Planning for Your Parents' Long-Term Care

There comes a time in everyone's life when they need to plan for their parents' future. It's best to start early. People are living longer than ever: and they're living youthful, vital lives. If your parents haven't prepared for a potentially long retirement — as well as long-term care — you may need to have some discussions with them.

What Will You’re Parents' Golden Years Look Like?

Different people have different strategies for their retirement. Will your parents be interested in living in a nursing home? Or would they prefer to live in their own home? Do they want to live in a retirement community? Or would it be better to move to a multi-generational home?

It can be difficult to discuss these topics with your parents, as you need to address the fact that their life situation is likely to change in the future. Yet planning is necessary to achieve your goals. Your parents' retirement strategy is going to impact their long-term care.

Some people prefer to have their long-term care done in a family home; others would rather be in a long-term care facility. Either way, there will be significant costs associated with it.

Have They Invested in Long-Term Care Insurance?

70% of retirees are going to need long-term care, with the vast majority of them needing long-term care for longer than five years. Long-term care insurance can help.

While it's commonly advised to buy long-term care insurance by the time you're 60, there are some reasons why it may be best to buy it at 50. Long-term care insurance policies are permanent policies that last as long as you continue to pay them. If you start paying for long-term care at 50, you can lock in substantially lower rates.

Long-term care insurance will cover your parents' costs associated with the care that they need to function independently in their old age. These are costs that are often not covered by health insurance, such as:

• Home care.
• Assisted living.
• Home modifications.
• Hospice care.

Everyone should have long-term care insurance by the time they are 60. Even if they have saved enough for their retirement, medical costs can be substantial. And it goes without saying they need good health insurance too.

Do Your Parents Have Enough for their Retirement?

It may be time to talk to your parents about saving for their retirement. It's never too late to start. If your parents are relying solely upon social security, they may find that they need to continue working into their older years. If they want to truly retire, they need to start saving.

Those who save late for retirement do need to play "catch up," but it's not impossible. Sometimes they may need to retire a little later. Other times they may need to start socking away more money faster, or reducing their cost of living now. A financial adviser can help.

How Much Should You Expect in Terms of Medical Costs?

Most people simply save up for their actual retirement: the amount of money that it currently costs them to live, from year to year. But medical costs are significant, which is why it's so important to plan ahead.

Long-term care averages $6,844 a month to $7,698 a month, depending on the state that you live in, and whether your parents want private or semi-private rooms. This cost includes rent, food, assistance, and medical care, but it's substantial — and it's the price for only one of your parents.

If your parents are currently budgeting for a retirement at $100,000 a year, they may really need to be budgeting for long-term care at $164,256 a year. Of course, these costs can be defrayed through long-term care insurance.

Will You Need to Help Your Parents With Their Retirement?

If your parents haven't saved enough money, it's possible that you will need to help them with their retirement. It's not unusual for parents today to help their children with things such as rent, and in return, children may need to help their parents with their retirement later on. If this is your situation, there are a few things you should do.

• Meet with a financial planner to discuss your responsibilities and your goals. A financial planner will be able to give you more insight into whether your plans are realistic and how much you will be able to provide to them without hurting your own quality of life.
• Start setting aside extra money now. If your parents don't need the extra money, then you'll have extra money for your own retirement. If your parents do need the money, then it will be available. Whenever you can save more money (comfortably), you should be.
• Make sure to prioritize your own retirement. Realistically, your parents can get into some amount of debt during their retirement and their long-term care. Their debt is not going to follow you; debt is not inherited, even if it may cut into an estate. You need to prioritize your retirement first, and their retirement second.

There's a retirement crisis going on, with 79% of Americans planning to work well after retirement.

What Should You Do Now?

Depending on your relationship with your parents, it may not be easy to discuss finances. But their long-term care impacts you, as well, as you're the one who will likely need to pay for their long-term care if they cannot.

Here's what you should do now:

• If your parents don't have long-term care insurance yet, you should consider getting them a meeting with an insurance agent. Long-term care insurance can substantially reduce late in life costs.
• If your parents haven't been saving up for retirement, they need to start now. Teach them the basics of automating their finances, from creating a budget to automatically drafting money into their retirement accounts.
• If you haven't talked to your parents about what they want for their future, it's time. As their child, you're likely going to be integrated in some way, whether they will be living with you or elsewhere.
• If your parents aren't going to be able to reasonably take care of themselves, it may be time to consider your own budget. Think about what might happen if you need to pitch in.

Once you have a plan in place, anything is achievable. With some work, you and your parents can create a long-term strategy that will work for both of you. For all the rest of your financial planning needs, check out Automate100.

William From the field of Finance budget automation, I am working at automate100 and writing a lot of informative stuff since long. Website: https://automate100.com/