Liz Weston

Dear Liz: I am 82, and my husband is 85. We are retired military, so we have a middling pension and some Social Security. Our monthly income of about $5,000 covers our monthly expenses. We rent in an independent living senior community. We have excellent health benefits via Tricare for Life. We both worked hard and are very thrifty. We have no debts.

We have savings of about $320,000. Our kids say we should spend some of our savings on cruises and things, but we just can’t let go! Are we in danger of running out of money? I am getting tired of always cooking and would like to eat out now and then. We do not want to be a burden for our kids and grandkids.

Answer: Your kids have the right idea. While you can, you should be enjoying some of the pleasures you’ve earned. You’re also smart to be careful.

You face at least two major threats to your financial stability. One is a reduction in income when one of you dies. The survivor will receive one Social Security check instead of two, and the pension income could go away or be reduced, depending on the payment option chosen at retirement.

The other threat is the potential need for custodial care. A long stay in a nursing home or a prolonged period where you need help at home could eat through most if not all your savings. Custodial care that helps people perform daily activities such as bathing, dressing, eating or toileting is not covered by Medicare or other health insurance, including Medicare supplements or wraparounds like the plan you have. Instead, Medicare covers limited periods of skilled nursing care, which typically requires licensed nurses to provide, while supplemental and wraparound policies can help pay co-insurance for such care.

There is a government program that pays for custodial care, called Medicaid. To qualify, the person needing care typically must have no more than $2,000 in assets. The spouse is allowed to have up to $120,900, although the limit can be lower depending on the state.

A visit with a fee-only financial planner could help you determine how much you need to prepare for these events. With that information, you should have a better idea of how much more you can safely spend.