The Women and Wealth by Natalie Jamison
Aging parents
I knew that one of
my clients was experiencing a lapse of memory when I started getting regular phone calls asking if there was enough money
in her account. I called the son and daughter (who had power of attorney on her account) and soon found out that their mother
had been very forgetful lately. In fact, they feared that she was in the beginning stages of Alzheimers. It was time for
them to take over the administration of her financial affairs, and start thinking about home care.
Aging parents with
cognitive decline are an increasing reality, but how do families prepare for this?
Here are 4 basic steps:
Consult the family physician and ascertain how quickly the mental or physical health might deteriorate.
Make
sure a Will and Continuing Power of Attorney are in place.
Talk openly with the parent about their needs.
Review
and perhaps change the investment mix of the parent's portfolio to better suit the income requirements (to pay for home care,
or a nursing home).
The demographic realityCanada's population is aging. Ninety years ago, only 5% of Canadians were over age 65. In 2009, it was 14%
and according to Statistics Canada, by 2035 nearly 1/4 of Canadians (about 10 million people) will be seniors.
With advances in medicine and healthcare, people are living longer (especially
women). In fact, one of the fastest-growing demographic groups in Canada is people over the age of 100! Personally, I have
already had 3 clients reach that incredible milestone.
Although
living longer is what we all want, one downside is the increased risk of having physical limitations (bad hips or knees),
chronic diseases (diabetes or arthritis), or health problems that affect mental ability.
According to the Alzheimer Society of Canada, "unless a cause or cure is found by
2038, 1.1 million Canadians will suffer from dementia. The cognitive decline happens slowly and is not noticeable overnight,
but it cannot be ignored." Some of the warning signs include:
Forgetting
recently learned information such as appointment dates
Asking for the same details repeatedly and not remembering them
later
Challenges in planning or solving problems, such as keeping track of monthly bills
Poor judgment, especially
when dealing with money
Withdrawing from social activities or paying less attention to a favourite sports team
Changes
in mood with an increase in confusion, suspicion, depression, fear and anxiety
The burden of care
Millions
of adult children will be caring for their aging parents in the coming decade. According to a recent study by MetLife, this
burden of care comes with an average cost of $324,000 in lost wages and benefits.
The kind of help that an aging parent is likely to require:
Financial help
Basic care such as dressing, feeding and bathing
Transportation
to doctors appointments
Companionship
Housekeeping duties
Statistics show that it is most often women
(the daughters) who carry the burden of care. They often quit work or move to part-time jobs in order to provide this care.
The troubling part is that this comes at a time when they themselves are dealing with their own declining health, paying
for their children's university education, and trying to save for their own retirement.
For self employed individuals, caring for an elderly parent can also affect productivity,
as the caregiver will often arrive late to work, or leave early to tend to their parents.
The costs of care
Nursing homes (also known as Long-Term Care homes)
residential facilities that provide 24 hour skilled nursing care and supervision
average cost: $1000
to $2000 per month
Retirement homes
-
multi-residence housing that provides meals and cleaning services for older people
- usually provides a private room
or complete living suite as well as common living quarters, like a lounge area, a common dining room, recreation rooms, social
and/or religious programs and some basic health care services
- average cost: $3000 to $4000 per month, but can be as
high as $9000 per month
Home Care
allows seniors to live at home independently for
as long as possible
the chart below highlights some typical services and their costs:
Adult Day Care
a community drop in program
where seniors are cared for in a group setting (similar to child care)
provides family caregivers with a much-needed
break in order to focus on themselves, take time to relax, or go to work
average cost: $6.00 to $35.00 per day
Who will pay?
Many people believe that the government will take care of handling all the costs
and care services they will require when they can no longer care for themselves. The reality is, while the government may
provide some assistance, there are limitations. In order to maintain a dignified quality of life, many people pay out of their
own pocket. As you can see, the costs can be quite significant.
In addition to care and accommodation costs, there may
be "hidden" costs such as equipment (e.g. bath lift, walker with wheels, wheelchair) or personal care items such
as incontinence supplies, which can add up over time.
So how do you make sure that you are prepared for these costs and
don't run out of money? Well, there are 3 basic options:
1. Rely on the government to fund and
provide all your care needs.
However given the aging population and the strain this will put on our health care system,
the government is likely to be overwhelmed and unable to cover all the costs.
2. Rely on your
own resources.
With increased pressures caused by Baby Boomers aging, it's reasonable to expect that long term care costs
will escalate. Will the money run out before you do?
3. Long-Term Care Insurance.
This type
of insurance provides regular cash flow to pay for long term care, relieving the burden and financial uncertainty, and providing
options and flexibility for choice and location of care.
Why purchase Long-Term Care Insurance?
The main reasons people buy long term care insurance are:
82% do not want to be a burden on family
80% want the option of choosing where to receive care
76% want control over decisions about care
75% want to make
sure their dignity is maintained
72% wish to preserve assets for their partner
71% want to ensure a high quality
of care
61% wish to leave an inheritance for their children
To help you decide if Long-Term Care insurance
is appropriate, here are some questions you can ask your parents:
· What quality of care do they
want if they become incapacitated?
· Where do they want to receive care (in their own home, a
retirement home, or a facility)?
· How will the family cope, financially and emotionally, with
caregiving?
· Do they really want to use their savings and investments to pay for long term care?
· Are they prepared to sell the family house or cottage to pay for their care?
Final Thoughts
Talking about Long-Term Care is not an easy conversation to have with your family members.
Nobody wants to think of themselves as "no longer capable of being independent". If you need help discussing this
topic with your parents, your spouse, or your children, we have information guides and brochures that we can send you.
Also, if you are interested in getting no obligation quotes for Long-Term Care insurance, I will be happy to provide
the best quotes available from various Canadian Life Insurance companies.
Stay wealthy,
Natalie.
