If you’ve recently retired or are approaching retirement, you have an exciting new chapter of life ahead of you. At the same time, you might need to think about some of the more challenging aspects of aging – such as the need for help if you become unable to care for yourself. If you ever required this type of support, also called long-term care, how would you manage it?
We suggest taking a holistic view of long-term care – by considering all the personal, family and financial aspects involved. You can start following this approach by doing some planning – in fact, the earlier you plan, the more options you’ll have and the more confident you’ll be when dealing with different aspects of long-term care.
Factors to consider
When planning for long-term care, you’ll need to take into account several factors, including the type, cost and duration of care. And these factors, in turn, will be affected by the type of health event that precipitates the need for long-term care (such as a stroke or Alzheimer’s). While you can’t predict these situations, you can at least be aware of some elements of long-term care – especially the cost. For example, Medicare typically pays very little of the costs for most types of long-term care. And these expenses are high: In 2021, the annual national median cost for a private room in a nursing home was over $108,000, while the median cost for a full-time home health aide was nearly $62,000, according to a survey by Genworth, an insurance company.
Your planning for these costs will depend to some extent on decisions you made earlier in your life. If you had previously purchased long-term care insurance, or perhaps life insurance with a long-term care rider, you have a degree of protection against the expenses you could incur. Depending on your age and amount of benefits you are planning for, these forms of insurance may be expensive, so, to meet the potential costs of long-term care, you may have to also consider budgeting for these expenses, as you may already be doing for other out-of-pocket health care costs.
Beyond the dollars
Although money can obviously be a key issue in planning for long-term care, there are other important concerns. Consider these questions:
- If you needed nonprofessional assistance, could someone in your family provide caregiving? If so, who?
- What are your care preferences, based on your lifestyle?
- What other financial goals do you have? How might long-term care expenses affect these goals?
- What arrangements do you already have in place? (Durable financial power of attorney, durable power of attorney for health care, etc.)
- What are your expectations for the future, and how might they impact your options? (Downsizing your living arrangements, moving, travel, activities, etc.)
- Are there any situations you’d like to avoid? (Certain types of facilities)
Have the conversations
As mentioned above, you will likely need to involve your family in the issue of caregiving – whether they are providing some of the care or are responsible for carrying out your wishes. However, while more than 70% of retirees say that being a burden on their family is one of their top fears, according to a study by Edward Jones and Age Wave, only one in four Americans older than 65 have discussed their care preferences with anyone.
Consequently, you and your loved ones will need to have a discussion – probably multiple discussions – about long-term care and caregiving. These conversations, while necessary, can be challenging, as they deal with sensitive matters. Here are some suggestions for maximizing the benefits of these discussions:
- Don’t delay. By talking about caregiving while you’re still in the early stages of retirement, you’ll have more time to identify the various issues involved and seek solutions for them. Now, while you’re healthy, is the time to make these important decisions for yourself.
- Set expectations. Let your family members know that the first conversation may not be the last. With several issues to discuss, you don’t want to rush things or try to get too much done at once. It may help to set an agenda prior to meeting to make sure everyone is prepared and on the same page.
- Share key information. You’ll want to be sure that your family members know where they can find your key legal documents (such as your will, durable powers of attorney for finances and health care, etc.). And if you haven’t yet drawn up these core documents, now is the time to do so, working with your attorney. Also, make sure your loved ones know how to contact your medical providers and other professionals, such as your financial and tax advisors.
- Clarify roles. By the end of your conversations, your family members should have clear ideas of what their roles might be in providing caregiving for you (if appropriate). Ideally, you will be able to rely on the ones who are physically, emotionally and financially able to help. Be aware, too, that caregiving is not easy for even the best-prepared caregivers. You might want to suggest that prospective caregivers look for resources to help, such as the Caregiver Action Network.
A balancing act
Ultimately, your goal with these conversations is to make sure you’ll be able to articulate decisions affecting your life and feel confident that your wishes will be fulfilled. At the same time, you’ll want to know that you’ve done the best job you can of balancing your potential needs for long-term care with your legacy goals, such as leaving assets to your family and those charitable causes you wish to support. To help with this balancing act, you’ll want to talk with your financial advisor.
By taking a holistic approach to long-term care, and involving your family from the beginning, you can make the journey a hopeful and positive one.