Health issues complicate couple’s plans
Discovery process uncovers pensions and benefits unknown to couple.
Special to The Seattle Times
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Crunching numbers and solving equations came naturally to Larry Hill, 84, of Lake Forest Park, for the more than 30 years he was building airplanes for Boeing.
Now, the retired engineer seesaws between trying to help his wife of 17 years, Rosemary, craft updated retirement plans for them both — and forgetting his own address.
With unpredictable and irregular episodes, Larry battles Lewy body, a condition associated with Parkinson’s and a dementia second only to Alzheimer’s. Some days, says Rosemary, he is fine. On others, he’s so forgetful and confused that she can’t leave him home alone so she can go to work.
Shortly before he was diagnosed, Rosemary, 64, received a cellphone call from Larry while she was at her job as a mental-health counselor. He told her his daily outing had overlapped with a couple who had driven him to an ATM; they wanted him to withdraw money and he was confused about what to do. After his diagnosis, again while Rosemary was at work, Larry spent an entire day “cleaning and reorganizing” all the files and their bills in her home office — twice.
“I knew his heart was in the right place, but I couldn’t find anything in there for weeks,” she says. “I had to put a lock on the door. That was hard.”
Now, she says, “he’s quite self-aware that he’s losing his memory, and yet he’s valiant in the ways he’s living. He maintains a positive attitude, squelches his complaints and keeps an active social life.” With enlarged print on his electronic tablet, he reads aloud to her in the evening.
Unable today to recall specifics about his pension benefits and health coverage that could be aiding with his long-term care, Larry’s declining health is taking a toll on Rosemary, too.
The couple own their $250,000 home. Rosemary earns $50,500 a year. And Larry collects about $40,200 annually in pension and Social Security benefits. But both worry about what will happen to her if his health drains their assets.
“I have been taken to the hospital from work twice now with dizziness,” she says. “I know that stress leading to caregiver illness is the primary reason that vulnerable adults are put in care facilities.”
Even though the couple hired a respite worker with the help of King County Senior Services for one day a week, “more and more help is required,” she says. “If I quit work, how will we pay for it?”
Though conservative with spending and saving, Rosemary’s financial fears are fueled, in part, by her lack of investment experience.
“I don’t even know what a 401(k) is,” she concedes.
That’s why she completed an online survey to participate in a free financial makeover with a member of the Puget Sound chapter of the Financial Planning Association.
Over five weeks, she met several times with certified financial planner Bobby Reamer, a junior partner with Bellevue-based ICON Consulting; Larry joined them at the last meeting. Immediately, Reamer detected Rosemary’s financial fears, several smart moves they had already made, and the couple’s devotion to each other.
“Larry very much wants her to be taken care of,” the planner says. Rosemary, meanwhile, helps Larry maintain his financial dignity by making sure he has a “debit card with a limit that is separate from their other accounts, so he can pay when they go out to dinner, and it has a limited risk.”
Reamer was impressed that the Hills met with a lawyer years ago to create a will and set up power-of-attorney roles to deal with health-care legalities. He also praised them for paying off their home mortgage. “That gives them a lot of flexibility.”
Even with those moves, Rosemary was so concerned with running out of money that she had almost all of her money in short-term certificates of deposit. While this choice was “safe,” he says, she was losing “significant purchasing power with inflation” over time.
Reamer worked with them to prioritize several recommendations. For starters, he began researching their investments, expenses and potentially missing benefits with a process he calls “discovery.”
Among the results: not one, but two pensions for Rosemary.
“Rosemary had a pension from a previous marriage and was not given the whole picture,” he found. On top of that, “Larry had also signed up for a pension that allowed for 50 percent survivorship — a benefit Rosemary did not know about.”
The planner also used an independent broker to “get the same homeowners and auto-insurance coverage from a highly rated company for about $450 a year less.”
Next up: health-care benefits.
Larry was already using some of his Veterans Affairs benefits, but he was unaware he was also eligible for VA Medicare supplemental insurance to help defray costs of his future dementia care. Now they’re working to tap that coverage. Reamer is also trying to get Rosemary approved for benefits before she leaves her job.
“This is a great strategy that will improve Larry’s quality of care both in and out of the house, help reduce their monthly expenditures and improve their overall financial picture,” Reamer says.
The savings are “significant” — perhaps up to 80 percent of what they had been spending on Larry’s out-of-pocket health-care expenses, according to the planner.
Next was dealing with the Social Security Administration. Rosemary didn’t have a retirement plan, and she worried she would be working for much “of Larry’s lucid time” and unavailable “to help as he declines.”
“It’s hard to create any universal words of wisdom about (retirement planning) because there are a ton of nuances to Social Security,” Reamer says. In the Hills’ case, Rosemary will defer her benefits when she eventually retires and will qualify for half of Larry’s benefits in the meantime, allowing her Social Security benefits to grow by 8 percent for a few more years.
The key, says Reamer, “is making sure your financial goals determine the best benefits option and not the other way around.”
Reamer says the hardest part for Rosemary was not knowing which questions to ask. “People who are under a lot of stress don’t always have the capacity to deal with it or get the right information.”
Other times, he adds, they’re afraid of bad news.
In all cases, he advises working with someone “who understands the changing Social Security landscape, and can get the right information for the right analysis.” For some seniors, “collaborating with their adult children can help facilitate this process.”
Finally, Reamer advised the couple to consider an investment strategy he calls “the bucket approach.”
This approach involves breaking up expenses, income needs and potential portfolio supplement into “different buckets or years.”
“Bucket 1 is the next seven years; Bucket 2 is the following seven years, and Bucket 3 is everything needed after year 14,” he explains. “Bucket 1 is very conservative, with the goal to not lose money. Bucket 2 has the goal of slightly outperforming inflation and not losing money, and Bucket 3 is capital appreciation.
“The whole idea is to give yourself a full 14 years of income from a portfolio with relatively low risk, while allowing the remainder of your portfolio to take advantage of asset classes that appreciate more over time.
“Our bucket strategy is simply that if you need money soon, take as little risk as possible. If you need it sooner than later, take a little risk. And if you do not need it for quite a while, then invest in assets projected to do well over the long-term,” Reamer adds.
“This was eye-opening,” says Rosemary. “I always thought the exact opposite. I thought the best way of planning for the future was to keep any money for the future liquid and safe, because you never know what will happen.”
As Larry’s health-care needs shift, more planning will likely be necessary, Reamer says. They have come a long way, he says.
“At the beginning, Rosemary was very nervous,” he says. “We were able to ease her concern and provide the reassurance that she has the resources to provide the retirement she is hoping for.”