There are a lot of misconceptions about the aging process and caregiving in the United States. Robert “Bob” Powell is joined by Care Right Inc. Founder Annalee Kruger to help separate the fact from the fiction.
Powell and Kruger also discuss aging in place, vulnerabilities in elder care, long-term care insurance, the critical role of caregivers, aging plans, and more in this week’s episode of Decoding Retirement.
Aging in America: The most common misconceptions (00:30)
As Kruger explains “there’s quite a few different myths out there” regarding the aging process. “When we talk about aging in America, we are also talking about family caregivers,” Kruger says. “And as we age, none of us get more healthy. … And so we’ve got this aging nation of adult kids getting thrust into the role of family caregiving without usually having any kind of conversation about the what and whens of aging, let alone having an aging plan in place.”
Ask Bob: Cost of living adjustment (12:15)
Question:
How does Social Security determine what the cost of living adjustment (COLA) will be on my Social Security benefit?
Answer:
The Social Security Act specifies a formula for determining COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for urban wage earners and clerical workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics.
A COLA effective for December of the current year is equal to the percentage increase (if any) in the CPI-W from the average for the third quarter of the current year to the average for the third quarter of the last year in which a COLA became effective.
If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA for the year. In 2024, the COLA was 3.2%.
Long-term care insurance (13:05)
Long-term care insurance is a type of private insurance designed to cover the costs associated with extended care when a person is unable to perform basic daily activities independently due to aging, chronic illness, injury, or disability.
It can perhaps help with the possibility of paying for home health aid or a long-term care facility. Kruger provides her thoughts on long-term care insurance. “I feel like any financial solutions that you can afford is money well spent because yes, when you look at how much the premium might be, it might be a big number compared with what it would look when you also compare the coverage,” Kruger says.
Aging plan (20:05)
An aging plan is a plan designed to help individuals and families navigate the physical, financial, and emotional complexities of aging before a crisis arises.
Why is an aging plan so critical to the aging process? Kruger breaks down the importance of an aging plan. “So it actually starts with family meetings to get everybody’s perspective and discovery of what’s working well, what’s not working well, what are the goals, aging in place at home,” Kruger explains. “We also do what’s called a care matrix … so that we can really make informed decisions where can mom and dad get more bang for their buck, but also get better quality of care.”
Care matrix (decoded)
A “care matrix” is a comprehensive tool designed to coordinate and organize essential aspects of caregiving for older adults.
Ask Bob: Managed account (22:50)
Question:
My 401(k) plan offers me the chance to invest using something called a managed account. Should I?
Answer:
A managed account in a 401(k) plan is an investment option where professional managers select and oversee your investment portfolio based on factors like your age, retirement goals, risk tolerance, and financial situation. But as with all things financial, there are pros and cons. On the plus side, you get professional management, personalization, and rebalancing.
On the downside, managed accounts typically come with additional fees; managed accounts may not significantly outperform less expensive investment options; and managed accounts can involve more complicated investment strategies that may not necessarily fit your specific needs if not aligned well with your circumstances.
The bottom line: a managed account can be a good option for those seeking professional help in managing their retirement investments, especially if they feel overwhelmed by investment decisions. However, it’s a good idea to weigh the potential benefits against the added costs to see if it aligns with your retirement strategy. And if you’re unsure, consider consulting with a financial adviser who can offer personalized advice.
If you’ve got questions about money or retirement, email us at AskBob@yahoofinance.com.
Video highlights:
00:30 – Aging in America: The most common misconceptions
04:10 – Aging in place: Thoughts on home modifications
07:45 – Vulnerabilities in elder care
12:15 – Ask Bob: Cost of living adjustment
13:05 – Long-term care insurance: Can it help with home health aid or long-term care facilities?
15:45 – Critical role of caregivers
20:05 – The importance of an aging plan
22:50 – Ask Bob: Managed account
Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!
Yahoo Finance’s Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds.
Find more episodes of Decoding Retirement at https://finance.yahoo.com/videos/series/decoding-retirement.
Thoughts? Questions? Fan mail? Email us at yfpodcasts@yahooinc.com.
Editor’s note: This post was written by Zach Faulds.
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