By Dave Beck
Insurance Expert and Partner,
Egan, Berger & Weiner, LLC
Ah, the joys of aging.
From having to ask my kids for help with the computer to needing help to get up off the driveway after I fall (none too gracefully) while playing basketball—at 50, life is an adventure.
Still, I cannot think of anything worse than having to ask my kids to take care of me when I get older and am possibly infirm.
I know of what I speak, for I am a card-carrying member of the sandwich generation. That means I am caring for my aging parents while supporting my own children—a situation lots of us are in now, or will be one day.
Unfortunately, my folks are struggling with some health issues, and it’s not easy. My hope is that after reading this article, you will benefit from my experience—as a “sandwiched,” and also as an insurance agent—so you will be better prepared for what could possibly lie ahead.
The Reality of Aging
As I talk with my clients about planning ahead and investing in long-term care, the number one concern—almost unanimously—is that as we age we don’t want to be a burden to anyone. Not our spouses, not our children, and not society at large.
But what we don’t often realize is that by not taking the proper precautions, there is a real possibility that we will be a burden to all of the above.
Consider these statistics:
- According to the Centers for Medicare & Medicaid Services, a couple turning age 65 will have a 91 percent probability of one of the two of them needing some form of long-term care services.
- Currently more than 5 million people have Alzheimer’s disease.
- If there is no medical breakthrough, it is estimated that number could increase to 13.8 million by 2050.
The depressing nature of the topic causes many of us to turn a blind eye because we don’t want to think about this looming reality. After all, anyone who is skilled in denial believes that if we don’t think about it, the worst-case scenario won’t happen.
Unfortunately that is not the case.
What’s the solution? Plan for the worst, and ease the burden for what might be ahead.
Here are some strategies to consider:
Long-term care planning does not necessarily mean buying long-term care insurance. Granted, I am “the insurance guy,” so I am not discounting the need for insurance. And while I cannot guarantee that everyone who reads this needs long-term care insurance, I can guarantee that every one of us needs to prepare for the inevitability of aging.
Talk to a lawyer. In my experience, an attorney is probably the most important person, besides you, in the whole elder-care planning process. Documents that you will need to have him or her help you prepare include:
- durable general power of attorney (financial)
- durable health-care power of attorney
- medical directives
Note: I have learned this the hard way as I have gone through struggles with my elderly parents. Since a health-care power of attorney was not prepared while my mother was able, it cost about $4,000 for the courts to decide that I am worthy to make those decisions for her. Be sure to have these documents in your hands—before you need them. It is critical to be prepared to take care of, or be, an elderly parent.
Meet with your financial advisor. It is essential to figure out how you are going to pay for the long-term care services that you might need based on your end-of-life desires. (And of course you should communicate those desires to your entire family and convey them in some manner in your legal documents.)
If your plan is to self-insure the risk, (i.e., pay for medical and legal costs out-of-pocket), there needs to be some planning ahead in your financial retirement plan to determine what impact, if any, that might have on your retirement lifestyle—especially if you predecease your survivors.
Reconsider long-term care insurance. So often, clients will tell me that they will pay any long-term costs themselves—until we show them what happens if an average-length stay in a nursing home is necessary. What quickly becomes clear is the reduction in lifestyle that would need to occur today. In most cases, that reality check inspires them to re-evaluate the need for long-term care insurance. Here’s a glimpse:
- With nursing homes running about $90,000 per year for a high level of care, and an average stay of 2.7 years, you can see that the average nursing home cost would be about $243,000 in today’s dollars.
- Based on the current average annual increase of 4.7 percent for nursing home costs, in 30 years the average nursing home stay would cost in excess of $1 million.
The Bottom Line
This is a brief glimpse of some of the things that you might want to consider to plan ahead for the care of an elderly parent—and for your own years as a senior citizen.
As Confucius said, “A journey of a thousand miles begins with the first step.” So please, take that first step and start planning. I know from experience that you and your family will not regret it.
Questions? Contact Dave Beck at email@example.com.