Regarding spending in advanced old age, keeping the means to fund a long term care stay for a few years might be wise. At $7000 or more per month, rather a chunk for those of us who have chosen to forgo LTC insurance. If not spent, then gravy for the offspring or charities. Have to see how RMDs might cut into those funds, however.
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But remember you don’t have to spend your RMD. You have to take it, yes, and pay the taxes on it, but you can then just let it sit around earning currently taxable income.
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We do the same with our HSA account. It’s a great vehicle for saving (and spending) tax free.
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We do this as well. But question for someone who has actually claimed and received money from these accounts - what kind of documentation is needed for old medical bills? I haven’t been very good at keeping track of medical expenses/bills - but I do put all the bills together in one folder. Would that suffice?
Also interested in hearing that you can use this account to pay for medicare or insurance .
I don’t know anyone who was audited, so I don’t know what the IRS would expect. But I have a plastic bin full of receipts! I plan to go through them to organize them and make a spreadsheet. I might scan them, but that’s pretty daunting.
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Dropbox’s app scans receipts very quickly and uploads automatically to your dropbox account. I do this for all my paper receipts now (I just move electronic receipts to dropbox).
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I’ve been using my HSA for ~10 years. I’m very old school. I have a folder by year labeled 20XX medical bills. On the insider cover of the folder I have the account total as of January 1. Then I write down every medical bill we get - the date, what it was, how much, and how I paid. it. If I use the HSA card, I highlight it in yellow. If I transfer a certain amount out of the HSA I write that down and highlight it in pink. All receipts/bills are in the folders. At the end of the year, I do a nice little close-out of how much we spent on medical, dental, vision and also how much we spent per person. It probably helps that we aren’t on any daily prescription meds and usually our medical bills total $500.
I also highlight receipts - the date paid, the amount, and the credit card # (and write which one it was). It just makes it easier to figure out if you have to go back and look at it.
There are probably higher tech ways of doing this, but that’s what I do.
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Agree, and if one spouse dies, the surviving spouse will be in the single tax bracket with the RMD of a couple and perhaps SS of two-thirds the amount received as a couple. (This is assuming that one spouse claimed on the other’s benefit at 50%–obviously not always the case.)
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Currently, assisted living is costing my mother $9,000/month. Long term care – nursing home, memory care e.g., costs $15,000/month, fyi. This is near Albany NY.
Assisted living costs vary by area. My MIL was paying about $4,800 a month, although she could have downsized to a smaller, less expensive room after my FIL passed away. She chose to move closer to my SIL, three hours away in the same state. The current AL is less than $3,000 a month. To be honest, the new place is not as desirable as the former facility, but they meet her needs, which is important. At this point in her life journey, the nicer facility was making little difference in her life … H & I enjoyed the staff & residents more at the other place, but MIL honestly isn’t interested in anything beyond her room, anyway. But … I know that I would want the more expensive place. So I have to plan accordingly. Unfortunately, I have no clue what AL costs here, so I need to look into that.
That’s us.
While in college, I sat down my daughter and we looked at all the family’s accounts (and obligations), including 529s, and where all the account logons are kept in case both parents perish in an accident, or health reasons should require her to manage family finances on our behalf.
One point was to reassure her that her college/grad-school decisions were from a separate “bucket” than the parents retirement income.
But the other points was: okay, go ahead and look at those retirement savings, then realize that’s the last time you’ll ever see those figures, because we are intent on spending it all. 
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This is what is scaring me in terms of retirement planning. My parents were paying $8K/month for my mom’s memory care unit but towards the end, they were also private paying extra caregivers which was closer to $10k/month. We want to make sure that we have enough to be able to stay in a nice place without burdening our only child. If we could know it would only be for a few years, that would be OK, but we have friends whose grandparents were in AL for 15+ years. Eventually Medicaid kicked in but that meant a change of facilities.
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My mom’s care cost us $1mm for having her 2 bedroom unit plus $7,000/month plus hourly fees for each of the 24/7 caregivers she had. The last year of her life with 24/7 care was very expensive.
When she got to skilled nursing, it was even more costly but Medicare paid for it since it was connected to her hospitalization for her stroke.
Yes, care at the end of life can be very very costly. My SisIL has had her mute bedbound mom getting 24/7 care in her home now for over 5 years, with no end in sight.
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Were you able to get some/all of the million back at the end of her life?
Yes, 90% of the $1mm was returned to the estate. It’s still a crazy high sum in the end of life.
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Another factor we might not have mentioned is job stability. In some cases it would be tough to get another job if current one is lost, which means increased need to bolster savings.
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Yes, age discrimination in the workforce does exist and can cause people to leave the workforce before they had intended. Getting a new position and/or being a contractor can be a lot more challenging than anticipated, especially later in life.
In the last decade of his career, H kept thinking he might be laid off and that weighed on him.
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Several things about long term health care and insuring for it. First, only half of us will need it. Second, those who spend over $200K represent a small portion of the total. Finally, and most disappointing, the market for coverage is terrible. 
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Well, my mom was the only one of our 4 parents that needed a lot of care at the end of her life of our 4 parents (my 2 and H’s 2), but her care was much more than $200,000! Similarly, my SisIL’s mom is needing 5+ years of care and I haven’t asked how much that is. My BIL’s mom had adult day care for many years—not sure about that cost either.
I guess I know a lot of elders who have required a lot of care toward the end of their lives and it was quite costly. That $200,000 looks pretty low to me, but who can guess?
The LTC coverage we explored cost a lot and didn’t provide the coverage we desired, plus we were maxed out helping pay our kids’ private school and college tuition & fees. Sadly I don’t have any great answers.
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Thank you! Your numbers make me feel a lot better about our decision not to get LTC insurance - our thinking was that we would just put more into savings so that we can fund it ourselves if we needed it.
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