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YOUR MONEY-Start planning now to care for elderly parents
October 10, 2017 / 6:20 PM / in 11 days

YOUR MONEY-Start planning now to care for elderly parents

    By Chris Taylor
    NEW YORK, Oct 10 (Reuters) - If you have an aging parent and
want a glimpse of what the future holds, look no further than
Leslie Glutzer.
    The 66-year-old from Chicago has a mom who is 92, dealing
with dementia, now living in a local nursing home. Those costs
are not covered by Medicaid, so Glutzer and her husband are
spending more than $5,000 a month from their savings. 
    "It really starts to add up," Glutzer says.
    This financial struggle is one that is shared by many. 
    For nursing homes, in particular, the costs can be
astronomical. A new study from insurance giant Genworth
Financial         found that a private room in a nursing home
averages out to $267 per day or $8,121 a month, up 5.5 percent
from the year before. Semi-private rooms are not far behind, at
$7,148 a month on average.
    Overall, long-term care costs rose by 4.5 percent from 2016
to 2017, according to Genworth's "Cost of Care" survey. That is
the second-highest annual increase since the yearly survey began
back in 2004.
    Experts agree that it is important to start thinking about
caregiving costs now. Waiting too long means you cannot
stockpile resources, take out affordable insurance policies or
plan ahead for a thoughtful drawdown of assets.
    "At that point, your choices become very limited," says
David O'Leary, president and CEO of Genworth's U.S. Life
Insurance division.
    So exactly how can you provide compassionate care for your
parents without bankrupting yourself and sabotaging your own
retirement? The following are five tips:
    
    TAKE FINANCIAL INVENTORY 
    Have a family meeting and take stock of the financial
resources available. Folks in their 70s or 80s may have a
pension, as well as Social Security and personal investments,
which could help soften the financial blow for adult children.
    Figure out if all siblings are going to share eldercare
costs equally, or if some who may not have the means can
contribute in other ways, like arranging hospital appointments.
    Be sure to find out what your parents envision for their
future.
    "As the child, we want to make the decision we think is
right," O'Leary says. "But we really have to look at everything
through the eyes of our parents."
    
    HOME EQUITY 
    If your parents own a home, consider tapping it to pay for
caregiving expenses.
    "Think of it as an investment that can be used to pay for
care," says Joy Loverde, an eldercare expert and author of the
new book "Who Will Take Care of Me When I'm Old?"
    That might mean selling it, downsizing elderly parents into
a smaller space, and using those funds for long-term care. It
might also mean that adult children buy the place, lease it back
to the parents and potentially tap the home equity. 
    Or it might mean a reverse mortgage, which allows homeowners
to borrow money against the value of their homes, receiving
proceeds as a line of credit, fixed monthly payment or lump sum.
    
    MEDICAID QUALIFICATION
    Medicaid can cover long-term care costs like nursing-home
admission, but only for those under a certain level of personal
wealth. That might require shifting assets in a thoughtful (and
legal) way.
    "One of the most effective planning strategies has been to
encourage our clients and their elderly parents to consider
gifting their assets into irrevocable trusts, including their
primary residence," says Ian Weinberg, a financial planner in
Woodbury, New York.
    
    GET COVERED
    Long-term care policies can definitely help with eldercare
costs, but only 8 percent of the population is currently covered
by them, according to Genworth. The trick is to secure them
while you are healthy and early enough - say, in your 50s - so
that they are still relatively affordable.
    "I have at least one client dealing with these costs for his
parents, and thank God we had the good sense to buy LTC
insurance," says Kashif Ahmed, a financial planner in Woburn,
Massachusetts. "Otherwise, their assets would be depleted in no
time."
    
    CONSIDER LESS EXPENSIVE OPTIONS 
    Nursing homes are not the only option. These days it is more
like a "continuum" of care. For instance, parents might move in
with their adult children. Or they might prefer to stay right
where they are, perhaps with a home health aide coming in
occasionally.
    The next level up might be an assisted-living facility,
which should offer an array of services for independent living,
and even different levels of care within the same facility.
Those will not cost as much as nursing homes, at $123 per day or
$3,750 a month on average, according to Genworth.

 (Editing by Lauren Young and G Crosse)
  
 
 

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