Understanding the Issues Facing
Aging Seniors

June 25, 2014 | by the NCPC

This article was produced from excerpts of the NCPC's new book How to Deal with 21 Critical Issues Facing Aging Seniors.

The Portion of Our Lifetime Where the Final Years Are in Sight

In this article we will use the term "aging seniors" and "final years of life" and "final years." For our purposes, an aging senior is someone who is facing his or her remaining or final years of life. Perhaps because of frailty or poor health or simply advanced age, this person is anticipating the end-of-life. An aging senior is no longer climbing the hill of life but has reached the pinnacle and is looking down the other side.

When helping aging seniors plan ahead, we are no longer interested in accumulating wealth or planning for retirement lifestyles in senior retirement communities. We are interested at this point in preserving what assets are left and passing them on to the next generation. We are concerned about reducing debt and maintaining adequate income. We are concerned about the need for long term care and the interaction of family members in providing that care. Or, we are concerned about a living arrangement that provides care support and supervision.

We are also concerned about proper legal documents for the final years and for preparations for the end-of-life such as death, funerals and burials. Finally, we are concerned about health issues and medical treatment and government programs (Medicaid, VA Benefits, Area Agencies on Aging, Medicare, etc...) to support health care and long term care.

The Senior Is in His or Her Final Years and Facing Important Decisions

For purposes of this discussion we will define a senior as an individual age 65 and older. This is in keeping with a definition that is maintained by government and private organizations. In reality, the age definition is totally arbitrary and actually dates back to the time of Otto von Bismarck in the 19th century. Bismarck was Chancellor of the German Empire in the late 1800s and instituted a number of social reforms supporting workers such as health care and a form of social security. The initial government retirement income age in Germany was age 70 but the German government reduced that to age 65 in 1916. When the United States instituted Social Security in 1936 under President Roosevelt, the precedent of using age 65 had been established with the German system as a model and with a number of domestic retirement programs. This arbitrary age has been continued as the precedent for one graduating from being a worker to one who is retired. Most retired individuals 65 and older are referred to as seniors.

As Americans continue to live longer and longer, becoming a senior at age 65 is no longer considered a major watershed in a person's life. Many people are continuing to work beyond age 65 because they are healthy and productive and do not wish to spend the rest of their lives watching television at home or playing golf or traveling. However, at some point, the aging process catches up with all of us. For a few of us it occurs well before the age of 65, but many of us can remain healthy and productive well into our 80s and even 90s.

Having helped seniors for a number of years, we find that generally most of these people fail to prepare for what we call the final years. For many seniors this is a period of time prior to their death that they are struggling to keep their heads above water both physically and financially. Health care costs are rising, savings are being depleted and income is not keeping pace with inflation.

For whatever reason, aging seniors themselves and typically their families try to ignore the need for seeking expert advice and for planning for final years. It is usually a crisis such as a fall, the inability to pay for services or medical care, hospitalization or sudden illness or some other precipitating event that results in action being taken. Unfortunately, by this time it is often too late to do anything about the eventual outcome. Assets are already depleted, interventions have not been pursued and the family is not ready to accept responsibility for oversight and care. Fortunately, even at this stage, planning assistance with the crisis itself is readily available. If you are in a crisis planning mode the National Care Planning Council can direct you to someone who can help you.

Due to Advanced Age, Savings and Investments Are Running Out

Many folks start their senior years with a significant amount of savings and investments and others not so much. Those who have little in savings and investments are particularly vulnerable to unexpected costs that may arise. But there is also a problem for those who been have successful in setting aside some extra money. Because people are living so long, they often outlive their savings and investments. What this means is that along the way to becoming older at age 85 or age 90 or age 95, a number of expenditures have eaten into savings and investments.

It's not always withdrawals to create extra income that deplete the accounts. Perhaps there were unseen medical bills. Perhaps there was a major repair to the home that was not anticipated. Perhaps there was a divorce and a splitting of assets which is not so uncommon with senior couples today. In today's modern society, we often see the children coming back and asking for financial help or moving in because they have no money. Perhaps the savings and investment returns that were anticipated didn't materialize and the accounts did not grow to keep pace. Perhaps the income stream during the senior years did not grow as fast as inflation and savings and investments were raided to augment income. Or perhaps the plan was deliberate to use savings to augment income but savings and investment growth were anemic.

Even in the face of dwindling savings and investments, there are some strategies that can help to stabilize or even reverse the depleted accounts. Contact the National Care Planning Council for assistance in this area.

Due to Advanced Age or Other Issues, Income Is Inadequate

We have already touched on issues that might result in inadequate income. One of these has been mentioned. If a senior or a senior couple is relying on investments and savings to augment income such as Social Security or pensions, and for various reasons those retirement accounts did not produce the anticipated results, many seniors find themselves in a bind in later years where they can't seek employment to make up the inadequate income.

There are also other reasons that the income might not be keeping pace. A major reason for many seniors nowadays is the accumulation of debt, particularly credit cards. Paying back money borrowed on credit cards or through home equity loans eats into income. For whatever reason, banks have been particularly liberal about issuing credit cards to older individuals who may not have the capacity to service that debt. The debt may have been necessary because of a major repair to the home, or due to unforeseen high medical bills or because of a bad investment due to financial fraud. These types of fraudulent investments seem to be more prevalent among seniors.

Another major factor for inadequate income could be that the income flow from year-to-year is not keeping pace with inflation. This is particularly true for seniors on Social Security or fixed pensions who have to pay for the high cost of medical care. The cost of medical care has been increasing significantly faster than the yearly increases in Social Security. Also, in some areas the cost of maintaining a household due to higher utility bills, higher taxes and higher maintenance costs has risen faster than the cost of living increases in Social Security income.

The Senior's Health Is Failing

Health can deteriorate over a period of time or a change in health can occur suddenly. Sudden unexpected changes in health might be a diagnosis of cancer or it might be a heart attack or a stroke or some other acute health issue.

Health that has deteriorated over a period of time will eventually result in disability – the inability of the senior to care for his or her own physical needs. This disability will then result in someone acting as a caregiver to assist in such things as dressing, bathing, toileting, ambulating, needing help with incontinence, preparing meals, answering the phone, paying bills, shopping, running errands and so on. This need for a caregiver usually requires making some major decisions for the remainder of the period in which the care is needed. As a general rule, chronic health failure over a period of time is not going to improve and will only get worse, resulting in a greater need for caregiving.

Acute changes in health can also lead to disability and the need for a caregiver. However, often the senior recovers and the disability disappears. On the other hand, sometimes the acute healthcare issue results in permanent disability and a permanent need for care.

A worsening of health for a senior – especially a senior of advanced age – will typically trigger the need for intervention and the need for making some serious decisions about living arrangements, costs, government support and family support.

The Senior Is Losing His or Her Independence

Seniors can lose their independence simply because of advanced age and a general weakness and frailty – requiring intervention and support from other people. However, the most common cause of losing independence is dementia. The risk of dementia or a loss of cognitive capacity increases considerably as one grows older. For aged seniors who are age 80 and above, the risk of dementia is almost 50%. This means that almost half of all aged seniors are experiencing some form of cognitive impairment.

Families often wait too long before intervening to assist the aged senior to maintain independence. Perhaps it is because the family is in denial or perhaps it is because they hope it will go away or perhaps it is for some other reason. As part of the planning process, all families should plan for the contingency of their loved ones losing their independence and should be ready to step in at the appropriate time.

Aging Seniors Are Vulnerable to Financial Exploitation

As one grows older, there is a tendency to be more trusting and thus more vulnerable to financial exploitation. We don't need statistics to prove that, we simply know from experience that this is true.

Financial exploitation can take several forms. For example, many seniors will hire handymen or mechanics or other service providers to help them with their maintenance, repair or remodeling needs. Unscrupulous maintenance or repair providers sometimes take advantage of seniors by providing services that are unnecessary and these people often charge more for those services. Additionally, because of the many exposés on television, all of us are aware of phone scams and Internet scams that take advantage of seniors and rob them of their savings. Finally, some financial services practitioners will sell financial products, financial services or investments to seniors that are not suitable for them that may result in losses or the inability to access their funds.

It is crucial for family and friends to become aware of this tendency for financial exploitation and to develop a plan to protect senior loved ones from it.

Planning Options for Aging Seniors

There are a number of strategies that are useful for assisting aging seniors plan for their final years of life. We will discuss these planning options in greater detail in future articles. For now, here is a list of some of the planning options that can be pursued.

• Care management advice for caregivers
• Implementing estate planning with asset preservation strategies
• Targeted planning strategies to meet specific needs of the senior and the family
• Designing and implementing a formal final years plan