Financial Considerations for Aging Parents
As a proud Gen Xer, I sometimes feel that we had the best years to come of age. During our youth, we witnessed the advent of MTV and enjoyed films featuring the “Brat Pack” in the 1980s. By the 1990s, there was a technology revolution as the internet took hold, and we still had the best music, from Seattle grunge to nostalgic boy bands. While our cell phones couldn’t take photos or give us directions, and “social media” still meant reading a newspaper in a coffee shop and discussing current events with others, it was a great time to be alive. Over the past 25 years, Gen Xers have seen ups and downs following the “dot-com” and housing bubble busts.1 Many of us have bought homes and raised families, and at this point, we all have something relatively new in common: we have baby boomer parents who are getting older and may need our assistance in some capacity.
Aging is now a team sport
So, while we’re still working and raising families, how do we juggle the new task of assisting a parent or other loved one, either physically or financially (or both)? Often, this burden falls unnecessarily on a healthy spouse or the eldest or nearest adult child. There are professionals, however, who can help alleviate that burden and provide the required support.
For instance, while recently attending the MIT AgeLab Forum, we heard from an Aging Lifecare Professional (formerly referred to as “Geriatric Care Managers”) and an occupational therapist who discussed how they assess the health-care-related needs of an aging parent and provide a family with a sensible course of action to deliver appropriate care if needed.
Some other professionals on the team may include an estate attorney or an elder law attorney. They can help Mom and/or Dad make sure financial assets are positioned and titled correctly, either to aid in distributions for care costs or at a parent’s death. Another member of the team may be a Certified Age-in-Place Specialist. This is a designation for specialized builders who can remodel homes to make them safer for elderly individuals to age in.
Location, location, location
I spend a lot of time in my practice advising retirees about housing options for seniors. I’m also frequently asked to speak at continuing care retirement communities. While transitioning to a community setting may appeal to some people, the idea of aging at home is preferred by most, in my experience. Helping a parent to determine where they want to reside can be a difficult conversation. A move may be perceived as a loss of independence, but it can also be viewed as a new beginning. As a father of two Gen Z daughters, I’ve been going through the process of visiting colleges for the next stage in their education. While a change that may include moving away from home might be a little unnerving, it can also be exciting. For those who are contemplating a move to a senior community or care facility, a focus on amenities and activities can overshadow the care services that may be provided. Ultimately, if the decision is for the parent(s) to remain at home, then the costs and benefits of that should be assessed, both financially and qualitatively.
Some financial questions to ask
“Do Mom and Dad have long-term care (LTC) insurance?” While this may seem like a practical question to ask, I often cringe when I hear it because it doesn’t provide enough information. Understanding a parent’s financial resources is important if future care costs come into play.
Here are three questions that may be better to ask:
- What’s the daily benefit of the LTC insurance policy?
- What is the lifetime maximum?
- Will the policy pay for home care as well as care that’s provided in a facility?
By better understanding the questions to ask, you can help an aging parent make good decisions about how those financial resources can be best put to work. A Corient Wealth Advisor can help in this assessment as well, while at the same time making sure that savings and investments are appropriately invested to provide for care costs, both now and in the future.
One thing I’ve come to realize as I’ve worked with clients is that aging doesn’t need to be considered a burden. It’s a natural part of our later retirement years, and while we may be experiencing it now with an older loved one, we’ll also be in that position ourselves at some point in the future. That’s simply the cycle of life. We’ll continue the conversation to explore in more detail how we can help aging parents assemble a great team, identify an environment where they can thrive and assess the financial resources necessary to help get them there.
ABOUT THE AUTHOR
James Ciprich, CFP®, MBA
Jim is a Partner, Wealth Advisor and Investments Leader in our Morristown, NJ, office. Serving a broad range of clients, he has a particular focus on retirees considering care and housing options. Jim founded legacy firm RegentAtlantic’s Senior Solutions practice specialty. He is often asked to speak at retirement communities and client events and is frequently quoted in the media. Jim also serves on an advisory council to the MIT AgeLab. He holds the CERTIFIED FINANCIAL PLANNER™ certification and has an MBA and a BA in Economics from Rutgers University. He served as an adjunct professor at Fairleigh Dickinson University in the CFP® program. Jim is a past president of his local estate planning council, and he has also served as a trustee for Morristown United Methodist Church. In recent summers, he has volunteered with Appalachia Service Project. In a prior career, Jim worked in the music industry, where he was awarded multiple RIAA-certified gold and platinum albums.
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