Financial Focus: Are your loved ones prepared to be caregivers?
Once you’re retired and your children are grown, they are likely “off the books” as far as your financial responsibility for them is concerned. Yet, you’re probably still prepared to do anything to help them — but are they ready to take care of you if the need arises?
Consider this: Almost half of retirees say that the ideal role in retirement is providing support to family and other loved ones, according to the Edward Jones/Age Wave study titled “Four Pillars of the New Retirement: What a Difference a Year Makes.” A slightly earlier version of the same study found that 72% of retirees say one of their biggest fears is becoming a burden on their family members.
So, if you are recently retired or plan to retire in the next few years, you may need to reconcile your desire to help your adult children or other close relatives with your concern that you could become dependent on them. You’ll need to consider whether your loved ones can handle caregiving responsibilities, which frequently include financial assistance.
If they did have to provide some care giving services for you, could they afford it? About 80% of caregivers now pay for some care giving costs out of their own pockets — and 1 in 5 caregivers experiences significant financial strain because of caregiving, according to a recent AARP report.
One way to help your family members is to protect yourself from the enormous expense of long-term care. The average cost for a private room in a nursing home is now over $100,000 a year, according to the insurance company Genworth. Medicare won’t pay much, if any, of these costs, so you may want to consult with a financial adviser, who can suggest possible ways of addressing long-term care expenses.
Participate in The Longevity Project
The Longevity Project is an annual campaign to help educate readers about what it takes to live a long, fulfilling life in our valley. This year Kevin shares his story of hope and celebration of life with his presentation Cracked, Not Broken as we explore the critical and relevant topic of mental health.
Even if you don’t require a long stay in a nursing home, you still might need some assistance in the future, especially if your health or mental capacities decline. So, start talking to your loved ones about their possible roles if you should ever need caregiving. You may want to create a caregiving arrangement that specifies payment for caregiving services and outlines the expenses to be reimbursed if paid out of pocket by a caregiver.
Also, you may want to create the appropriate legal documents, such as a durable power of attorney for health care, which enables someone to make medical decisions on your behalf should you become incapacitated, and a durable power of attorney for finances, which allows you to name someone to make your financial decisions if you become unable to do so yourself. A legal professional can help you make these arrangements and incorporate them into your overall estate plan. A financial adviser can suggest ways of preparing for the costs involved with care giving and can direct you to relevant resources, such as social services provided by your city or county.
Clearly, there’s much you can do to help shield your family from the financial strain of care giving. But you are not alone: By drawing on other resources and outside help, you can ease the burden on your loved ones. And everyone will feel more secure when you have your arrangements in place.
This article was written for use by Edward Jones financial advisers. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Kevin Brubeck, Charlie Wick and Jeremy Lepore are financial advisers with Edward Jones Investments and can be reached in Edwards at 970-926-1728, in Eagle at 970-328-0361, 970-328-0639 or 970-328-4959 and in Avon at 970-688-5420.