Long Term Care Planning – When It Becomes Personal
As a financial advisor, I meet with clients and prospects all the time and discuss many different aspects of finance. Much of what we talk about is personal, and we usually get to know each other very well. Many people enjoy talking about saving and investing. They love to share their plans for traveling they would like to do when they retire, or envision the extra time they will have to spend with family. This is completely understandable, and it is absolutely the reason why planning is so important. One pattern that I have noticed over the years is that many people get somewhat uncomfortable when I bring up the topic of long-term care.
Long-term care isn’t anything that excites anyone, and that is understandable. The idea of not being able to care for yourself or needing help isn’t anything people want to consider. As a result, long term care is something that is quite often being overlooked in the planning process. However, it is the unforeseeable and unfortunate circumstances that can derail the best retirement plan, if it is not at least considered. This is where most people will choose to stop reading because they sense the impending “plug” for purchasing long-term care insurance. I am not saying it is completely necessary. What I am saying is that you at least need to have a plan. Let’s back up this statement with some statistics and a personal experience.
Some of you may already know that at this current point in time, 10,000 people per day turn 65, and this will continue to be the case until the year 2030. This changing of demographics has several trickling effects that have become more prevalent over the recent years. The increase is this demographic has led to a shortage of needed caretakers. Thus, this supply and demand has led to the price of care increasing at a much higher rate than normal inflation. This, in turn, is putting a strain on the system financially. To add more fuel to this metaphorical fire, government programs and running low on funding.
Much of the complication with trying to plan for Long Term Care is the large “unknown” that it entails. Research shows that over 60% of people turning 65 will need some form of long term care in their life. Furthermore, the average stay in a nursing home is 2-3 years. The cost of that level of care has the potential to escalate over 100K per year. The issue with trying to plan for this is the mere fact that there are so many different problems that can arise and such a variety of types of care you could receive. As people contend with aging, many want to stay at home for as long as possible, and this is completely understandable. Home care is an option of care that is often used. With this option, family is a great resource that may also come in to help as well. In addition to home care, other options consist of assisted living, adult day care, memory care, nursing home care, and several others. Regardless of the type, all of them have different costs associated with them, as well as the types of medical cases those facilities will accept.
Listing off these options personally hits me a little differently now. As you can probably surmise, I have researched quite a bit over the years on long-term care options, costs associated with those options, what is covered by Medicare, what are the asset rules for Medicaid acceptance, what are the Spousal Impoverishment rules, and so on. However, it hits very differently when you are “living” it with family members. You may be familiar with the term, “Sandwich Generation.” Well…that is what my wife and I have now graduated to; caring for our 4 kids, working full-time, and helping figure out how to care for her mom, who has dementia.
To be honest, we didn’t have those tough conversations as a family, other than sometimes hearing my mother-in-law (prior to the dementia effects) say that she didn’t want any of her daughters taking care of her.
Other than that, there was no real planning to speak of. As an advisor, I regret not being a little more vocal in bringing it up.
Trying to figure things out in the midst of the chaos has been very difficult. Not only the financial piece of it, but also the emotional strain. I feel very blessed that my wife has two younger sisters that are local, and with whom she has a very close relationship. However, having a close relationship hasn’t stopped some tense conversations taking place. I can’t even imagine navigating through a situation like this if you don’t have a great relationship with family. Even luckier for us, one of my wife’s sisters is a Nurse Practitioner, and the other works in the medical device field and has a pretty extensive knowledge base of healthcare and medical insurance. In addition, her husband is also a very competent realtor, which has also been a great help in our situation.
Even with all of the resources we have to pull from as a family, it has still been very difficult for us. My in-laws have limited resources, and we are trying to figure the best place for them, as well as making sure we are always trying to look ahead as best we can. But costs are always an issue. It’s unfathomable how difficult it would be if we didn’t have family members in the medical field to help find our way through the maze.
I do not share all of this to scare you. I share this so that you don’t find yourself as the ostrich with your head in the sand. Generally speaking, I get questions about long-term care after someone has been through a tough situation themselves. Having a family member with diminishing health is difficult and stressful enough. Don’t put unnecessary stress on you or your family if you can possibly help it. Ask yourself those difficult questions. Have those difficult conversations. Take the time to do a little planning and have a conversation with loved ones to try to figure out some possible alternatives, should a situation arise. It isn’t the most enjoyable thing to talk about, but it could be very beneficial. With all of that being said, enjoy your time with your loved ones, and I pray that everyone has the best year yet.
