Have questions about how investments work, how they fit into your overall financial plan, and strategies to help you get the most out of your money? Contact us at beth.pinsker@marketwatch.com.
About 7 years ago, my mother was diagnosed with aphasia, which progressed fairly quickly to frontotemporal dementia. At the time of her initial diagnosis, she was approximately 70 years old. We were advised by her doctor to move her to her assisted living facility, which we did. I received power of attorney years ago, but I didn’t know she had long term care insurance in her 2007. This was a huge relief to us as it covered her stay at the facility. We were also able to sell her house and invest the money.
Last year, she was moved from assisted living to memory care as her condition worsened. We are currently facing a situation where her insurance will run out in about a year and a half. Thankfully, she received an investment of about $550,000 from the sale of her home, and at current rates, she will be able to live in the property for another 10 years. Although this situation is very sad and stressful for us, we feel very lucky with her financial situation.
My question is, if my mother outlives her insurance and investment funds, what are our options? Neither I nor my brother have the ability to properly care for someone with her condition. I looked into cheaper facilities, but to be honest, they are pretty bad. And the idea of her having to go into a subpar state-run facility is not something we want to happen, even if it’s possible.
Thank you for your advice,
worried son
Dear concerned son,
One thing that is very clear from your letter is that you and your siblings love your mom and want to take care of her in the best way possible. Your question isn’t really about money, it’s about guilt. Most people in your situation aren’t sure if they’re doing the right thing at all. It’s a lot of responsibility. Additionally, we typically pay much more attention to how we care for others than we do about our own future plans.
And yes, you are lucky. Recent research shows that approximately 80% of people over the age of 60 do not have the financial means to cover long-term care services or further financial shocks. National Council on Aging.
Say, “Very few people make plans like this. I want this person to be my caregiver.” Joy LaVerdea senior care expert and author of The Complete Seniorcare Planner.
But that doesn’t cancel out your anxiety. It’s hard to watch the insurance clock ticking and your bank account balance dwindle. But that’s what these resources are for, and you’re doing the right thing. Let’s be honest, without even getting into the sad actuarial stuff, 10 years is forever money.
Can mom be there?
The first practical question you raise is about your mother’s housing situation. If your mom is currently happy in a memory care facility and you like it too, consider the option of staying there. At the moment, your long-term care insurance covers the cost, and then you can pay out-of-pocket as long as you have the money.
As you near the end of these assets, your mother can go through the process of qualifying for Medicaid to cover medical costs, but as you say, not all places are equal. One thing to do now is to contact a Medicaid professional like yourself. state welfare department, AARP Or contact the National Council on Aging to find out what your mother needs to do to qualify and have the paperwork ready when you need it. Another proactive move she can take is to find out if the facility she’s currently in has a Medicaid designated bed and will work with her to transition her mother to a Medicaid payment schedule when the time is right. It’s about checking. “Some places are cooperating with us, and some places are not,” Lavarde said.
You may find a surprising source of information from your mother’s insurance company. “Long-term care insurance agents know about other options that may be available to you beyond insurance,” says Lovarde.
How long will the money last?
You’ll want to make sure you have money to not only help the facility, but to continue making payments. Now comes the hard part of how to make the most of your mother’s savings. To do this, you will need to consult a financial planner and a real estate attorney. There may be ways to structure the money so it lasts longer and is excluded from Medicaid formulation. You need a trustee who has your best interests at heart. Otherwise, there is a risk that someone will try to sell you complex pensions in bulk.
You can also play with the numbers yourself. One of my favorite online calculators is savings distribution calculator This takes into account the amount you need to withdraw and tells you how long that amount will last in the long run. Money increases as you spend it, so it’s not a simple division.
For example, if a mother needs $550,000 to live for 10 years, that would be about $6,000 per month. That’s assuming its growth rate is around 5%, and means keeping most of it in money markets or Treasury products for now to be safe. If your mom receives Social Security benefits, that may be enough to cover the facility for a while.
You will need to adjust the numbers to suit your situation. You may need less now, considering insurance payments, but you may need more later. It’s also possible that she may have a medical emergency or require private supplementary care not provided at the facility. If she needs more, for example, if she needs $12,000 a month, she will only have that money for about 4 years.
This calculation may help you deal with worries about using up your assets. “The only thing I’ve advised people about guilt that comes in all its forms is to tell them to talk to a financial professional. They have such a bottom-line approach and everything I’ve seen it and done it all. It helps me understand what’s really going on here,” says Loverde.
Good luck mom too! Most of all, enjoy your time together and trust that the finances will be taken care of.
