Westhill Consulting Insurance – Saving for your ageing parents : an easy guide to where to start

Saving for your ageing parents: an easy guide to where to start

The needs of elderly parents can surprise even those who are prepared, but you don’t have to support your family alone



We all want to age like the late Pete Seeger, who celebrated his 90th birthday performing onstage in front of thousands of adoring fans of all ages at Madison Square Garden, and went on to entertain the Newport Jazz Festival audiences a few months later.

In our pragmatic moments, we know that the odds of living that long and in such good health aren’t in our favor. We know we need to plan not only to live longer but perhaps to spend more time in costly nursing homes or care facilities.

It's not just ourselves we have to worry about. Failing to develop a plan to help our parents in their final years could deliver a similar kind of blow to our emotional and financial wellbeing. In the last few months, I’ve watched three friends, ranging in age from their 40s to the early 60s, scramble to resolve non-medical problems for their parents. In all cases, that meant forking out on costly airfares to be there in person; in one case, it required money to hire a new accountant. “I’ve always been aware that at some point, there would be an emergency, but I had assumed it would be a stroke or something, not this,” one told me, ruefully.

A recent US Trust survey revealed that while about half of all Americans have planned for their own long-term care needs, only 18% of those with parents still living have factored in the possible need to help parents.

And yet, 26% of those under the age of 49 already were footing the bill for parents’ out-of-pocket medical expenses while 18% were contributing to long-term care costs.

I’m not suggesting that you double your savings rate to ensure that your nest egg is large enough to cover your needs as well as the needs of your parents and in-laws. That’s both illogical and – given that most of us are struggling to save for our own retirement – impractical. That doesn’t mean your hands are tied, however.

Start with the basics. Make a list of questions and fill out the answers. It's easiest to start with the most important documents you need to be prepared.

Do your parents have a health care proxy? A power of attorney prepared? Where are they located? In the midst of a crisis, you don’t want to go on a treasure hunt in quest of these crucial documents.

“Clients call me to say that hospitals won’t talk to them about treatment for their elderly father with dementia because no one has a healthcare proxy or knows where it is,” says Nan Giner, a partner at Boston-based Choate Investment Advisers.

Do your parents have long-term care insurance, or do they plan to “self-insure” and cover their costs from their savings?

“Knowing the answer to that question can help you understand how much risk there is that you’ll be called on to help” whether directly or by helping them to navigate the labyrinth of federal, state and local programs that exist to help fill gaps of this kind, says Dave Richmond, a financial adviser in Jackson, Michigan.

Beginning conversations on these topics might feel awkward – after all, it hasn’t been that long since your mom and dad were monitoring your behavior. But it’s important to be proactive. The more you’re able to communicate openly, the better the odds that you’ll spot something that otherwise might have developed into a crisis.

“Most of the parents I’ve worked with don’t want to be a burden to their children,” says Gideon Schein, founding partner of Eddy & Schein, a New York firm that manages personal finance and health insurance issues for senior citizens still living in their own homes. “The best way is to make parents aware that you’re asking for everyone’s benefit; that it’s a kindness to everyone in the family to be prepared – not for death, but for the rest of their lives.”

There are plenty of tips out there for ways to start tricky conversations like these. Bringing a third party into the discussion can also help, especially if your parents feel you’re overstepping your bounds, or you’re afraid of sounding greedy or self-interested. “Sometimes having a mediator takes the tension out of a situation,” says Schein.

A good place to start is an elder care attorney, who is intimately familiar with these issues, including specialized vehicles like pooled income trusts that can be invaluable to elderly individuals facing a financial shortfall in covering the cost of their care in their final years. They can refer their clients to other specialists, including people in Schein’s rapidly-growing industry, members of the American Association of Daily Money Managers.

None of this practical stuff will make it easier to deal with the emotional burden of octogenarian parents struggling with dementia or other major ailments. But part of everyone’s personal financial plan should include strategies for dealing with some of the most likely scenarios involving their parents. That leaves everyone in a less vulnerable position.

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