Long Term Care: No Money, How To Care?

There was a saddening article on The Sunday Times, March 8 2009. The article was about the scarcity of beds in local nursing homes. The reason is that people are flocking to subsidized homes, that it is estimated that one has to wait for 4 months to get a bed there. Ironically, there are some other available beds in other homes, but most families cannot afford them as they aren’t subsidized.

Alternatives that some families take are to check their ageing parents into nursing homes in Malaysia. While it is cheaper, the price really isn’t that encouraging too.

While it has always been the maxim to provide for our elderly parents, sometimes it’s clear to me that the cost of living makes it somewhat near impossible.

Let’s study three possible scenarios arising from the result of an ageing parent becoming disabled. The following are the simplified calculated costs (all costs of nursing homes are derived from the article mentioned):

Scenario 1 – Disabled parent checks into local nursing home
Nursing Home Cost: $1,000 to $4,000 monthly

Scenario 2 – Disabled parent checks into Malaysian nursing home
Nursing Home Cost: $450 to $1,000 monthly

Scenario 3 – One adult child stops work to look after disabled parent
Income loss of adult child: $1,200 to $3,000 monthlyCost required for adult child’s lifestyle is still required

While it is easy to conclude that Scenario 2’s cost is the lowest, not all families can accept putting their disabled and ageing parent in another country. Scenario 3 is the most ideal in the aspect of family ties, but this will literally mean a loss of income due to an adult child stopping work to look after the parent. We also must not forget that this adult child too has lifestyle costs like his/her food, bills, clothing, etc.

Most often, families are likely to choose Scenario 1, and pool resources from family members to pay for the nursing homes cost. And if they have no choice but to choose subsidized nursing homes, they may now have to wait 4 months to get a bed for their parent.

The Ministry of Health’s Eldershield plan created for CPF members is a useful idea. However, it falls short in relevance to the spectrum of the problem. By default, Eldershield insured members are entitled $400 monthly for 6 years in the event of severe disability under their terms and conditions*. This would be a far cry from the nursing home costs in Singapore. Paying out for 6 years only, also isn’t comforting enough. Another whammy is that such coverage ends when the insured reaches age 65.

However, private supplementary plans have been created to make the Eldershield coverage relevant. Using the CPF Medisave as insurance premiums, such plans can increase the monthly payout up to $2,000. The payout period can also be extended to 12 years to a lifetime.

In conclusion, the most cost effective arrangement to cater to this long term care problem is the Eldershield plus is supplementary plan. Caregivers can also pool Medisave resources to supplement the premiums, instead of needing to pool to supplement the nursing home bills. Either ways, the disabled and ageing parent remains closer to home, and yet having his/her medical needs taken care of.

* To qualify for payout for Eldershield, the insured must not be able to perform at least 3 of the following Activities of Daily Living: Washing, Dressing, Feeding, Toileting, Mobility, Transferring.

Defensive or Offensive?

I thought that financial planning can be explained a little differently.

Consider the work that I do. I help clients review their finances, adjust spending, set up insurance programs, build investment portfolios, bring dividends, bring interest rates, monitor performances, etc. These help preserve and grow money that my clients have.

I explained the above to a couple of my important clients, and asked them what they thought. Generally, they felt it was good to have such work in place. I later told them, that I coined such work as defensive financial planning.

So when there is a defensive, there has to be an opposite called offensive. Now what's offensive then?

What if I told you that an aggressive investment portfolio is not considered offensive? What if I told you that cutting down expenses by 50% is not considered offensive? What then is offensive?

I explained further that offensive means that you work on building your income, not your investment portfolios.

Here's why I said that.

All these years I discovered that clients want and have an ideal lifestyle ahead of them. However, they usually dismiss these ideals because it's just "not realistic" due to the expenses that they already have in their lives. They say these commitments cannot be reduced, despite how they try.

Fine. I mean, why reduce it? Why not earn more?

With recessions like what we are facing, opportunities abound everywhere. The majority of the herd will be hiding, not daring to make potentially rewarding moves in their career, or strike out on business opportunities in the weekends. If you observed the streets on Valentine's Day yesterday, you would have guessed that those nice looking gentlemen selling bouquets of flowers made very handsome profits (why didn't I do that myself???!!!).

Offensive financial planning is critical, because how you save, how you spend, how you build your insurance, how you build your investments, all depend on how much you earn!

You can increase your income by weekend business opportunities, trade some commodities, provide a service to a niche market in your evenings, work hard and smart in your existing career with a definite direction and plan of growth, whatever it may be.

You don't have to desperately put on whatever armour you can find now and go to war. Begin by first visiting the library and get your hands on good books. If you'd like personal recommendations, you may drop me an email, and I'll gladly give you my choice titles. Whatever you do, your new journey of success only begins on the day you take your first step. Else, you'll probably find yourself in the same place when it's 5 years later from now.

All the best.

Rich Dad Revisited

For Christmas, I got Rich Dad, Poor Dad from my buddy at work. She thought I never read the book before... how could she...?

But it was really timely. Not too long ago, I told myself to revisit the book again. I was halfway through another great book called The Richest Man Who Ever Lived, and wanted to complete that first. After I was done with that, I ordered a copy for my buddy for her Christmas gift because I thought the contents of the book was so crucial to financial and life success. In other words, I gave her what I wanted to give, and I got what I wanted to receive.

(Marge, if you're reading this blog, from the bottom of my heart, thank you.)

I'd like to share about one paragraph from Rich Dad.

In the last chapter, I offer ten steps that I followed on the road to my financial freedom. But always remember to have fun. This is only a game. Sometimes you win and sometimes you learn. But have fun. Most people never win because they're more afraid of losing. That is why I found school so silly. In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk. The same is true for learning to ride a bike. I still have scars on my knees, but today I can ride a bike without thinking. The same is true for getting rich. Unfortunately the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.

-- Rich Dad, Poor Dad by Robert T Kiyosaki

Well it's not just about buying stocks, unit trusts, real estate, setting up a business, or the likes. It's just the mindset of wealth. It's not about how much money you have today that determines your wealth, neither is it about how much you will get tomorrow. I've come to learn and accept that wealth is a mindset. The amount of money is usually just the by-product of the mind that is developed.

Do I have a lot of money? No, not yet. Am I still working like a cow to pay my bills? Do I still have loans? Do I still have debt? For the last three questions asked, my answer is -- you bet! These were mistakes made from the past, which my family and I still pay the price today. But failure is really not about how many times or how bad your fall is, but how long you stay down.

I wish you a great 2009 coming up soon. Opportunities abound in times of trouble.


PS: I've found a relatively cheaper way in buying books. If you intend to buy good books, drop me a mail to find out how.

Cash Flow is King

Yep. Self-explanatory title.

Especially with the oncoming real recession hitting us real soon (nope, it has not really hit yet, unfortunately), money matters are going to be the talk of the town. If it's not already the talk of your home, you'd better do it now.

How are you working on your income? If you are likely going to face retrenchment, do you have something else in the works? Why wait till you are laid off then start looking for something else.

There are other side-income earning opportunities (I'm sorry but I can't really help very much in this area, but this fella and this fella may be able to) that you can just source about for. Or, you can work on brushing up on your skills, or take this opportunity to explore new markets for your company while the majority are curling up in fear.

That's the offensive.

And you have to take care of the defensive. Be tactful of expenditure. I am currently in the process of reducing a client's insurance portfolio premiums by 25%! When the paperwork is complete, he will save a whopping $51 a month, or $612 a year! And mind you, his new portfolio will have much more comprehensive coverage. It makes sense that this can happen, when you bought insurance plans from agents who know nothing about the insurance product market except for their own companies', and are more concerned about their commissions.

Then there are also those things that you spend on. Robert Kiyosaki calls them doodads, meaning things that are desirable to buy, but aren't really helping you financially. That could be the car that you bought because of the low COE, but didn't really need. That could be the condominium that you are thinking of buying, even though if it means squeezing your CPF dry for the next few years unless you get a raise (... unless you get a raise??). Or simply those snacks you buy from the supermarket and food stalls, and cigarettes and beer, where you can save on not taking, because it's not only good for your wallet, but your health too.

Recessions are usually good to force out all those unnecessary expenditures that we carelessly lavish on, and also a motivating factor to create income and improve your work.

Know that "cash is king" is not entirely correct. You must have cash flowing in -- not just sitting around looking pretty -- thus cash flow is more important.

Happy Holidays!

Okay everyone. Don't forget to get your travel insurance.

I love this pic.

For great laughs, go to http://www.engrish.com/.

Happy holidays!

Turning your passion into your profession

I thought this was an interesting article.



The maker of the iPhone game, Steve Demeter, made $250,000 from his iPhone puzzle game called Trism, that he quit his day job to set up a development studio.

Another person I read about, Anthony Borelli, became successful in affiliate marketing after much attempts, and now enjoys a lot of time with his family, and now a millionaire.

If you followed my blog long enough, Yaro Starak shouldn't be a strange name to you. He's another successful entrepreneur. Even before his professional blogging days, he already had considerable successes on the internet.

How about The Terminator-turned-Governor of California, Arnold Schwarzenegger? Did you know that even before he was Conan The Barbarian (his breakthrough movie), he was already a millionaire business man?

All these men transformed their passion for something into a lucrative income earning career. It can be from a passion in making computer games, to simply a passion in building businesses (particularly in restauranting, isn't it, Governor Schwarzeneggar?). I began mine in an accidental passion in financial planning years ago, and I sure have more than one passion, but I'll have to take it one at a time. At least I've got started too. What about you?

In the older days, work is HARD work. You don't sweat, you don't bleed, you don't get paid. Long gone are those days. Even if you sweat and bleed yourself dry today, you still get laid off. Employers cannot hold up their own businesses. The risk is sometimes only an hierarchy difference. If you have got what it takes to run a business, why not do it yourself?

If you read beyond the gloom and doom in the newspapers, you will find some articles here and there about some unique group of people who are pursuing their dreams particularly right at this moment! At this global slump? Yes! And I agree with them 100% that there is no better time than this!

What could be your passion that can be transformed into a career? It sure takes a lot of planning, a lot of attempts, and a lot of failure. It may cost you a lot of money too. But if you desire to break through but choose to not move, the failure will be permanent and guaranteed.

Or maybe for some, it's simply just injecting more passion into the work you are already in.

I'll leave you today with a quote from the late Abraham Lincoln, who knows better than most people what it is like to fail over and over and over and over again. He said, "My greatest concern is not whether you have failed, but whether you are content with your failure."

Taking Care of Dad, Mum, Grandpa and Grandma

I got a scare.

My buddy at work shared with me that when her grandmother was alive, she became ill with dementia. The children still needed to work, and the final decision is to put her in a nursing home. The bill was $3,000 monthly.

My maternal grandmother had a fall early this year, and her children disallowed her to live alone anymore (much to her near violent objection, however, she finally lost the arguement, and now living with one of my aunts). Prior to the current arrangement, the possibility of a nursing home was considered. The quote given by the nursing homes was $3,000 monthly.

My grandfather has an injury in his nerve, and can no longer walk for many years. He has a nasty temper, so if he were to go to a nursing home, I think there will be lots of casualties in there. Thus, he stays at home with my grandmother, and a maid. The maid is employed specially to tend to my grandfather. With all expenses in, the domestic service should amount to $700 or more per month.

What do the above real-life scenarios tell me? Cost. Big cost.

My grandfather's scenario yielded the least cost because apart from the injury, he is actually pretty healthy. He and I debate over the current markets and political situations, and because he is just in front of the TV the whole day, he is even more up to date than I am (maybe he should start a blog too)!

My other grandmother's fall gave only a temporary (but pretty serious) injury. She has now since recovered and back with a vengeance.

But my buddy's grandmother's scenario is a very real example of health gone really really wrong. In the event that a family member becomes disabled -- be it physically or mentally -- to the point that close care is necessary, that's when the crunch comes in.

Did you read earlier that the monthly bill was $3,000 at the nursing home?

The government has a national severe disability insurance scheme for CPF members that provides monthly income to the family of the caregivers. Based on the above 3 scenarios, my buddy's grandmother and my grandfather would already qualify for the benefits, except that they do not have this plan in force when their disability happened.

The government's version -- called Eldershield -- at best, provides from $300 to $400 monthly only, and pays up to 6 years only. Coverage ends at age 65. That may have helped cover about half of my grandfather's maid's expenses. But for a much severe case like my buddy's grandma, the amount is only a consolation.

Then there are the supplementary versions that can extend the coverage to $2,500 a month, and with a lifetime payout every month should the disability qualify. Boy, won't it help the family!

I told my Dad and Mum that if they don't have this coverage, and if there is a need to hire a nurse to tend to them, my sis and I will be financially killed. Sounds so blunt, but that's a true fact.

Premiums for these plans, by the way, can be paid using Medisave.

I won't put details here and for corporate compliance, I cannot share information of the products on this blog. At best, I can only forward you to the relevant companies' websites.

• Aviva - http://www.aviva-singapore.com.sg/ElderShield
• Great Eastern Life - http://www.lifeisgreat.com.sg/ElderShield
• NTUC Income - http://www.income.com.sg/insurance/eldershield/

But if you are keen to find out how exactly it facilitates your family, drop me an email.