How to Find Balance: Your Legacy and an Aging Parent’s Needs
If you have elderly parents with health problems, you might be facing the need to provide critical financial or practical support. In our experience, this is an extremely challenging time for children who want to give their parents everything they need, but who may be facing logistical or financial constraints themselves.
As with most things in personal finance, there is no single “right” way to approach this issue. But you can make progress towards reaching your own goals with some careful consideration and prudent planning.
In this article you’ll find our tips and guidelines to finding a stronger path forward for your family. In all cases, we’ll assume that you’ve exhausted Medicare benefits and that your expenses go above and beyond those covered by your loved one’s insurance and income sources.
Let’s get started.
Mind the caregivers
One of the most overlooked costs in caring for elderly relatives is time. Whether it’s as involved as everyday in-home assistance or the occasional running errands and helping out around the house, care can be time-consuming – which can have both personal and financial repercussions.
For many families, the trade-off is easily worth it on a personal level. But if you’re spending significant time as a caregiver it’s important to take steps to safeguard your financial future, especially if you’ve seen reduced income or loss of career opportunities as a result.
If caring is having an impact, consider taking a big picture look at your financial plan to help make sure you can stay on track towards your goals.
For example, you might consider adjusting your family budget to help boost your savings, or work towards alternative income sources to help make up any losses. For married couples, be sure your retirement savings plans account for both parties – women tend to provide most caregiving, and they also tend to live longer – so that your plan accounts for both present and future needs.
Know your financial limits
If your parent or family member needs in-home or nursing care, you may have seen the potential price tag – and experienced the sticker shock. Elder care services are notoriously expensive, and with healthcare costs expected to rise about 6.5% in 2018, continuing a decade-long trend of high inflation, it’s wise to stay aware of the possible impact on your finances.
First, consider what you can feasibly afford to pay – depending on your situation, this might be a one-time expense, a monthly line item for some period of time, or an ongoing part of your annual budget.
If you’re looking at shortfalls, consider your options.
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You might want to ask yourself:
- What assets are potentially available to help cover costs?
- Can we structure our loved one’s finances to help them qualify for more benefits?
- How can we save on costs without sacrificing quality of care?
These are open-ended questions because, in practice, this is an open-ended process. But there is a wealth of strategies out there that might apply to your situation, which is where a financial advisor can be a significant help.
We also recommend discussing these issues with your financial advisor. You may want to make tax-sensitive choices about where the money should come from, or how much you can dip into savings without risking your future planning.
Build your resources
Whether you’re an only child or part of a larger clan, there are ways to get help with this planning process, which can sometimes feel overwhelming.
For example, we recently had a client, Sarah, whose aging parents were respectively suffering from health problems and dementia. Sarah’s older sister, a freelancer, offered to move into the family home so that their parents could age comfortably in place, but she was concerned about the risks. Namely, caring for their parents would require moving and would have a significant impact on her income.
This family’s solution? Everyone got together to redraw the inheritance plans, so that some assets could be freed up to provide immediate support and so that Sarah’s older sister could help protect her own financial future. The whole family got the benefit of knowing their loved ones were getting needed care, while Sarah could breathe easier knowing that she also had resources in place for her own future.
If you’re an only child or don’t have this kind of dynamic, keep in mind that there are also support programs available to caregivers.
Contact your local department on aging to learn about the federal Family Caregiver Support Program and any state or local programs that might apply to your situation. If your family member has a specific disease, like cancer, you might consider investigating organizations that may offer practical, financial, or other forms of support to caregivers.
In all cases, our key advice for caregivers is do not forget yourself. While it can be satisfying to contribute to your loved ones, that contribution should not come at the expense of your ability to care for yourself and your future.
It’s possible to do both, though that doesn’t always make it easy. But by taking the time to understand both your needs and the needs of your family, you can start to think more strategically – and get closer towards your goals.
Are you also thinking about the younger generation?
Helping your children may just one part of a larger plan to provide opportunity and resources to your family. Download our free guide to full family financial planning, From the Bucket List to the Bank, for more tips and ideas on estate planning, forging family bonds, and managing the risks that come with a multi-generational approach to wealth management.
Download our free guide and take the reins of your family legacy today!
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