My inbox is filled with emails from caregivers trying to figure out how to pay for their parents’ care. They’re facing complicated and hard choices.
The big choices? Whether they should quit their job, move a parent into their home to avoid expensive care, or pay for care and risk running out of money. Or some combination of any or all of these.
That’s a really crappy set of choices.
We all agree that, regardless of your financial situation, it’s hard to be a caregiver… But, the truth is that it’s really scary to be a caregiver when you or your parents don’t have much money to pay for care….
That’s because there’s nothing standing between your parent and an institution except your hard work and the family bank account.
This is not your fault!
There are really no good options for paying for the care that over half of us will need in old age for basic life activities, like bathing and eating.
Very few of us have the special kind of long-term care insurance that pays for this kind of care.
So, with a diagnosis of Alzheimer’s or a sudden decline in health — the bank account can run low quickly.
And, if you’re among the 14 percent or so of older adults who need this kind of care for 5 or more years, your odds of ending up on Medicaid and in an institution are extremely high!
So, what can we do to protect our children from having to choose between moving us into their home or a nursing home?
How do we fund our future independence?
Unfortunately, there’s not one clear answer to this question. But it’s also not hopeless. If you treat your future self like you would one of your children and think about your needs in advance, you can have some control over what will happen.
Here’s a list of Dos and Don’ts to get you started preparing for your future self’s old age.
Don’t assume Medicare will pay for long-term care.
According to polls, one big mistake that nearly everyone makes when preparing for old age is that they assume Medicare will cover everything they need.
While Medicare will cover much of the health care you’ll need in retirement — like doctors and hospitals, it won’t pay for long-term care. It won’t pay for assisted living or for long-term nursing home care. And, it won’t cover in-home care for help with daily activities.
Do save for retirement, but don’t expect savings to be enough.
Lots of folks think that being prepared for future long-term care need is the same thing as being prepared for retirement. Retirement savings ARE essential for having an independent old age. And, savings are more important than ever now that we’re living so much longer — For example, you’ll need them to pay for food, housing and clothes.
But understand that those savings may not be enough if you need a lot of help from other people to eat, get dressed and just get around your house. They’re rarely adequate if you need this help for a long time.
The bottom line here is that it’s hard to save for an unpredictable event like needing other people to help you get bathed and dressed every day. You don’t know if you’ll need this kind of care or, if so, for how long. So you also don’t know if you’ll need to spend $0 or $100,000 or $250,000, or even $1 million.
Do consider buying a (relatively) inexpensive long-term care insurance policy.
There are products called “long-term care insurance” that pay for services like home care and assisted living when you have a very high level of need.
And, research shows that people whose parents receive long-term care insurance benefits feel that they get significant help.
Premiums for typically sold policies are quite high; they can run around $2,000 a year if you wait until you are in your 50s to buy the insurance (which most people do). However, you CAN find less expensive policies that will provide for a somewhat more limited amount of services when you really need them. And, they are also cheaper the earlier you buy them.
For the inside scoop on this product, including who can buy it and who can’t (due to pre-existing conditions):
You do need to know that these products are not to be entered into lightly but given that they’re all we have, they’re worth considering. Think of this product as one tool in your future old age independence toolbox.
Do rethink your geography.
When you are frail and trying to maintain some autonomy over your life, community matters. And, state and community services matter a lot because they can help you stay at home longer.
Consider deliberately choosing to live in a state with better than average services and environments for older adults. There’s a wonderful resource on the AARP website for evaluating states who have their act together in creating supportive environments for older adults. It’s a state scorecard on long-term services and supports for older adults, people with disabilities and family caregivers!
Also, determine if there are already communities or services that you can tap into. For example, check out the Village movement. The Villages are communities that come together to pool financial and volunteer resources to support older adults. See if there’s one near your parents and/or consider starting one in your area.
Do rethink your house.
We all get attached to our homes. But, there will be more and more options for us to trade traditional houses for alternative living arrangements that will better support us as we lose our ability to function.
Very soon we’ll be able to find assisted living alternatives that are more affordable, more attractive and more integrated into communities, and urban centers. An example of this is my friend Ryan Frederick’s The Stories in Rockville, MD.
Or, you may not have to move but you might alter your existing home to make it more accessible. For example, you can replace home entry steps with ramps, and bathroom grab bars with towel racks. Just doing a few things to prevent falls can be a very cost-effective way to extend your time at home, and your money.
Do recognize our changing demographics will mean a new normal.
Our society is undergoing a seismic shift that will change how all of us approach preparing for old age, and it’s going to take time to adjust.
But, in the meantime, there are things we can do. We can prepare our finances, our homes and our communities. And, we can advocate with political leaders for better options for funding our future independence.
My gratitude goes out today to three amazing organizations, AARP, Leading Age, and The SCAN Foundation. These organizations are doing so much to advocate for a bright and independent future for all of us, including funding a project on which I have been involved — a huge, new body of work by the Urban Institute and Milliman that will give policymakers information they need to figure out how to get us to a new normal…
Where our children won’t have to choose between paying for our grandkids’ college or our care.