old, he was starting to slow down. By 85 years old, he was looking for help managing his affairs and, shortly after that, moved to a nursing home.

If you are all set, you do not have to review your financial arrangements because everything is in place. Unfortunately, my dad started to have trouble communicating even though his mental capabilities are still in place. Perhaps with an annual review we could have changed his springing powers of attorney to effective powers with his consent. Now, I am afraid he cannot give his consent. Now his investments are being spent down to pay the portion of his nursing home stay not covered by long term care insurance. His investments are no longer invested solely for future generations.

Changes continue in your life no matter your age. Some of those changes may come from the economic environment. Some may come from changes in your family situation. Some may come from changes in your health or personal situation. Your financial plan needs to be reviewed periodically to respond to those changes.