Elder Law Practice of
Douglas R Jones &
Cynthia Orlicek Jones

How Long Can We Make Our Money Last?

It is tough to plan, especially when you can’t see the future! Of course, none of us can see the future, so when helping a declining Senior plan for future health care needs, sometimes it’s a matter of figuring out what will happen should any one of a number of scenarios occur. When speaking of financial planning, sustainability planning is difficult. There are any number of scenarios within scenarios that may arise. With sustainability planning, it is always best practice to create a Plan B (maybe C & D, too) while planning.

For example, in the chart below, we assume that Frank & Martha have $3,000 per month joint income.  Let’s assume $200,000 in savings. We cover three different potential life scenarios that could happen if their health declines to the point where they need substantial assistance:

Sustainability Planning Chart

Monthly IncomeMonthly Cost of LivingCurrent Cost of CareAssets Used per monthSustainability Period
$3,000$2,500$0.00$0.00Indefinite
$3,000$2,500$3,600$3,100 / mo5.37 years
$3,000$2,500$10,000$9,500 / mo1.75 years

One disclaimer.  Don’t get hung up on the numbers.  The numbers could change a lot. The purpose of this exercise is just to show a few concepts and to get you to thinking what could happen.

Row #1

Monthly IncomeMonthly Cost of LivingCurrent Cost of CareAssets Used per monthSustainability Period
$3,000$2,500$0.00$0.00Indefinite

This is Frank & Martha’s reality now.  They have $3,000 per month coming in from Social Security and from Frank and Martha’s pension.  Their monthly cost of living is $2,500. Since they need no outside care at this point, their cost of care is $0 and they have used none of their assets for their care.  Therefore, as long as Frank & Martha can stay at home and remain in fairly good health, they can survive indefinitely, living just off their income. As a matter of fact, at this level, they are contributing money to their asset base every month.

Row #2

Monthly IncomeMonthly Cost of LivingCurrent Cost of CareAssets Used per monthSustainability Period
$3,000$2,500$3,600$3,100 / mo5.37 years

This is Frank & Martha’s reality should either one of them need some assistance.  They still have $3,000 per month coming in from Social Security and from Frank and Martha’s pension.  Their monthly cost of living for basic expenses at home is still $2,500. 

However, this is where the scenario deviates from the scenario pictured in Row #1. In this scenario, either Frank OR Martha’s health declined to the point where they needed some care. Let’s assume that it’s Frank. The $3,600 monthly expense estimate could represent either one month in an Assisted Living Facility OR about 6 hours per day of non-medical in home care (assuming $20/hr X 6 hours per day X 30 day month). Of course these are estimated costs. Either of these expenses may be more or less and the hours needed from in home care may vary a lot, depending on need.

Since the cost of care ($3,600 / mo) plus monthly living expenses exceeds their monthly income, they are now dipping into their savings at the rate of $3,100 per month.  At this rate, if spending remains constant (which it won’t), their savings will last 5.37 years. The reality is that if both continue to stay at home, they will need even more assistance from non-medical home care. If Assisted Living is an option, the cost may be about the same. The cost of care may rise (at some facilities) as Frank needs more care.

Row #3

Monthly IncomeMonthly Cost of LivingCurrent Cost of CareAssets Used per monthSustainability Period
$3,000$2,500$10,000$9,500 / mo1.75 years

Frank & Martha’s reality changed even more where Frank needed Nursing Home care (est. $6,400 per month) and Martha now needs 6 hours per day of non-medical home care (est. 3,600 per month).  OR perhaps Frank goes to a Nursing Home and Martha moves to an Assisted Living Facility. OR they both receive substantial non-medical assistance at home (about 8 hours per day each). 

Since the cost of care ($10,000) plus monthly living expenses exceeds their monthly income, they are now dipping into their savings to the tune of $9,500 per month.  At this rate, if spending remains constant (which it won’t) their savings will last 1.75 years.  

If either or both go to a Skilled Care Nursing Home, the family would be well advised to seek the assistance of an Elder Law Attorney to determine whether any assets could be preserved.  This is especially important where there is a “well” spouse at home.

Again, don’t get hung up on the numbers – that’s not the point.  As you can see, things can change a lot, very quickly when health starts to decline.  The point is to start doing some planning.

Next Steps

  1. Meet with your financial advisor for a review.  Check to see whether your assets are invested appropriately and whether you can get access to them if needed. Determine whether you have an option to safely generate more monthly income from invested assets. Remember that sustainability is the key.
  2. Meet with your Elder Law Attorney for a review, OR if you don’t have your planning in place, ask what is needed and get it in place while you still have capacity to do so. Ask about asset preservation options.  If your parent is going to a Nursing Home now or in the near future, it’s critical to start the planning process as soon as possible.
  3. Gather your income and asset numbers and do a Mom Centered Family Meeting. Discuss your preferences and determine what options are available should you need more assistance. One key to productive sustainability planning is to create multiple plans.

If you have gone through this process (or something like this) what did you discover?  If so, please drop us a comment below and let us know what you decided to do so that you can receive the care you need in the future.

Thank you for taking the time to offer your input.  We may share some of your comments in future posts as we work together as a community to plan and educate.

Are you are a fellow Arkansas resident who would like to jump start your sustainability planning? Click the button below to schedule your FREE 10-Minute phone consultation.

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