As published in the Racine Journal Times | July 11, 2013
What would you say if I told you after age 60, you make worse decisions with your money? You might disagree which is actually because you also become more confident in your decision-making skills. In other words, the actual decisions you make are worse but your confidence in making the decision is greater! You’d be right to dismiss this accusation if it was just my opinion but there was an actual study supporting these conclusions.
The study by Michael Finke at Texas Tech University found a link between aging and reduced ability to make financial decisions after age 60 as well as increased levels of confidence in the decisions being made. I think this is important because many significant financial decisions occur after age 60 including the topic of today’s column – long term care. Fortunately, there’s a simple (but not necessarily easy) solution which is to include others in your decision-making process.
I suspect most people would argue they are the exception to the study’s results but I think including family members continues to be important for a number of other reasons. The likelihood family members will be the ones providing or coordinating care is a great reason to include them in the conversation. Whether it’s a spouse or adult child, family members are often the first choice for care providers.
Another reason to include family members in the discussion is the potential impact paying for long term care will have on future inheritances. One of the reasons people choose long term care insurance is to preserve their assets for the next generation. However, many people also choose to use their own money to pay for care as it provides more flexibility and avoids the cost of premiums. While I don’t think one approach is best for everyone, there’s certainly a benefit to letting potential heirs know which option was selected to avoid future disappointment.
A great resource for people considering their long term care needs as well as family members who want to take the initiative to start the conversation with an aging relative is Allen Hamm’s book “How to Plan for Long-Term Care.” Hamm provides an overview of long term care in general (dispelling some common myths along the way) as well as outlining specific steps anyone can take to develop their own long term care plan.
Whether you think you are representative of the study cited above or not, isn’t it time to start a conversation with the people most impacted by your decisions – your family?