OCEAN CITY — There are few things more wrenching than realizing that an aging parent or loved one can no longer manage alone. In the flurry of decisions that follow — about living arrangements, responsibility for care and where the money will come from — family members may disagree about what’s best. Unfortunately, numerous adult sons and daughters are now in the unenviable position of having to make such choices.
What’s more, many of these same adults will one day have to confront the same issues from the other side —when they become the ones who will need the care. According to the Department of Health and Human Services, around two-thirds of today’s 65-year-olds will need some form of long-term care in the future, and with Americans living longer, that need will likely increase. That makes planning ahead crucial.
As families begin to confront the financial and emotional challenges of eldercare, they often find themselves plunged into an array of unfamiliar questions, says Bill Hunter, director, Personal Retirement Solutions at Bank of America Merrill Lynch. Although these discussions are never easy, it’s imperative to talk to aging parents about their wishes — no matter how difficult that might be. It’s also best to include the whole family in the conversation long before decisions have to be made. Doing so can reduce tensions and ease the transition for everyone involved.
Looming over all eldercare decisions is the question of finding the money for the care that is needed. For those who have time to plan, buying a long-term-care policy well in advance, for either your parents or yourself, can help. That’s because the sooner you buy long-term care insurance, the lower the premiums — and the less likely a health condition will disqualify you or a loved one from coverage.
Traditional long-term care insurance may not be the answer for everyone. Health-related requirements for coverage are becoming more stringent, and some big insurers have stopped offering traditional long-term care policies altogether. Moreover, many people are understandably reluctant to spend years paying for coverage they may never use.
But a number of alternatives to paying for long-term care expenses are available that may be better suited for many people because of their flexibility. Among them are “hybrid” life insurance policies that contain additional features to help cover long-term care and other financial needs. These are permanent life insurance policies with long-term care benefit riders, which come at an additional cost. These are generally purchased with a single lump sum payment and—unlike traditional long-term care policies—come with a return of premium rider so that assets can be tapped for other needs.
Unfortunately for many, by the time they begin to think about eldercare, it may be too late to obtain long-term care insurance — either for themselves or for their parents. However, you may be able to find other ways of handling these financial challenges by meeting with your financial advisor and conducting a thorough analysis of your current investment strategy, with the aim of generating guaranteed income that you can dedicate to these expenses.
However you decide to manage the situation, the most important thing is to set your course as far ahead of time as you can, making your plans as flexible as possible to account for a range of scenarios. When it comes to the challenges of care, whether you’re giving it or receiving it, having a strategy in place early can be the greatest gift you give yourself—and others.
(The writer is a senior financial advisor and can be reached at 410-213-8520.)