Out of Money In Her 90s, and Needing Far More CareSubmitted by S. F. Ehrlich Associates, Inc. on July 6th, 2018
June 30, 2018
While both sad and depressing, the story of Rita Sherman, as reported in The New York Times1, should provide valuable lessons to every current and future retiree. (The title alone is depressing.)
“A dozen or so years into her retirement, Rita Sherman had plenty going for her financially. Recently widowed, she had a net worth of roughly $600,000 as of 1998.”
“Her health was excellent, and she dutifully purchased a long-term care insurance policy that would cover three years of nursing home costs should she ever need help. Watching over it all was her daughter, a medical social worker, and her son-in-law, a financial planner.”
“By the time she died at 94 in 2016, however, all of the money was gone after a diagnosis of dementia and five and half years in a nursing home. Like so many people who never see it coming, she’d gone from being financially comfortable to qualifying for Medicaid.”
The story is more complicated than the first few paragraphs copied above (it includes a lawsuit against an attorney who was accused of improperly preparing a trust for Ms. Sherman), but the lesson seems obvious.
Odds are you’ve either read in this newsletter or heard us use the expression: “The good news is we’re all living longer, while the bad news is we’re all living longer.” (Perhaps you’ve heard or read it even more than once?) The comment intends to get clients to critically think about a few vital subjects, such as:
- What am I going to do during all the extra years I may live?
- How will I pay for the expense of living all those additional years?
- Where will I get the money to pay for assisted living expenses if/when necessary?
- Where should I relocate so I can get the best ‘bang for the buck’ (aka: Where can I go so my dollars last longer to provide for my current standard of living?)
These are the types of concerns that motivate John and me to advise clients to save more, spend less, and work longer. And let’s not forget the staying healthy angle. After all, what’s the point of growing old - or having money - or growing old while having money, if you’re not healthy enough to enjoy it?
Don’t read about Mrs. Sherman and feel gloomy for your future, but read the story about Mrs. Sherman and be realistic about spending and saving and working. Yes, you may die long before reaching age 94, and you may die knowing that you used your money to do all the fun things that were on your personal bucket list. Conversely, you may live to age 94, still possessing the wherewithal to know that you spent far too much during the early retirement years. The conundrum is obvious.
We spend our days worrying about our clients. We literally spend hours each day trying to calculate the best way for our clients to live long, rewarding lives. And we’ve spent years trying to figure out ways that clients can increase their odds of living all the way through a successful retirement.
Almost ten years after the stock market reached its post-crash low in early March 2009, you can rest assured that the story of Rita Sherman is as haunting to us as it now might be to you.