5 Steps to Help Ensure You’re Not a Burden on Your Family as You Age
As we get older and contemplate the possibility of declining health, many of us worry about becoming a burden on our family members. Among the questions I hear are: Will I have enough money to last? Can I afford the healthcare I’ll need? How can I make it easy for my family to settle my affairs when I’m gone?
But what does it mean not to be a burden? What actions should you take now? Here are five steps to help reduce the likelihood that you will be a burden on your family as you age:
Step 1: Have a long-term care plan. Understand whether you have the resources to remain financially independent and pay for long-term care if you need it. If you’re not sure you’re going to be OK financially in the future, try seeking professional advice. If your adult children will need to provide financial support for you in the future, they need to know as soon as possible so they can take that need into account in their own financial planning.
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Many people want to stay at home as they age. Do you need to change your living situation to do so? Those changes could involve downsizing or modifying your home to install grab bars in the bathroom, or a change in location to move closer to family.
If you want to stay home, think about how you will get food if you’re no longer cooking and how you will get help with bathing or dressing. According to Genworth Insurance, the median hourly rate for in-home care can be as much as $30 or more. Paying for a few hours of help each week may be reasonable for you. However, you could pay upwards of $260,000 per year if you need round-the-clock care. If you have long-term care insurance that can cover some of these expenses, let your adult children know where to find your policy, what the benefits include, when they would begin and how long they would last. If you choose to not buy long-term care insurance and plan to pay for any care out of pocket, let your adult children know that, too.
There’s no right or wrong answer when deciding whether to stay in your home or move to a senior community. Both options have pros and cons. The point is to have conversations with your adult children about what you want and permit them to make a different decision if circumstances change. Plan for change; it’s a part of life and will continue to happen. Finally, remember that your adult children can help you and guide you but they cannot make you happy. You must find contentment in your circumstances.
Step 2: Simplify and organize your financial information. Make it easy for your adult children to find your financial information if you have a medical crisis or upon your death. Medical emergencies and death are stressful; you do not want to add to that stress by asking your adult children to become detectives to find your important papers.
If you are working with a CERTIFIED FINANCIAL PLANNER™ professional, consider inviting your adult child to sit in on a meeting. Attending one or more meetings with you and your financial planner would help your adult child get up to speed on your financial situation and smooth the transition when your adult child becomes a decision-maker. Your CFP® professional likely helps prepare your net worth statement, which summarizes what you own and owe. Some parents choose to share this information with their adult children. Others tell the children where they can find the report when they need it.
As you review your financial situation, look for ways to simplify. For example, do you still need multiple bank accounts? Perhaps that decision was appropriate earlier in life. But is it still the right decision? If you own individual stocks or mutual funds, can you deposit them in an existing investment account? Be sure to consider getting professional advice to avoid any unintended tax consequences. Finally, shred financial and legal documents that are out-of-date and no longer needed. You want your children to know the accounts you have now, and not the accounts you had seven years ago!
Share information that would allow your adult children to pay your bills if you suffer a medical emergency. You might ask your adult child to sit with you one month while you pay bills. Be sure to share where you keep a record of usernames and passwords for online accounts. If your power of attorney names your adult child as your attorney-in-fact, consider putting the power of attorney on file with your bank.
Step 3: Provide contact information for the professionals you use. This list should include your accountant, financial planner, estate attorney, banker, and insurance agent. If your adult daughter needs to ensure your taxes get filed, she needs to know who your CPA is and how to reach them. If you have always handled your investments and filed your tax returns, consider hiring a professional to help in anticipation of the time when you may not want to do this work or may not be able to do so due to health problems or cognitive impairment.
In addition to gathering contact information for financial professionals, collect contact information for your doctors and pharmacy. This contact information, along with a list of medications you take and a summary of medical conditions, will be helpful if you have a medical emergency. If you have the financial wherewithal, consider finding a concierge MD who could have more time to complete a thorough medical assessment and be a more attentive healthcare partner.
Step 4: Make sure your estate planning documents reflect the law and your family situation. Your will, power of attorney, and health care directive should be current, and your children should know where to find them. For example, does your power of attorney, which allows someone to make legal and financial decisions for you, name your husband who may be suffering from dementia or other health problems? If so, it is time to update this document. If you and your spouse name each other as executor and attorney, consider whether you have the physical and cognitive health to do this work. Do each of you want to take on this responsibility? Might it be time for another family member or close friend to serve in this capacity instead?
Look over your health care power of attorney with your children. Tell them what makes life meaningful to you. Are you interested in the quality of life or quantity of life? Discussions about end-of-life care can be difficult. Being Mortal by Dr. Atul Gawande is a book about growing older and medical care that matters at the end of life. Five Wishes is a supplement to your health care power of attorney that helps spell out the type of care you want at the end of life.
While you look over your estate documents, review the beneficiaries on your life insurance, IRAs, and 401(k)s. These assets pass outside your will, so it’s important to ensure those beneficiary designations are correct.
Talk to your adult children about personal property. Who gets what? Some of the fights that happen after someone dies are about sentimental items like Mom’s recipe books, Dad’s Bible, and family pictures. Write down who is in family pictures. You may know who is in the photos but do your children and grandchildren know?
Make funeral plans. It is difficult for your family to honor your wishes if they do not know what they are. It is also easy for a family member to be taken advantage of by a funeral home when decision-making may be clouded by grief. Here are questions for you to consider:
Where do you want the memorial service to take place?
Who do you want to conduct the service?
What scriptures do you want to be read?
What songs would you like played?
Do you want to be buried or cremated?
If it is too difficult to have this conversation with your adult children, you could write down your wishes and let your family know where to find that document when the time comes.
Step 5: Take the next step. You do not have to complete steps one through four immediately, but do take action. Otherwise, in six months, you will still be worried about being a burden on your children. These conversations will take time. Start where you and your adult children are most comfortable. And, along the way, enjoy the conversations and the time with them. If health and circumstances allow, you could plan some extended time together to create new memories and allow more time to talk. You will not regret it. They will not regret it.
Talking to your adult children about your financial situation can be difficult. You may decide these conversations are so challenging, you are better off not having them. But, it is “pay now or pay later” when it comes to talking to your adult children. If you avoid these awkward conversations now, your children may pay a higher price later when they cannot find your important financial documents. Help them learn the resources you have to pay for long-term care and understand the kind of care you want at the end of life.
A recent study from Transamerica showed that roughly half of retirees never discuss their financial situation with others. This same study showed that about 20% of retirees have not thought about their plans for receiving long-term care or do not have any plans for such care. Please take steps to make sure you do not fall into these groups!
This is intended for educational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your financial professional regarding your unique situation.
Patti B. Black
Financial Advisor
CFP®, CSA®