Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Wealthy Clients Supporting Their Elders–How Much Will It Cost?

Jan 23, 2017 | elderly, finances for elders, handling money for aging parents, handling money for seniors, long term care

We at AgingInvestor.com met with some forward thinking business owners, all under age 40, expressing their concerns about their aging parents. They weren't sure what should be set aside or what to plan for their loved ones. Any of these business owners could be your HNW clients.

 

Some had purchased long term care insurance for a parent and we were happy to see that good planning.  Others figured they’d have to pay out of pocket when the need arose.

 

The gap between what older people think and expect and what really happens as we age is startling.  And it is likely to throw the burden of paying for it on the financially successful adult children of these elders in denial.  Some of their parents never had much wealth. Others have depleted their assets by outliving them or by other factors.

What about the dollars and cents?  The Genworth Cost of Care Survey is done every year and provides average rates charged by service providers for homemaker services, home health aides, adult day health, assisted living and nursing home care across the country.  And you can also search by state to see the average where a client's parents live.  Even the lowest level of care, someone to come in and help with cooking, shopping, laundry and errands averages $19 per hour, the national median hourly rate.  The national median monthly rate for assisted living is $3500.  And in my state, in urban areas and well populated centers, it is twice that.

 

If your clients must consider paying for long term help for their aging loved ones, it’s planning you need to do with them. It's a special fund or targeted assets to be used for aging parents as needed.

 

Educate yourself first. Figure out how much it may take. According to a colleague who knows long term care insurance benefits, the average time a person with this kind of insurance collects policy benefits is three years or less.  If it’s three years at $43,200 a year for assisted living, not factoring in the 2% annual increase in cost, that’s $129,600.  And that’s under the unlikely scenario that a person who lives into her 90s, say, is going to stay level in what she needs over that three years.  More likely than not, her needs will increase and the facility will charge more every month for more services.  We see clients who are shelling out over $10,000 a month for a parent to be in assisted living.  When parent is infirm and needs a lot of things from the staff, every new thing increases the monthly cost. A few years of that kind of expense can take its toll on your client's retirement planning.

 

Near the end of our fruitful discussion, one of the participants asked “What do the other 99% in our society do when an aging parent needs long term care?”  The answer: they either provide the care themselves at a very high personal cost, or their parent spends what assets he has until they’re gone.  Then he ends up on Medicaid in a shared little rom in a nursing home. No one wants to see that happen if you can help it.

 

Here are the takeaways to share with your HNW clients who may end up supporting aging parents or paying for their care.

  1. Look ahead.  Discuss what needs your client's family, particularly elders may have and what may be required from your client to meet potential obligations created by their family members.
  2.  Consider whether your client should buy long term care insurance for parents if their parents are not wealthy and have health issues. Do this before their parents turn 60 if you can. The elders may become uninsurable or premium cost may become prohibitive later.
  3. Educate your client about the real costs of long term care. If they're under 40 as our audience was, they are probably not thinking about their potential future obligations to parents who are not financially successful. This was an unusual group.

 

Smart planning now can save your client shock and distress later.  If they are responsible folks, help them to expect the long run as their parents age. People in the 85+ age group are the fastest growing segment of our population. Most of these elders are not wealthy and someone will need to care for them.

 

Your client can get a great head start with planning and communicating well with elders in our book, The Family Guide to Aging Parents. It can help YOU too, if you are in the situation of caring for your own aging loved ones. Click here for your copy.

 

Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com and AgingParents.com

What Is The Real Cost of Long Term Care For Aging Clients?

What Is The Real Cost of Long Term Care For Aging Clients?

Jan 16, 2017 | aging, finances for elders, long term care, long term care insurance, medicare

Are you doing retirement planning with your clients? Do you understand the real dollars involved in long term care? It goes way beyond out of pocket medical expenses for Medicare premiums, supplemental insurance and medicines. You need to help them free up enough to pay for it.

We are indeed living longer now due to advances in medicine and technology but what is the condition we're in with longevity? It's not true that we're living healthier than the prior generation.

No one wants to talk about the reality that things like obesity, in 30-35% of Boomers are going to affect whether they need to pay for lots of things Medicare does not cover. Obesity is frequently associated with significantly greater risk for heart disease, strokes and diabetes. Boomers have the highest rates of obesity of any age group in the U.S. If you want to pick conditions that are most likely to result in the need for long term care, all of these are among them.

Retirement planning can be very tricky when it comes to considering the cost of long term care. Most people don't want to have a conversation about what would happen if they became disabled. Most would rather change the subject quickly if the issue of possible diminished capacity is raised. "That's NOT going to happen to me!" is the expected response. But the risk is real, and there are plenty of statistics to support an analysis of what it costs to care for a person with disabling health conditions.

According to the Genworth Cost of Care Survey, which comes out annually, 70% of people over the age of 65 will need some kind of long term support as they age. At AgingInvestor.com, we recommend that every financial professional have the latest study on hand and that you share it with your clients when you do retirement planning. Chances are they are not as healthy as their parents were. And what kind of care will they need?

Most people want to stay at home as they age. Many will use home care services to be able to stay at home. Here's an example. My now 94 year old mother in law, Alice, had numerous hospitalizations for a couple of months, for blood pressure issues, the flu and other problems. She simply wasn't safe living independently in her apartment as she recovered. A home care worker came in every day for a cost of $25 per hour, initially for 12 hours a day. That cost is not paid by Medicare.

She's a good example of how we can need care with advanced age even if we do things right. She has always taken good care of herself, doesn't smoke, doesn't abuse alcohol, exercises regularly and keeps her weight in normal range. And yet, after illness she needed 24/7 care. The overall out of pocket costs associated with that bout of illness approached $10,000. She's fairly tough and did recover fully. However at her age that is not what usually happens. Home care could be needed indefinitely at a cost even part-time of at least $20,000 per year.

The extra $20,000 a year any less resilient elder could need is for someone who has neither heart disease nor diabetes. Chronic illnesses put a person at even greater risk of needing expensive care. Full time around the clock help can run $250,000 per year and up, depending on geographic area market rates.

Here's the takeaway: Expect that anyone who reaches the age of 80 is much more likely than not to need cash to pay for help of some kind. If your client is overweight or obese, the risk is very high. Ditto if your client smokes. Be sure to plan for making cash available to cover your client's likely needs in his later years. Most of what is usually required is not covered by either Medicare nor supplemental "Medigap" insurance.

By Carolyn Rosenblatt, RN, Attorney, AgingParents.com and AgingInvestor.com

Podcast Interview: Common Challenges in Helping Aging Parents

Podcast Interview: Common Challenges in Helping Aging Parents

Nov 15, 2016 | aging, elderly, financial capacity, handling money for seniors, seniors finances

Interview: Common Challenges in Helping Aging Parents

Hello everyone. Welcome to better health while aging, a podcast that gives you strategies and tips about improving the health and well-being of older adults. We discuss common health problems that affect people over age 60, the best ways to prevent and manage those problems and we also often address common concerns and dilemmas that come up with aging parents and other older loved ones, like what to do if you're worried about falls or safety or memory or even the quality of a seniors healthcare.

I'm your host Dr. Leslie Kernisan. I'm a practicing geriatrician, so that means I'm a medical doctor specialized in geriatrics, which is the art and science of modifying healthcare so that it works better for older people, and for their families.

Today’s episode features a special guest and we are going to be talking about common challenges related to aging parents. My guest is Carolyn Rosenblatt. She is an attorney and a registered nurse, and for the past several years she and her husband Dr. Mikol Davis, who is a geriatric psychologist, have specialized in helping families resolve difficult issues related to older parents. They have a website at AgingParents.com.

Carolyn is the author of “The Family Guide to Aging Parents” and several other books about assisting older adults with legal, financial, and life issues. She also write a column about aging for Forbes.com.

I have read many of Carolyn’s Forbes columns over the past few years and also read her book recently as I was writing one of my own articles about advance planning for legal and financial issues. So I’m thrilled that she was able to join me today to share some of her insights on how to manage some of the common challenges and dilemmas that families often struggle with.

Carolyn, welcome to the show.

Questions:

  • Tell us about your practice and how did you come to specialize in families and aging parents?
  • What are the most common types of problems that people ask you to help them with?
  • Some common scenarios we can discuss:
    • People are sometimes concerned that their parent is losing mental abilities, or becoming “incompetent.” They also often complain that their parent is refusing to talk about the issues and refusing to go see a doctor. What are some of your suggestions to help families resolve this?
    • People worried about how their parents are spending money, and/or worried that someone else is influencing the spending (e.g. a sibling)
    • People worried about their parents driving
    • People who want their parents to plan for decline in the future but the parents refuse or avoid the subject
  • How can older adults and their adult children plan ahead to avoid many of these difficult situations? Can you share some favorite resources that are effective in helping people through this?
  • For families that have set up springing powers of attorney, there is often a requirement that a doctor or other clinician say the older person no longer has capacity to manage finances or whatever power is in question. But families often say they can’t get the person to the doctor/psychologist to obtain this assessment. Suggestions?
  • There is really a lot that families could and should do to plan ahead. If people are feeling really limited in time and energy, what do you think are the most important or high-value things to do, when it comes to older parents who are doing ok now.
    • Another angle on this: what are the things that people end up regretting not doing the most often?
  • You’ve written a lot about preventing financial abuse of older adults. What are some useful steps you recommend to prevent this from happening, or from causing serious financial losses?
  • You have a chapter on helping older parents from a distance, and you write about how you and your husband eventually hired a care manager, in order to have someone close to your mother-in-law. What do you recommend for people who feel they can’t afford to hire a care manager?
  • How can families deal with declining abilities, dementia, and physical dependency if there isn’t family to provide care or money to hire someone?
  • How have you and your husband planned for your own future? (We can skip this if it’s too personal.)

At the end I will tell people they can learn more about you and your special consultation practice at AgingParents.com.

Proving Value to Retired Clients: Creating a Financial & Personal Checklist

Proving Value to Retired Clients: Creating a Financial & Personal Checklist

Oct 28, 2016 | aging, aging investor, elder investor, elderly, finances for elders, financial advisors, handling money for seniors, investor, senior investor, seniors finances

Proving Value to Retired Clients: Creating a Financial Checklist

Many of us in this society have a very negative image about aging in general. We don't want to be "old". It is fueled by advertising on TV, movies, print media and other outlets with a consistent message: aging is bad, being younger and turning back the clock is good.  We are a work ethic driven culture. When we are older and no longer "productive" we are generally seen as less valuable.

Then there is the fear and denial about dying and death.  Our culture has been called the only one in the world that thinks of death as something optional.  Note how we talk about it to family--"in case anything ever happens to me... Besides it being a fantasy that maybe something" won't happen to us, it keeps us from planning, from preparing our loved ones and from being responsible about our older years, possible declining health and the burden ignoring these things can put on our families.  Reaching retirement age is a time to do planning about more than money.

Financial advisors are in the planning business.  You look ahead, analyze, budget and calculate. But your clients may not be on the same page in your view of the future.  They are busy being in denial that they may ever get ill and die.  You can help them.  In doing so, it may also make your job of talking about such issues as long term care, budgeting and spending easier.

Most people do not want to burden their loved ones. Most of them do not want to trouble adult children unnecessarily as they age. That is your best selling point for bringing up the personal matters.  These include how every senior and every retiree needs to plan for things in their own lives that go beyond how much money they've saved and how it will be spent having a great retirement.

Here at AgingInvestor.com we see the messes people leave behind when they nurture the Great American Fantasy that losing independence won't happen to them and that they will live happily to age 100 and die peacefully in their sleep.  Family members can spend years cleaning up the disaster their older loved ones leave because of failure to plan and take care of business.  It is truly not fair to anyone.  It leads to anger, resentment, family conflicts and sometimes to loss of wealth through ignorance. We've heard it and seen it countless times.  We put a checklist together to help people avoid these disasters created by the fantasy.

What Can You Do About It?

You can give your clients this checklist next time you sit with them and review the portfolio.  You can gently urge them to do what the list says is needed. We've broken down the essentials into 10 points, a "to do" list if you will. You can encourage them to take care of the items on the list, if they haven't already.  In general, the to do list includes updating the estate plan, having critical documents in the right hands, providing necessary financial, computer and account information to trusted family and having a family meeting to educate one's heirs about the older person's affairs. This is how your client gets a family ready. This is how they avoid unduly burdening anyone. This is how they free their loved ones from distress and unnecessary work when they have to take action as an aging parent declines and passes away.

Some of your clients will brush off your suggestion. They love that Great American Fantasy and aren't about to give it up. Others will thank you as they have thanked us and will go forward.  Their families will be forever grateful.  You'll look like the caring, smart and responsible planner that you are.

Get your free Ebook and the Financial & Personal Checklist For Smart Retirees, click HERE.

By Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.comclick-here

Financial Advice Your Boomer Clients May Need

Financial Advice Your Boomer Clients May Need

Aug 9, 2016 | aging, aging investor, finances for elders, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances

Are you considering the issue of Boomers having to care for their aging loved ones in retirement? You've probably done a good job with helping clients be ready for retirement age, but every financial professional needs to consider a massive problem we now face. Our oldest old are living longer than anyone expected and they can run out of resources. Their adult children might have to care for, pay for or take in their aging parents.

Years before, the parent probably extracted a vow from the adult child your client, (typically a daughter) "promise you'll never put me in one of those homes".  And the daughter, without much thought replied, "Of course Mom. I'd never do that".  How time changes things.

The concept of "being put in a home" is vague, based on largely outdated notions our elders have of ugly warehouses for the poor, something conjured not just out of an English novel, but out of the way things once actually were in some places, long before Medicare and Medicaid existed to ensure at least some care for our elders. We did neglect older impoverished people and place them in poorly regulated homes.

Things are supposed to be better now, with the rise of public benefits, and government regulations over skilled nursing facilities, all designed to keep residents safe and in a somewhat dignified existence. The intended outcome of these regulations does not always meet reality. The cost of caregiving for all but the lowest income in our society is borne by the elders themselves if they have the funds or by their families if the parent has limited means.  .

Advisors may discuss with retirement-age clients that Medicare doesn't cover all the costs of medical treatment that clients themselves may need as they age. But few advisors have the foresight to ask their clients if they anticipate also having to pay the cost of care and out of pocket medical expenses for their parents too.

We have a 94 year old mother in law. She's in decent health, and has the means to cover what she needs now and in the future. We're among the fortunate ones. Years ago, we and my husband's parents made a joint investment that pays enough income for her, now widowed, to live on. She can cover health emergencies, home care, expensive medications and whatever downturns her health may bring. She has savings as well. This is not how it works for the average person in our country. Perhaps your clients are wealthy but their parents might not be.

Some folks solve the issue of what to do by bringing the aging parent into their homes and providing or paying for care themselves. This multi-generation household approach is a cost effective way to house an aging parent with limited resources and cover many expenses that would otherwise have to be borne by the elder who just might be low income by the time they reach the age of 94, like she did in my family.

Bringing in the aging parent to live with you is not a solution for everyone, but one worth considering. If you broach the subject with your Boomer clients, you can get them thinking about this. Longevity is increasing steadily and it is going to affect those whose parents live longer than anyone thought they would. The takeaway here is for you, the financial professional to ask them about it.

Here are some basic questions you should ask:

"Do you anticipate having to pay for support for anyone else during your retirement years? Are your parents living? How is their health these days? What would you do if they got low on funds and needed care? Have you thought about what it would cost to care for them?"

Learn more about how your clients need to discuss finances with their own aging family members at AgingInvestor.com in Succeed With Senior Clients, A Financial Advisor's Guide to Best Practices. You'll be doing a great service and prudent planning when you initiate the discussion they need to have.