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Parenting Your Parents - The Great Role Reversal
By Amy A.
Brandts, CLU, ChFC
You have
probably just taken a great sigh of relief, as your children prepare
to leave the nest and become independent adults. But don't relax
just yet. Before you know it, you may find yourself being a
caregiver once again, because as your children mature, so do your
parents! Their golden years may be tarnished by health problems and
your family could be significantly impacted if your parents haven’t
done the appropriate planning for this possibility. Do you know
where your parents will live (and how they will pay for it) if they
can no longer take care of themselves?
First, talk to
your parents and encourage them to discuss their living preferences
in the event that the frailty of aging impacts their mobility. If
they are willing, ask them to share information about their
financial situation. If they are uncomfortable discussing it with
you, encourage them to meet with a financial planner. Also ask them
if they have a current will, durable power of attorney and advanced
medical directive, all essential legal documents for managing one’s
health and finances. For this, they should consult an estate
planning attorney.
Why should you
worry? Perhaps your parents are among the few that have all their
financial and legal affairs in order. But if not, a lack of
planning can be costly, both in time and money. In northern
Virginia, you can pay as much $19-20 per hour for a caregiver to
come into your home to help with a parent. Assisted care facilities
range from $2,000-$4,000 per month and nursing homes can cost as
much as $6,000 per month. Can your parents afford these costs, or
will you need to pitch in and help? How will this affect your
family budget?
Age and illness
will eventually affect us all and it is essential to plan for it.
The best solution is to establish a "nursing home avoidance plan,”
so that your parents have an adequate combination of available
assets and long term care insurance, to cover the costs of getting
the help they need in their own home without risking poverty. Based
on our personal experience and the experience of our clients, we
suggest taking the following steps:
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Choose or
modify their home with an eye for accessibility. Make certain it
has doorways and bathrooms that are wheelchair accessible and that
they can live on one level. Make certain there is an extra
bedroom where a caregiver can reside. Select a home close to
their preferred doctors and hospitals.
-
Make certain
they have adequate health insurance after retirement. Supplement
Medicare with additional coverage that will provide prescription
health benefits, if possible, or join the new Medicare discount
prescription plan.
-
Find out if
they have a will or living trust. Are the documents up to date
and do they fully reflect their current wishes? If not, consult
an estate planning attorney.
-
Do they have
a durable power of attorney? This appoints someone to manage
their financial affairs in the event they are unavailable or
incapable.
-
Do they have
an Advanced Medical Directive? This legal document specifies who
will make their medical decisions in the event that they cannot.
It can also express their wishes if they become terminally ill
and/or unable to maintain any quality of life. Make certain that
this document is updated to reflect the newly required language
that is needed due to the recent HIPPA legislation (Health
Insurance Portability and Accountability Act of 1996).
-
Hire a
financial planner to review their portfolio to determine if it is
invested appropriately based on their age, comfort level with risk
and need for current income.
-
If they are
between the ages of 50-75, have at least $75,000 of assets in
addition to their home and are still healthy enough to qualify,
consider buying long term care insurance, which will help pay the
costs of long term care. Make certain that the premium is
affordable and remember that premiums may increase in the future.
It may make good sense to purchase a policy for them and share the
cost with your siblings. This helps ensure that they can afford
the care they need and also protect their (and your) assets from
being depleted.
Your children
are growing up. As you begin to reflect on the pleasures of the
next stage of your life, don't forget the Great Role Reversal. A
little pre-planning can help your parents enjoy their older years,
age gracefully in the comfort of their own home, and help protect
their assets. It will also give you peace of mind, knowing that you
can put your worries aside and focus on enjoying their golden years
and yours.
Amy Brandts is a financial planner and founder of Symphony
Financial, an independent fee-based financial planning firm in
Herndon, VA. She specializes in working with the "Sandwich
Generation," those who are sandwiched between the needs of their
children and their elderly parents. To reach Amy, call 703-481-9876
or email her at
abrandts@symphonyfinancial.net.
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