Thinking about the future when you're young can be intoxicating. The freedom! The jobs! The vacations! As we age, we worry more about what the future holds, particularly with regard to our parents.
Thinking about their eventual decline and mortality can prompt feelings most of us prefer to avoid.
The good news: The average American lives to 79—significantly longer than previous generations. That gives families more time for making memories, yet also means individuals have a higher likelihood of needing long-term care. Of the 12-plus million Americans who require long-term healthcare, over 60 percent are 65 years or older.
Though it's difficult to imagine the day our parents might struggle with the basics—like being able to bathe themselves—if they're lucky enough to live those 79 years, it's a distinct possibility. Also worth considering: People age 65 and older have a 68 percent statistical probability of becoming disabled in at least two Activities of Daily Living (ADL). (See sidebar.)
While these figures may seem daunting, there are steps you can take now to reduce the stress and potential financial burden if long-term care becomes necessary. And if you think about it now and your parents never need it? Count your blessings!
Tips for Starting the Conversation
As you might imagine, long-term care doesn't come cheap. If your parents have already discussed their preferences and finances with you, you're fortunate! Only about 25 percent of adults have had these types of in-depth conversations with their parents. If you're among the remaining 75 percent, initiating these discussions falls to you and your siblings.
"Oftentimes this is a very uncomfortable conversation for families, because mortality is a scary prospect," explained Nicole Maag, Vice President of Operations for Porter Hills. "And, ideally, this is an ongoing conversation."
You don't want a "one and done" talk because things change—both preferences and finances.
When you meet with your parents, come prepared with a list of questions and with a gentle heart. The idea here is to really listen. You want to find out, ideally and realistically, how they'd like to live out the rest of their life and—together—determine how to pay for those wishes.
"It might be difficult to address these things at first," said Lisa M. Cargill, ChFC®, CLU®, CRPC®, CDFATM, a Financial Advisor with Ameriprise Financial Services, Inc. "But afterward, everybody feels so much better. It takes the worry away."
Don't skip the fine print! Include these important documents in the discussion with your parents:
• Advanced Directive (aka "living will")
• HIPPA Consent Form
• Powers of Attorney (POA) for Health Care and Finances, giving you the ability to make health or financial decisions on their behalf.
Without POA for Finances, you won't be able to access your parents' assets—or even information about their assets—in an emergency.
"One of the biggest stresses that we see is if someone becomes disabled or incapacitated and can't make financial decisions, and no one has Power of Attorney for Finances," said Jennifer Baldini, CRPC® and CFP®, a Financial Advisor with Rehmann. "Bills still need to be paid and someone needs to have access to their bank account. We worry about having Power of Attorney for Finances when parents pass away, but it can actually be harder in this situation."
You'll also need to know where to find these documents. "We have a checklist for our clients," said Baldini, "that contains all of the important information." It's worth working with your parents' financial advisor, or hiring one, to create this type of checklist if they don't have one. A thorough checklist should at least include where to find legal documents; account numbers and passwords; and names, phone numbers, and addresses for important points of contact, such as their financial advisor, CPA and attorney.
While POA for Finances is a biggie, POA for Health Care is equally important.
"Take a look at what the needs are in your family," suggested Cargill. If your mother is a snowbird—maybe living near you, in West Michigan, for part of the year but spending the snowy months in Florida near your sister—you may both want to consider having Power of Attorney for Health Care, so you can handle an emergency when your mom's in your locale.
Options for the Long Run
Remain at Home
If your parents remain at home, they may require home health care services, in which home health aides assist them with ADLs at their home. Aides may come once a week, daily or even around-the-clock. Depending on your parents' needs and insurance coverage, these dollars can add up quickly.
You may also need to make renovations, such as adding grab bars in the hallways of their home and a walk-in shower to their bathroom, to keep them safe as they age.
Move in with You
As with all long-term care options, this one comes with its own financial and emotional considerations. For example: Do you have space? Can you make necessary renovations? How will your siblings contribute? Can you cohabitate peacefully? Will you need to quit a job or work fewer hours? Can you afford the loss of income? Can you provide the level of care they need now—and what will you do if that level changes in a year or two?
On the plus side: You'll gain invaluable time together in your parents' final years, which can be a fulfilling and tender experience.
If you choose this route, you may still need to pay for home health care, depending on your parents' health. Another option is to use an adult day health care facility part of the time, which can offer you a much-needed break, provide your parents with socialization, and may include some health care and therapeutic services.
If your mom and dad are considering are considering any type of facility, especially a continuum of care facility, start looking early on, suggests Baldini. There are many types, at many price levels, with varying amenities and funding methods. Getting an early start allows your parents to understand their options and make decisions based on what they'd like and can afford, rather than rushing to find something—anything—if tragedy strikes.
When we think of long-term care, what comes to mind most often is what we typically refer to as a nursing home. But in continuum-of-care communities, such as Porter Hills, that's the last stop. The options before that can vary, but at Porter Hills they can first move into a fully independent home—essentially just relocating, then have options to access independent apartments, assisted living and a secured memory unit before moving to long-term care.
Not every retirement community offers a continuum of care, however, meaning if your parents move in and eventually need long-term care, they're facing another move. "There are many levels of care, many options, and they're very customizable to your finances and your health care needs," said Maag.
To make things more complex, financing these places takes various forms. Some communities have a monthly fee, some require a significant fee up front, some—generally the nonprofit type—offer "benevolence," which means if your parents run out of cash, they can stay. Without benevolence, if your parents' funds expire, they're moving or you're coming up with the cash elsewhere; this could affect your children's college savings and your retirement fund.
Don't make these choices in a vacuum. Each retirement community has a sales office that can walk you through the options, amenities and funding decisions. They can set up times for your parents to tour the facility, have dinner there and explore a bit more what it feels like, before they make a decision. Grand Rapids has a few independent companies, such as Crossroads Eldercare Planning, AgeWise and CarePatrol, who can help you understand the options, walk you through the process and determine the best fit for your parents.
The Financial Piece: How Will You Pay for Care?
Newsflash: Most of these services aren't covered under traditional health insurance plans or by government medical assistance. That means that your parents' assets—retirement funds, cash, investments, real estate—matter, as the cost can be surprisingly high.
If your parents are in their 50s or 60s and in good health, they may want to consider purchasing Long-Term Care Insurance or Life Insurance with a Long-Term Care Rider. (You might also consider these options for yourself.) "I think Long-Term Care Insurance is absolutely worth buying. The younger that you do it, the cheaper it is," said Cargill. "I've seen million-dollar net worth completely depleted to care for long-term care needs."
Life Insurance with a Long-Term Care Rider is a relatively new product that allows you to access a percentage of the death benefit for long-term care if the need arises. "What's nice about it," explained Cargill, "is that if you never need long-term care, you've paid for a death benefit that you can leave to your spouse or heirs."
Activities of Daily Living (ADL)
There are six generally agreed-upon routine daily activities that healthy individuals can perform on their own. ADLs are used by insurance companies and long-term care facilities to determine things like level of care and coverage.
- Getting dressed
Kirsetin Morello is a Michigan-based author, speaker, writer, travel-lover, wife and grateful mom of three boys. Read more about her at www.KirsetinMorello.com.