At 75, Jack has health issues that make him uninsurable. If he requires long-term care, he could lose his assets and have to rely on Medicaid. His wife, Sally, is 73. She is relatively healthy but is concerned about her future care and losing the couple’s assets. Because Sally is still insurable, she recently purchased a long-term care policy with a $300-a-day benefit for up to three years. The annual premium is $9,000. (In 2012, the average cost of a semi-private room in a nursing home in Washington was $7,386 per month.)
With proper planning, Jack and Sally can protect the assets they’ve worked so hard to accumulate during their lifetime, allowing them to live a comfortable retirement, get the care they need, and still have money to leave to their children. Without planning, however, Jack and Sally could lose everything and their quality of life and care will suffer.
We’ve changed the names to protect this South Sound couple’s identity, but their concerns and their children’s are common. None of us wants to think about our parents’ aging or confronting their mortality, but it is an important conversation to have, sooner rather than later, says Tacoma State Farm agent Paul Rohrbaugh.
“People are a little ambivalent. They don’t like to think about end-of-life issues,” Rohrbaugh says. “These are uncomfortable conversations to have.”
John McBride of Lewis-Mason-Thurston Area Agency on Aging refers to the 60/40 rule.
“When your parents are 60 and you’re 40, it is time to have that conversation,” he says.
It’s a talk no one is comfortable having, but it’s necessary for parents and their adult children to discuss the parents’ post-retirement wishes. What kind of lifestyle do they want? Who will care for them if they’re sick? Where will they live? Who will handle financial and legal matters if they’re incapacitated?
There are so many questions to ask. Where do you begin? The experts at HavingTheConversation.com also suggest starting the discussion with your parents early. Here are some additional tips from local experts on three major areas: housing and lifestyle, long-term care, and financial and legal matters.
Housing & Lifestyle
Ask your parents where they’d like to live. If they are able to live independently, can they care for and afford their current home after retirement, or is downsizing more appropriate? If they move from their current home, where will they live, and will they need additional care? For those without local family support, moving to a senior facility is one option, including everything from independent and assisted-living facilities to adult family homes and secure dementia care.
Alex Lynn, family adviser for Farrington Court in Kent, says families often begin the discussion as parents approach their 70s, but there isn’t any best time.
“Everybody ages differently,” says Lynn. “We encourage families to bring the issue up as soon as possible and
to recognize when the need for support is strong.”
As families begin to discuss housing options, Lynn recommends that they do due diligence when considering a senior facility. Ask about staff-to-resident ratios, the level of care provided, and whether the facility can accommodate a parent now and later.
If they are able to live independently, some parents will choose to downsize their home. Mary Kay Horton of Keller Williams in Federal Way specializes in working with older adults and their families as they make these difficult decisions.
“The quality of life is the important factor when deciding to downsize. It is a natural progression of life,” Horton says.
Horton suggests families consider these key areas: home and yard maintenance, stairs, cooking, meals, and socialization.
“I encourage seniors to move sooner rather than later. If they become ill or need support services not available at home, the transition can be more difficult for them, and they miss out on years of enjoyment,” Horton says. “I find most of us want to enjoy our lives more, and having a lot of ‘stuff’ becomes less important.”
When downsizing is needed, services like Rightsizing for Seniors in Burien are available to help parents and adult children prepare for a move. Rightsizing owners Terry Denend and Sue McCullough help families make difficult transitions, including sorting, packing, liquidation, supervising moves, floorplan design, and decorating.
“We come in as professionals who have done this before and are fresh faces with no baggage or family history,” Denend says.
The pair recently helped move an elderly woman out of her lifelong Des Moines home. It was an emergency move with little help from the adult sons, but the Rightsizing team brought in a real- estate company to get the home ready for sale while they inventoried possessions and prepared her for the move.
Denend’s advice to adult children: Be patient; don’t expect things to happen quickly when you are in the throes of a crisis; and know where your parents’ important documents are and who their professional advisers are.
In 2012, the average annual cost of a private one-bedroom unit at an assisted living facility was $51,000, and a private room at a nursing home was $96,000. Except for those with sizable retirement savings, a few years of assisted living or skilled nursing care could easily wipe out someone’s retirement savings, or leave a healthy spouse with little money to live on.
To cover long-term care costs, which are not covered by Medicare, Washington residents have three options: pay for care through personal savings and assets, spend themselves down to poverty to qualify for Medicaid, or purchase long-term care insurance when they’re young and healthy enough to qualify.
Rohrbaugh recommends that people consider potential needs and actual costs when deciding whether a long-term care policy is in their best interests. The conversation should be part of a broader discussion of how parents will get the necessary care as they age, Rohrbaugh says. Some parents assume their spouse or children will take care of them, but that’s not always realistic or possible.
Rohrbaugh suggests folks do their research, looking beyond the cost of coverage at the types of policy benefits and provisions and the financial soundness and claims-paying ability
of available carriers.
Bruce Bamford, an independent broker for Bamford LTC Financial Services in Olympia, specializes in helping families navigate the long-term care maze. His firm holds free seminars to explain long-term care coverage, Medicaid, and asset protection. He also belongs to a referral network, Senior Action Network, in Olympia that helps people get more information about issues related to aging.
“Most people don’t care. They don’t see themselves in a nursing home or an assisted living facility until it happens,” Bamford says. “But with the right information, they can protect the assets they’ve worked their whole lives for.”
In addition to professionals like Rohrbaugh and Bamford, nonprofits like Area Agency on Aging are available throughout the state to help refer seniors and their families find needed resources and services, including health care providers and caregivers.
Financial & Legal Concerns
Ali A. Criss, CFP, managing partner for Financial Insights in Tacoma, identified three primary areas of financial concern: accumulating wealth during work years, spreading wealth out during retirement, and covering post-retirement living expenses and health care.
Ideally, financial planning should begin with a person’s first job, but even those who plan later in life can still live comfortably and plan ahead, says Criss. Other considerations include retirement savings, Social Security benefits, estate taxes, long-term care needs, healthcare costs, Medicare, and Medicaid.
It is also important for parents to have the appropriate legal documents in place to take care of their needs while they are living, but also to carry out their wishes when they’re gone.
Mark Reinhardt, an estate-planning attorney with the Rehberg Law Group in SeaTac, says a good way to broach the subject with parents is for adult children to do their own planning first. He says anyone over 18 should do some basic planning, whether married or single.
“We want to be in control of ourselves and our finances as long as possible, and we want peace of mind,” says Reinhardt. “Once it’s too late, it’s too late.”
The goal of estate planning is three-fold: who is in charge, where things go, and how they go.
To facilitate that planning and to maintain control, Criss and Reinhardt recommend the following documents:
- Community property agreement
- Powers of attorney — medical and financial
- Healthcare directive or living will
- Trust documents
- Up-to-date beneficiaries on retirement accounts
Reinhardt cautions families to make sure their documents are up to date. Powers of attorney, for example, should be no more than five years old, because some institutions will not honor older documents. Criss recommends that each professional adviser — attorney, CPA, financial adviser, etc. — have copies of the documents and that relevant parties, including children, either have copies or know where the documents are.
Family Love Letter recommends that families compile a personal property disposal list, which should include a list of assets and accounts and an informal document to help parents pass down their last wishes.
Though not all documents are appropriate for every situation, working with an experienced estate-planning attorney can help families decide what is needed to protect their needs and wishes.
“Because the law is so specialized, it is important to find someone who focuses on estate planning,” Reinhardt says. “You wouldn’t go to an auto mechanic to have your washer and dryer fixed.”
Caring for aging parents is a complex, multifaceted topic. Each family and situation is different. Consult with your own team of advisers — your family, attorney, financial adviser, insurance agent, etc. — to design a plan that meets your needs.
Illustrations by NightWolfDezines for vecteezy.com; Alex Schloer; Zhaolifang; Danielcampos, both for vecteezy.com