As a Financial Adviser, I've Spent 30 Years Helping Clients Make Tough Choices for Aging Loved Ones. Now It's My Family's Turn — and This Is What I've Learned
I understand exactly how aging loved ones' care needs put pressure on financial plans and caregivers — and the importance of talking openly about options before a crisis happens.
This year marks two meaningful milestones in my life: 30 years of marriage and 30 years in business with our financial services firm.
Those anniversaries have made me more aware of how quickly life changes. Two people close to me — one on my side of the family and one on my wife's — have been facing ongoing challenges involving health, independence and long-term care.
Watching these situations unfold has changed the way I think about this topic, both as a family member and as a financial adviser.
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Over the past 30 years, I have helped many families prepare for retirement and make difficult decisions involving aging parents. As our clients have aged — and as these issues have become more personal — the importance of planning before a crisis has become increasingly clear.
Families often imagine predictable progression: A loved one lives independently, eventually needs more help and then moves permanently into assisted living or a nursing facility.
Real life is rarely that orderly.
A person may move from independent living to a hospital, rehabilitation center or long-term-care facility and later return home. A temporary arrangement can become permanent. A plan that worked several months ago may no longer be safe or affordable.
Many families hold off on planning until they feel certain about what lies ahead. That certainty rarely arrives. A better approach is to create a plan that can adjust as health, independence and care needs change.
Here are five places to begin.
1. Discuss care before there is a crisis
These conversations are uncomfortable because they involve aging, independence, money and mortality. That is also why families tend to postpone them.
Do not begin by telling a loved one where they should live. Start by asking:
- What would be most important to you if you needed help?
- Would you prefer to remain at home, even if outside care were required?
- Who would you trust to make financial or medical decisions?
- What would make you feel that independent living was no longer safe?
The goal is not to settle every future decision. It is to understand the person's wishes while they can still participate fully.
Waiting until a hospitalization may force a family to make major decisions in only a few days.
2. Make sure the legal authority exists
Being a son, daughter, spouse, niece or nephew does not automatically give someone the authority to manage another person's finances or make medical decisions.
Families should review whether the individual has an updated financial power of attorney, health-care proxy or medical power of attorney, living will and HIPPA authorization permitting medical information to be shared.
The people named in those documents should understand their responsibilities and know where the documents are stored.
Financial institutions may also have their own procedures for recognizing powers of attorney. Addressing those requirements in advance can prevent delays during an emergency.
Because laws vary by state, an estate-planning or elder-law attorney should review the documents, particularly after a move or major change in health or family circumstances.
3. Understand what Medicare does — and does not — cover
One common misunderstanding is that Medicare will pay for long-term custodial care.
Medicare may cover qualifying short-term skilled nursing or rehabilitation following an illness or injury. It generally does not cover ongoing help with activities such as bathing, dressing, eating or using the bathroom when custodial care is the only need.
Some Medicare Advantage plans now offer limited supplemental benefits, such as personal care visits or minor home modifications, so it is worth checking the specific plan rather than assuming traditional Medicare rules apply across the board.
Families can be caught off guard when a covered rehabilitation stay ends but their loved one still cannot safely return home.
Potential funding sources may include income, savings, retirement accounts, long-term-care insurance, home equity, veterans benefits or Medicaid for those who qualify.
Medicaid rules differ by state. Before transferring assets, changing ownership or making large gifts, speak with an elder-law attorney. A well-intentioned decision can create unintended consequences.
4. Build a flexible cash-flow plan
Long-term-care planning should not assume one setting at one fixed cost.
Consider several possibilities:
- Help from family
- Part-time or full-time home care
- Independent or senior living
- Assisted living
- Memory care
- Skilled nursing care
Estimate how income and assets would support each option. Identify which accounts might be used first and consider the tax impact of withdrawals from IRAs or other retirement accounts.
Maintain enough accessible cash for deposits, moving expenses, home modifications or private caregivers.
The plan should be revisited after every major transition. A budget created for independent living may no longer work after assisted living begins. Someone returning home may need funds redirected toward caregivers, transportation or home safety.
5. Divide responsibilities before one person becomes overwhelmed
In many families, one person gradually becomes the default caregiver, financial organizer and emergency contact. That person may also be working, raising children or managing other responsibilities.
Discuss who will handle specific tasks. One person might communicate with doctors, another manages bills and insurance, and another coordinate transportation or facility visits.
Create a secure list containing important contacts, medications, insurance information, advisers, attorneys, account locations and recurring expenses.
Families should also identify signs that the current arrangement needs to change. Repeated falls, missed medications, unpaid bills, unsafe driving, poor nutrition or caregiver exhaustion may signal the need for more support.
The goal is not to take away independence prematurely. Sometimes preserving independence requires accepting help.
Planning cannot remove emotion
Even the best financial plan will not make these decisions easy.
Family members may disagree. A loved one may resist help. Health can improve and then decline again. Families may wonder whether they are doing too much, too little or making the wrong decision.
After 30 years in financial planning, I have learned that the most important conversations are not always about investments. They are often about independence, dignity, family responsibilities and how financial resources can support the people we love.
Planning cannot remove the uncertainty. It can give families a framework for responding to it.
You may not know what kind of care a loved one will need, when it begins or how long it will last. But you can make sure the right conversations have occurred, the legal documents are in place, the financial resources are understood, and the responsibility does not fall unexpectedly on one person.
When an aging family member's needs keep changing, the plan must be able to change with them.
Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®. CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
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