If you think you might end up caring for Mom or Dad in their twilight years, be aware of an issue that most caregivers never think about or prepare for: The big hit to your own savings and finances.
I am seeing this phenomenon more and more. Some people grow so old they simply run out of money. Parents may not have had much to begin with and never considered long term care insurance. Some came to this country with just the shirt on their back. Some put kids through college and are living longer than they ever thought possible. Many cultures expect kids to care for parents without realizing the differences in costs and life expectancies than was existent with their own parents and grandparents. This older generation is less likely to be veterans who can access any veterans benefits. And the older generation often does not want to have these discussions with their children – until it’s too late to plan effectively.
More than two-thirds of caregivers report providing financial support as the caregiver. A third spend at least 20 percent of their own monthly budget on caregiving-related expenses such as medicine and medical supplies and personal-care items.
About 41 million people age 15 or older provided unpaid eldercare in the last 2 years according to the Bureau of Labor Statistics. As it stands, about a third of adults have taken on the role of caregiver, while 22 percent expect to in the future. Nearly half said their new role was unexpected.
If caregivers haven’t planned ahead of time, they end up making some rash decisions about how to absorb their caregiving costs like withdrawing from savings or retirement plans or working more “Those can have long-term repercussions for the caregiver.”
Where the caregiving dollars go? The biggest unexpected expense is the cost of long term care – needing someone to be with the senior citizen on a part or full time basis. For instance, many people want to age in place, yet they have not had a conversation with family about how to make that work.
For adult children — many of who might already be caring for their own children — it’s worth the conversation, too. While it can be a tricky conversation to have if your parents aren’t the ones to start it, the more information you’re armed with, the better prepared you can be.
Long-term care insurance can be an option. A type of insurance that’s growing in popularity is a hybrid insurance policy that combines a traditional death benefit with a long-term care feature. In simple terms, you can use the money from the policy to pay for long-term care. Click here for further information.
“Before you’re or a family member is in the situation of needing care, talk with your family members about it.”
It will be worth sitting down with your parents or family and having a gentle conversation about how to plan for future needs.. Sometimes we preplan for the possibility of getting Medicaid down the road as the payor of some or all of the long term care costs. Planning in advance is critical since Medicaid eligibility has some strict rules.
The idea is that the better prepared you are for the cost of caregiving and are aware of all the available resources and options, the less disruptive the care will be to your financial situation and your peace of mind.
Feel free to call our South Florida office at 954-726-6602 for more information about planning for the possibility of incapacity or for any of your elder law or estate planning needs.
