Dina says she needs financial advice.

The 73-year-old new widow recently went to a financial advisor, but she didn’t like the sales pitch.

“He is trying to sell me indexed funds — not sure what they are or how safe they are — but I just see him as a super salesman,” Dina said.

A friend recommended she try a free money makeover with NJMoneyHelp.com, and that’s how she ended up here.

Dina wants to protect her assets should she ever require a nursing home, and but she also wants to generate income from her investments.

“I need to withdraw from my savings to pay my property taxes each quarter,” she said.

That’s where her income comes from, and the rest is from Social Security.

She has $50,100 in IRAs, $34,300 in a brokerage account, $281,000 in money markets, $26,000 in checking and $60,000 in cash. When her husband’s estate settles, she’ll also have $185,000 that’s in a trust account and $16,000 in an estate account.

NJMoneyHelp.com asked Jodi D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown, to help Dina with a review of her finances.

“Her main concerns are protecting her assets and generating income from them,” D’Agostini said. “These are valid concerns as medical expenses can erode even the best laid out plan in retirement.”

LONG-TERM CARE

Long-term care insurance, while expensive, usually provides either home health care to “age in place,” adult day care, assisted living or nursing home care for individuals who need assistance with the activities of daily living such as bathing, eating, dressing, toileting, continence or transferring, or if you have cognitive impairment.

D’Agostini said the need for this type of care has been growing with an aging population.

“Diseases that used to kill us are now treatable, but we linger,” she said. “Life expectancy has been growing in the U.S., with women on average living to 81 and men to age 76, making longevity the greatest risk in retirement.”

The concern is outliving your money.

Statistics from the Centers for Medicare and Medicaid show that you if live to age 65, there’s a 70 percent chance of needing long term care coverage for three months or more. The average usage is 2.5 years.

D’Agostini said the difficulty is the cost of care.

She said the Genworth Cost of Care survey shows in Northern New Jersey, assisted living averages over $60,000 a year and nursing homes more than $120,000 a year. Home health care averages over $50,000 a year, D’Agostini saud.

“You are wise to consider how you would pay for these services if needed as these would be in addition to many of your existing expenses,” she said.

Many individuals believe that the government provides for long-term care, but it does not.

Medicare will provide for up to 100 days in a skilled nursing facility, D’Agostini said. This must follow at least a stay of three nights in a hospital.

“They would pay in full for the first 20 days, and then there would be cost sharing for the following 80 days,” she said. “After that point, you would be on your own for these expenses.”

She said Medicaid is the largest payer of long-term care coverage in the nation, but this would only be available to individuals who prove financial need.

You’d need to have less than $30,000 in assets and income of $2,000 or less per year to qualify.

“This means that you would have to spend down your existing assets to qualify and there is a five-year look back period,” she said.

Dina does have four adult children, and if she has a goal of leaving money to them someday, she would need proper planning from a Medicaid standpoint. Working with an estate planning or elder care attorney would help.

GENERATING INCOME

The good news is that Dina is living within her means.

It might be advisable, though, to consider growing her assets a bit more than her current plan shows, D’Agostini said.

Dina currently has more than $600,000 in savings, but 75 percent of it is invested in cash or cash equivalents.

“This means that she is probably growing over $450,000 of her wealth at 1 percent or less annually,” D’Agostini said.

This is not a concern right now because Dina’s expenses are well within reach at only $2,500 per month. But Dina needs to consider that being conservative may cost her in the long run, D’Agostini said.

For starters, inflation averages 3 percent annually, with medical inflation at close to 5 percent, D’Agostini said.

“As you age, the medical piece of your budget will generally expand as you may require services outside the medical coverage that you have,” she said. “You also may need long term care services, which is an expense, not accounted for in your current plan.”

Dina is taking $6,000 a year one account, which is approximately 4 percent of the balance — usually a target number for retirement withdrawals.

But, D’Agostini said. the money in this is invested in a money market fund, which most likely is returning around 1 percent.

“This means that over time, she will be dipping into her principal,” she said. “If you add to this the effects of inflation at 3 percent per year, her budget, which is currently $2,500 per month, will grow to $3,373 per month in 10 years — with a shrinking account to pay for it.”

D’Agostini said it might be wise for Dina to consider investing her money to at least keep pace with inflation, if not higher, so that she can maintain this nice nest egg.

She recommends Dina complete a risk tolerance questionnaire, which will help to determine how she might invest your assets going forward.

“Be mindful of the effects of inflation and eventual needs,” she said.

Another idea is that Dina could carve off a piece of her investments and creating a bucket of money that could provide for possible long-term care needs. This could be invested differently than the other bucket that is providing you with current income, she said.

Dina could also look into obtaining a long-term care policy, but at her age, this will most likely be too costly and self-insuring would make sense, D’Agostini said. The costs go up sharply from age 60 on.

So we understand that Dina was nervous about the index funds offered by the financial advisor she met, but sometimes being too risk-adverse may actually be risky if you live a long life.

“Inflation and potential long-term care/medical expenses may require larger withdrawals from her investment accounts at some point and therefore it would be wise to consider growing her nest egg,” D’Agostini said. “The effects of inflation are real, but a variety of strategies are available to help mitigate.”