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September 14, 2021

You Can't Take it With You...Spend It on Yourself and Others

David Godfrey

The PDF in which this article appears can be dowloaded here: Bifocal Vol. 43 Issue 1.

There is an old joke, that “if I can’t take the money with me, I am not going.” Living forever is not an option, but you can spend it on yourself and others while you are still here to enjoy it. Most baby boomers are children of parents raised during the great depression.  Many boomers learned from their parents to be careful with money, avoid debt, and save for old age.  The result is baby boomers have an unprecedented accumulation of savings. Forbes reports that the estates of baby boomers contain over $30-trillion dollars in assets.  While it is nice to leave an inheritance, you can also leave memories of living well and sharing the joy.

Take Care of Yourself

There are three motivations for saving for later life; to make sure we have enough income, to be able to take care of ourselves as we age, and to share with others.  Your needs need to come first, and you have saved it, so make your life as comfortable as possible. We will discuss options for sharing the wealth while you are alive in the next section.

Investment advisors tell us they have the goal of assuring we have income for life.  Part of how they do that is by structuring investments so that the principle grows faster than income is withdrawn. A growing portfolio assures an ongoing stream of fees and commissions. Many of us will die with a higher net worth than we had when we retired.  Most older adults are afraid to withdraw the principle.  In our grandparent’s days, when the principle was often invested in bank certificates of deposit, this might have made more sense, but when invested in stocks and funds, the principle tends to grow over time. It is time to reexamine this practice.     

Take care of yourself.  Obviously eat well, stay active, and stay socially and intellectually engaged.  Some of this takes money.  Do not feel shy about paying for the gym membership, of buying the expensive walking shoes, or going out to lunch with family and friends (well once it is safe to eat out again). Those are money spent on keeping yourself well.

Use Your Money to Live Where You Want and the Way You Want

Over half of us will need long term assistance with living, and about one-third of us will spend time in a nursing home in our lifetimes. The longer we live, the greater the likelihood that we will need to.  It often starts with little things: needing help paying bills on time, difficulty with housekeeping, or meal preparation.  Most older adults, unless they have had help over their lifetime, are reluctant to spend money on these services. Failing to do so, can cascade into others thinking you cannot live in your own home any longer.  So, hire the cleaning service, order delivery from your favorite local restaurant, or hire help with managing money as needed.

In over 20 years in this field, I have met only a handful of people who looked forward to spending the last weeks, months or years of their life in a nursing home. Yet few people make realistic plans for care at home. The default action for health care providers, when discharging a patient from the hospital who is going to need help with activities of daily living, is a nursing home placement. A nursing home may be the best option for short term rehabilitation, or for persons who require intensive medical management.  But most residents in nursing homes do not need that level of care; they are there because they needed some help and there was no plan in place for in-home or community-based help. 

Assuming that the need for in home care is post-acute, meaning following hospitalization for an illness or injury, it is probably best to work with a geriatric care manager to arrange in home care. A geriatric care manager is an expert in coordinating services based on the needs of the person, and the availability of help from family and friends. For a person who has been placed in a nursing home, it is important for the person and their loved ones to start planning immediately for a transition home as soon as the person’s condition is stable. The longer a person is in a nursing home, the greater likelihood they will die there.   

How much care can be provided at home?  As much as you can arrange and pay for. An emerging trend in other parts of the world, is in-home ICU level of care. There are few programs doing this in the United States, but it is possible.  Yes, it is expensive, but so is inpatient intensive care. 

The model for providing care in a skilled nursing home is based on a hospital model of care and is much more intense care than most residents require – and at a much higher cost.  The average cost of skilled nursing facility care in a semi-private room is $89,297 per year, for a private room it is $100,375 per year. If we take that same amount of funding, at $25 an hour, we can buy about 4,000 hours a year of in-home assistance.  Unless the person needs complex medical assistance, in most parts of the country caregivers, housekeeper, and companion services can be hired for that rate. If you are going to pay for it, why not pay for it where you want it?

Don’t I have coverage for nursing home care already? Yes, but not much.  Medicare pays for a very limited amount of care or therapy in a skilled nursing home.  Medicare covers the first 20 days, then the cost in excess of $185 per day co-pay for up 100 days. Medigap policies and some Medicare Advantage plans supplement this, but not for much beyond covering co-pays and deductibles. Medicare recognizes this as short-term rehab intended to get a person ready to return home, not as a long-term benefit.  Less than 10% of Americans have long term care insurance, and the market is shrinking, as insurance companies exit the market and premiums rise. 

Medicaid is the largest payor of skilled nursing facility also known as nursing home care. Medicaid is a needs-based program, meaning a beneficiary is limited in what they can own. There are options for asset planning for Medicaid. If, heaven forbid, Bill Gates had a medical need for long term care, give me 61 months and I can make him eligible for Medicaid. The first step is he transfers all his assets to me, all of his Social Security Income to an irrevocable trust, then I private pay for his care for at least five-years, then we place him a Medicaid bed, in a semi-private room, and apply for Medicaid.  That is a ridiculous example, but it is what a lot of middle-class families do, when they engage in Medicaid long-term care asset planning.  They surrender ownership and control of all but exempt resources with the best outcome being that Medicaid pays for nursing home care. Medicaid pays for some in-home care, but the benefit is not mandatory, and in most states the benefit is a fraction of what Medicaid would pay for in-patient care. 

Medicaid asset planning falls into two categories, planning to protect a well spouse who is expected to outlive spouse in need of care, and planning that merely preserves an inheritance for the children. The best-case outcome of this is the person whose life savings is being structed will be placed with an unknown roommate in the nearest available nursing home with an open slot for a Medicaid patient.  COVID 19 brought concerns about nursing home care to the forefront, about 1/3rd of COVID-19 deaths, over 100,000 people have been residents in long term care. Some facilities had infection rates as high as 80%.

I would urge that a much better plan is to use the assets and income you have to buy the care you want, in the place you most want it.

An alternative to in-home care, is “assisted living.”  Assisted living is complicated to write about, because it is almost entirely licensed and regulated at the state level.  What works in one state may not work in the next state.  All assisted living provides private living quarters (most often apartments), help with meals, cleaning, and personal care. In some states, assisted living can include limited health care assistance, in other states less so.  Some assisted living allows professional home health care service providers to provide services in the facility, some do not. Some states limit assisted living for persons with limited mobility. Some assisted living facilities have specialized memory care services.   

Virtually all assisted living is private pay.  Medicare or Medicaid paid home care may be able to provide limited home health services to a person in assisted living, but payment for the living accommodations, housekeeping services, and meals is generally all private pay.  Assisted living cost can range from about $3,000 per month, to over $6,000 per month, often with added charges for meals delivered to the room, personal care services beyond a minimum, or private transportation services. When you look at the cost of skilled nursing facility care, assisted living is almost always less expensive, and provides a much more home-like setting. 

Taking Care of Others: The Big Three

When you ask people about to receive an inheritance what they plan to do with it, the top three answers are, buy a car, buy or pay off a house, and pay off credit card debt.

When buying yourself a new car, consider giving your current car to a family member.  There is almost always a difference between what a car is worth on the used car market, and what you are paid for it when you trade it in (the car dealer needs to make a profit.) That difference makes it possible to make a gift, at a reduced cost.  Don’t buy your kids a new car, give them your reliable car, and treat yourself to a new one.  

For most adults, their home is one of their two most valuable assets, the other being defined contribution retirement accounts.  Helping loved one’s own homes is a great way to share our good fortune. A good starting point is increasing a down payment from the minimum to 20% or more. In most cases this eliminates the cost of mortgage insurance, insurance that covers the lender in the event of default and does not benefit the borrower who pays for it. This can reduce the monthly payment by hundreds of dollars per month. Making additional principal payments can also make a huge difference. Adding $250 a month in additional principal payment on a $250,000 home with 20% down, pays the home off in just over 20 years, instead of 30 years. Even at today’s extremely low interest rates, the interest savings over the life of the loan are enough to buy a new Mercedes (when interest rates are high the impact is even greater.) And you get to enjoy, your loved ones enjoying the home.  My fathers only instruction to me as trustee of his estate, was to pay off my house and encourage my brother to do the same.

Hopefully if you have helped your loved ones avoid car loans, and afford a home, they will avoid the most expensive of consumer credit, borrowing on credit cards. Helping with essentials that are needed along the way, are another way to minimize credit card debt.  Take the kids and grandkids shopping for clothes, keep them in up-to-date electronics, and or providing a family plan for cell service, will help your loved ones avoid expensive debt. 

Beyond the Big Three

Why should the kids wait until you are gone to enjoy a dream vacation?  Go as a family. Spend quality time together and allow each other time apart. Explore the world or spend time in your favorite nearby getaway.  Create memories that will last lifetimes for all of you. 

Education can pay lifelong dividends.  Higher education has gotten rather expensive.  I am not a fan of anyone getting a free ride through higher education. I worked most of the time I was in undergrad, and borrowed most of my way through law school, but a little extra cash from my parents bought groceries during law school. Make sure they have some investment in their education, but help as you can. 

Support causes that are important to you.  Estimates are 4 out of 5 dollars in giving are from individuals and giving based on a percentage of income is a “U” shaped curve, with a higher percentage of household income given by lower income, and higher-income households.  Another curve to flatten in retirement; support causes that are important to you.


I first encountered the concept of spend it all back the 1990’s.  You cannot take it with you, take care of yourself, and enjoy your life savings with those you care about.  Death does not care what your net worth is. Create memories, take care of yourself, and have a bit of fun along the way. 

    David Godfrey, JD

    Senior Attorney, ABA Commission on Law and Aging