UPDATED September 23, 2019
By Buck Wargo
With our parents aging and life expectancies lengthening, a growing number of Baby Boomers are going to have to care for and support their parents.
A new survey sponsored by “A Place for Mom” and “The Mutual Fund Store (now known as Financial Engines)”, shows that 28 percent of Americans whose parents are still living say they already are and will need to support their parents at some point.
The difficulty with that is the 86 percent of Americans who say they're concerned about their ability to support their parents during their retirement.
"Through our work with families, we find that it's quite common for adult children to provide financially for their aging parents, but it's not often clear if families had expected or planned to do so."Ed Nevraumont, CMO of A Place for Mom, a living referral service for older Americans of which Joan Lunden is an advocate.
Now it Counts did an exclusive interview with Joan Lunden late last year about her courageous battle with breast cancer -- and her advocacy for long-term caregiving help, after losing her mom, Gladyce, who had dementia for many years.
The goal of this survey was to explore Americans' knowledge of their retirement benefits, gauge their concern around supporting their parents financially as they age, and help underscore the importance of families to start talking about the difficult conversation of caregiving, Nevraumont says.
Advance Planning Protects Savings and Income and Reduces Family Burden
A Place for Mom and The Mutual Fund Store, a system of investment advisors, commissioned a survey by the Harris Poll.
What those organizations are telling people is that families can avoid planning mistakes by understanding and discussing all of the costs associated not only with retirement but long-term care.
Family Discussion is Essential
The survey found that 42 percent haven't even discussed the issue with their parents about caring for them in their retirement. Some 27 percent of those who say they need to support their parents say they haven't discussed it with them.
"This survey shows that too many families are not discussing financial planning with aging loved ones,"
"It's an important reminder for families to start voicing concerns about retirement finances as well as to make senior care a priority for themselves and for loved ones."Andy Smith, executive vice president of investments at The Mutual Fund
Five Steps to Take Now
What five steps should families take in planning for those expenses for their parent's elderly care?
- Start gathering and organizing important financial and legal documents so family members know where to find these in an emergency.
- Find an advisor who understands livings options and those for a variety of care for aging Americans. Each case would be based on a particular situation and budget.
- Also find a financial advisor who understands different investment vehicles to prepare for retirement and care of their parents.
- Map out a budget for care using sources of available income. That means looking into veteran benefits, long-term care insurance your parents might have, 401(k)s and other investments.
- If you are relying on government assistance, educate yourself on the differences between Medicareand Medicaid, and what is covered, officials say.
An essential part of retirement plan for many American families is affordable Long-Term Care Insurance. In many states special partnership policies are available which provide additional "dollar-for-dollar" asset protection. The best time to plan is prior to retirement, in your 40s or 50s, when premiums are low and the most options are available.
The fact is Long-Term Care Insurance is easy, affordable and rate stable income and asset protection. Many people are not aware that these policies are custom designed. Be careful, however, since premiums can vary over 100% between companies for the exact same coverage. This is why you pursue the help of a qualified Long-Term Care Insurance specialist. Find a specialist by clicking here.
Four Items to Discuss with a Long-Term Care Specialist:
- Partnership – Most states offer special policies that provide dollar-for-dollar asset protection. The Long-Term Care Insurance Partnership Program might be one of the best-kept secrets in retirement planning. Make sure the specialist explains this program and how it might help you.
- Tax incentives – There are federal tax incentives available for some people. If you own your own business be sure to ask.
- Health Savings Accounts – If you have an HSA you can use the pre-tax money in your account to pay for the premium.
- Asset-Based or Hybrid policies – These are life insurance or annuities with a rider for long-term care. Careful, only a handful are actually a long-term care benefit. However, one of these policies can provide you with the flexibility of both a long-term care benefit or a death benefit. They are expensive but can be paid with a single premium.
Make sure the specialist asks you detailed questions about your health, family history, and retirement plans. Underwritingcriteria varies with each insurance company. If they are not asking you detailed questions then find another specialist.
It is always best to start planning before you retire. Once you have your plan in place you will enjoy peace-of-mind and your family will thank you decades from now.