American Care Manager Monthly Newsletter

"The Newsletter that Keeps Geriatric Professionals Up-To-Date on Important Healthcare Topics" 

An American Care Managers, LLC / American Home Care, LLC publication

Issue 27 March 2007 Edition

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Financial Concerns: "Keep out of the Red Zone -- Overzealous Credit Card Usage!"

"Keep out of the Red Zone!" Even though this may sound like a warning for a sport or driving lesson the truth is that we are referring to a senior person's debt.  The majority of America's senior citizens are putting too much of their living expenses on credit cards.  Racking up significant debt for someone who is 30-50 is not the end of the world since they are usually employed, and have the longevity of their life to work off the debt.  Seniors, on the other hand, are usually not employed and rely on a steady income stream that is not increasing to pay off their debts and living expenses. 

Many of our past articles has revolved about preparing oneself for retirement by addressing certain topics such as Roth accounts, mutual funds, long term care, land purchases, etc. These topics are meant to be an aide to a senior's financially healthy retirement.  The majority of today's seniors have not set-up a safety net causing them to strictly rely on a stream of revenue that will most likely decrease.   Many of these seniors will still try to live a lifestyle that will exceed their monthly stipends.  Many tend to open up new credit cards and rack up high bills in order to maintain the lifestyle they desire as well as trying to pay off substantial medical and pharmaceutical expenses. 

Many seniors that have previously been frugal have started to use credit cards to pay their expenses, said a study by National Consumer Law Center.  Interestingly, this report showed that while seniors historically have kept lower debt than younger generations they are, nonetheless, starting to catch up.  The study also showed that average credit card debt for people ranging from 65-70 increased more than 217% over the past 10 years to $5,844 when inflation was factored in.  This is alarming because a large percentage of seniors are not in a position to work to pay off their debt.  Rather, they are dependent on the same amount of money coming in month-to-month, and once it is exhausted they have nowhere to turn for additional financial assistance. 

Seniors need to be made aware of the potential financial problems that can arise by increasing their debt.  They need to understand that the customary lifestyle they maintained when they worked has to be modified.  Most seniors have to understand that they need to readjust their thinking in order to accommodate their new income stream.  They need to think long term and consequently save and plan for health issues and medication expenses.  Most seniors do not plan for the future and instead, start digging a hole they will never be able to get out of. They have to be shown that the credit card is not a safety net but a spider's web!

One lifeline seniors can turn to are senior centers and care managers that can speak with creditors in order to cut the interest rates that many times balloon to unthinkable rates because of failed payments.  Many times credit card companies give exceptions to seniors in order to provide a way that the money can be repaid instead of getting nothing back.  The best way to stay out of the spider's web is to be prudent and use your credit card sparingly or DO NOT USE YOUR CREDIT CARD AT ALL!!

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Senior Life:  "Helping Senior People with Pets"

Many of the articles we have provided for you have discussed the fragile psyche of senior citizen's loneliness, depression, and loss of a partner.  Many of these issues can unfortunately make the lives of seniors very difficult and short-lived.  One of the new methods being utilized by families and senior centers to combat these issues has been the adoption of pets for seniors.  Many new studies have surfaced and been released that support this new approach.  

Instead of giving grandma or grandpa a new sweater, TV, or book you should consider a cat or a dog. A recent study showed that just ten minutes of interaction with a household pet can enable a senior person to lower their blood pressure and increase the temperature throughout their body allowing them to relax easier.  The study viewed senior people that owned pets and tested their psychological reactions to daily stress.  The study showed that these seniors became agitated less then half the amount of time than seniors without pets given the same stress situation.

A separate study tested hypertension in seniors over several days. One group had a pet in the home and the other did not.  At the end of the study the group of seniors with the pets showed reduced blood pressure and ambulatory blood pressure even if the senior person held a daily job.   

Pets have also been shown to help curb Alzheimer's side effects.  Most notably, a study with Alzheimer patients was conducted testing seniors with pets against seniors without pets.  The results showed that seniors with dogs in their home became less agitated and started to express more socially accepted interactive behavior particularly in the late afternoon and night when stress is at its peak.  

Pets can play a pivotal role in maintaining your senior loved ones' level of: alertness, socialization and, overall happiness while minimizing the feeling of loneliness. Furthermore, many times dogs and cats can be obtained without a fee from many animal shelters. 

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Senior Living: "Myths of Retirement part 3"

Myths have become a very prominent part of a senior person's life, from the medicines they take to the treatment they receive.  Many of these myths can lead to a senior person's deterioration, especially when they start to believe these myths are factual.  Therefore, we are determined to try and end as many of these untrue myths as we can. 

Myth:  My significant other will take care of everything so I do not have to worry about anything -- it's better that only one of us be fully responsible for both of us!

Reality: When one senior partner takes on the full responsibility of the household, retirement commitments, insurance, and bills they are setting themselves up for some serious risks.  If one person takes care of everything in the household the other person becomes inept many times and unable to take care of themselves.  This is a serious problem especially if the person who is in charge gets ill or passes away.  This will throw the surviving spouse into a tailspin many times creating additional and even overwhelming hardships such as financial insecurity, declining credit rating, missing monthly payments and worse.  Clearly, both partners should share knowledge and know as much as possible about their retirement, their bank accounts, the payments that are made monthly, insurance information, what they are getting from social security, what debt is left, etc.

Myth: I do not have to worry about my retirement since I will be getting an inheritance. 

Reality: Never bet on something that you do not have in your hands.  You might be coming into some considerable amount of money but you should keep in mind you might not always get what you expect.  There are huge taxes on inheritances, settlement costs, as well as potential losses if you are inheriting stock that is dependent on how well the market is doing.   A recent study completed by the AARP showed that 15% of boomers anticipated receiving an inheritance -  the median inheritance households received in 2004 were $50,000.  If you are planning on an inheritance most likely it will be lower than six figures which will only help you pay for your house or cover some medical bills but won't be enough to cover them throughout all of retirement. People need to continue to plan for retirement whether they are getting an inheritance or not.  An inheritance should be viewed as being a bonus to your "way of life," if and when you receive it. 

Myth:  I will stay healthy and have more than enough money to take care of my health in retirement.

Realty:  As long as you stay healthy you will not have to worry about healthcare, but the odds are against you.  Even though you might not have large healthcare bills all it takes is one disease or one virus or one problem that can clean out your savings account.  A survey completed by Penn State and Georgetown Universities showed that 65% of people above 65 years of age will need long term care in their homes, which is only slightly covered by Medicaid while most insurances will require people to pay the majority of the bills on their own.  However, on average if a person sets aside $25,000 at age 65 to pay for future bills, it should be sufficient.  Importantly, if your net worth is less than $3 million dollars you should consider obtaining long-term health care insurance in order to ensure that you will not wipe out your savings account because you need medical care.