By: Dennis McFadden Retired, President/CEO

“Mom, are you sure that you are going to be OK now that Dad is gone?”

For large numbers of seniors, the answer will not simply deal with the grief occasioned by the loss of a beloved spouse. Seniors face a variety of money woes that often surface — painfully —at the time of death of a husband or wife. This can be especially urgent when the one left behind was not the primary bill payer in the family.

Julia Valentine, Columbia MBA, veteran of leading financial institutions, and speaker and founder of the Joy Compass organization, represents one of the nation’s leading experts on retirement design. Her 2011 book,Joy Compass:  How to Make Your Retirement the Treasure of Your Life, identified several of the most costly financial planning errors retirees often make.

First, seniors tend to try to save money by replacing competent financial experts with well-intentioned family members. In many cases, the busy daughter juggling her own job with getting her kids to soccer practice and piano lessons does not have the time to provide mom with the advice necessary for wise decision making. And, as I saw in all too many situations during my years at Atherton, children of seniors often suffer from a conflict of interest when it comes to their parents’ money. Doing what would be best for mom may not correspond to what the child wants. Large interest free “loans” to bail a child out of trouble, or even to fund an expensive vacation or new car, would not represent the kind of counsel in the best interests of the retiree with limited assets to invest.

Second, many retirees err by not having adequate short-term and long-term plans. Inflation expectations, actual investment returns, and changes in health condition can wreack havoc on a plan that has not been well crafted and periodically reviewed to test the adequacy of the assumptions. The death of a spouse may result in significant loss of income, particularly if pensions and annuities were not calculated to continue after the death of the husband or wife. Those who work with seniors report that many of them spend too much of their nest egg at the beginning of retirement, not leaving enough to get them through the years to come.

Third, scams target seniors who are frequently credulous and gullible. Estimates that one in five Americans older than 65 will be victims of the con man’s arts should sober all of us. At Atherton, I was amazed at the numbers of telephone, mail solicitation, and even door to door schemes to separate older adults from their money.

Finally, leaving one’s portfolio on autopilot represents the final common financial planning error. Market changes, family situation, the death of a spouse, and developing an unexpected serious health condition should all trigger re-examination of one’s financial plans.

Here the continuing care retirement community can be a senior’s best friend. In better communities such as Alhambra’s Atherton Homes, we found that the modest entrance fee charged to residents upon admission coupled with their monthly fee afforded them great peace of mind. Our marketing staff always explained that the entrance fee purchased a contract that meant that even if someone ran out of their money (as long as they did not give it away, sell their assets for less than market value, or enter into schemes of divestiture) he or she would have a secure place in the community at any of the levels of care. A stroke or other debilitating condition can force a spouse into nursing home care, costing $8,000 or more per month. Trying to find a suitable placement after the need arises can be frustratingly difficult. Living in a retirement community while both spouses are still well and knowing that you cannot outlive your assets can be a particularly reassuring message in troubled financial times.

For those who work with retirees on a regular basis, the key takeaway relates to adequate planning and periodic evaluation of the plan. “Planning is bringing the future into the present so that you can do something about it now,” said Alan Lakein. Or as one way quipped: “Always plan ahead. It was not raining when Noah built the ark.”