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Financial Topics

"We are assuming that our parents have their future care planned out.

Don't assume!" 

My Support Network

One of the most complex responsibilities a Caregiver undertakes is managing a loved one's finances.    Everyone knows how to spend money, so this is not way it's complicated.   It is complicated because of the different layers involved:   from funding long-term care, to having granted authorities for accessing funds, to controlling expenses.  

     

But wait, there's more...

There are other financial aspects; such as having a direct impact on the Caregiver's own financial well-being, protecting your loved one from identity theft, and becoming more knowledgeable in order to make practical and informed decisions.   

 

Financial planning sometimes becomes intermingled with some of the legal aspects of long-term care giving and planning so it will be important to work with an Estate Planning attorney or Elder Law Attorney as well.  

Having a solid financial plan is part of this Journey.   Unlike wine, one's financial situation does not always improve with time.   As we get older, the opportunity to prepare becomes limited due to the lack of time.    It is important to understand what financial planning means and what steps to take today to prepare for tomorrow.     

Let's get a better understanding of this.

Defining Moments

Yahoo Money

Over half of female Caregivers agree with the following statements according to Julie Hyman Anchor; Yahoo Money :

"I'm afraid that caregiving expenses will keep me from ever retiring (83%)"

Working The Challenge

For Caregivers, most of the time we are unaware of our parent's long-term care plans.   We are just assuming that there is one.     But here is the problem.    We are confusing planning for Retirement with Long-Term Care Planning and, yes - there is a difference!  Everyone knows about planning for their retirement.   It is when we save up our pennies for when we get old.  But Long-Term Care Planning is about how all of that  money is going to be spent and how to make it last.    

One of the most stressful responsibilities as the Caregiver or Care Manager, will be managing those retirement funds your loved one has work for all their life.   Remember, they made sacrifices in order to have this money available to them for their Golden Years.    Therefore, you have an obligation of asking yourself before spending their life's savings- "am I making the best and most practical use of this money by doing this (home remodeling, renovation, major purchase." 

At first, spending someone else's money sounds like it will be easy to do - "they have the money, I'll just do it or buy it."  However, making financial decisions for someone who has entrusted you with their life savings is even more stressful than making decisions about spending our money.    

As the Caregiver, you will find success in this role by becoming more informed about the decision making process and having access to resources to help you make them with confidence.  For example, before spending $25K for a bathroom renovation  it is important to be aware of other practical solutions.    Having these options readily available will be the key to being comfortable with making important decisions.   

 

In addition, you must learn how to move past any of your own emotional residue - "They've always been cheap.  They have the money, I'll just do it or buy it".     This is why by having access to professional resources to work through some of these complex financial topics will be so valuable and yield a more positive relationship between you and the one you are caring for.

If you have questions about any of these situations, then you may need a Financial Planner.

Sticker Shock!

What shocks new Caregivers is the amount of out of pocket expenses.   Whose pocket?  Yours!   Yes, your out of pocket expense!   It is going to happen so it will be important to have a plan on how to handle them.   

Document your expenses if you are going to pay for care expenses from your own pocket.   There is a right way to go about this and a wrong way.  

 

The right way is having an attorney create an agreement which allows you to document your expenses and then become reimbursed from your loved one's estate when they pass away.     When the decision has already been made that you will be your loved ones Caregiver, discuss your concerns with your loved one and as a family.   

 

The wrong way?   It is not a going to be a good plan to take matters into your own hands with your loved one by maneuvering their assets on the down-low in order to cover your out of pocket expenses.  Doing it this way may back fire later when your loved one tries to apply for Medicare/Medicaid Benefits.

"Care Managers/ Givers spend on average $7400+ out of their own pocket when caring for another individual."

Knowledge is Power

The number one concern Caregivers have; especially NEW Caregivers is making the right decisions on behalf of the person they are caring for.    In the unwritten Caregiver job description, there is an obligation to manage and spend a loved one's money responsibly.   So what is the best way of going about this - through education and support

There are typically two big questions Caregivers ask:    

How does my loved one pay for their care?

Where do I find the money to pay for the stuff they need?

 

Working with financial planner and/or estate planner is always the best answer.   They will help uncover and provide information about the many ways available to cover the costs of Care; ie. Long Term Care Insurance Policies, investments, trusts and any future or current benefits to which they may be entitled.  Take advantage of their FREE Consultations and Workshops whenever possible.    

By relying on Financial Professionals will help with the "big picture" so it will be important to work with one who is not only experienced in making investments but is invested in helping seniors and their families navigate through changing times.   No, not all financial planners are alike, they each have their areas of specialty.   

 

What is most important about engaging with any professional resource is that sense of a personal connection.   It is knowing that they are committed to serving the Eldercare industry and a realness which is demonstrated through community involvement.     

Meet  Mike Profit, Financial Planner

"Knowledge is the key to a successful financial future." 

Mike Profit, MBA.  Financial Professional, MassMutual Greater Philadelphia 

Knowledge is the key to a successful financial future.   Mike's background, experience and commitment to providing you with the resources you need to make financial decisions, can help make your financial future as successful as you need it to be.

 

"I pride myself in getting to know each client so that I can understand their individual needs and what matters most to them.   This helps me recommend products and strategies designed to meet their current needs, and more importantly, their future needs."

Affiliations & Memberships

Business Networking International Member - Past President & Membership Committee Member
New Castle County Chamber of Commerce member
Delaware Small Business Chamber member

Community Involvement

SCORE Delaware Chapter - Currently the Executive Vice-President
Delaware Senior Resource Network - Former Chairperson, current member

Mike Profit, Financial Planner
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MassMutual Greater Philadelphia

Looking for buried Treasure

 

The issue that continues to present itself to Caregivers while on this journey is simply knowing what is it that we are looking for.   The Eldercare industry does not make it easy so trying to do any research about any of this is impossible when you do not know what you do not know.   Therefore by having a few clues about what is involved in the Financial aspects of Caregiving through basic knowledge will help make decisions with more confidence.  

  • Make practical decisions - Sometimes rushing through the decision making process yields poor investments.     Don't be hasty- be practical.    For example, a decision families are quick to make is doing home renovations, but is it truly a good investment?  Before rushing into this, consider some more practical alternatives:   

Today, there are many great solutions geared towards Aging In Place; such as a Portable Shower Unit in lieu of a complete bathroom renovation.     My sister and I went through this process with our own Dad.   We were prepared to invest $25K of Dad's money to remodel my sister's home with a first floor shower because Dad could no longer go upstairs to shower.    Fortunately, a day before the construction was to start, we found a portable shower solution.    It cost a fraction of the renovation and turned out to be a temporary solution when Dad passed away a few months after we bought it.     

The point is, make practical use use of their money to create a safe, livable environment using products specifically designed for today's Aging In Place.    

  • Reverse Mortgages - A reverse mortgage may be a good funding option; especially if your loved one has made it their plan to remain in their home for as long as possible.   

Even this strategy comes with a few flaws when the equity of the home is not used wisely.     It is important that the focus is on creating a safe Aging In Place living environment and not an opportunity for a buying spree.

  • Long-Term Care Insurance - Long-Term Care Insurance helps to pay the costs related to care.   Most commonly, it helps to pay for Home Care Services.   

If your loved one has this type of policy in place, it will be important to familiarize yourself with it.   Every policy is different.    Before engaging with a Home Care Agency, you will need to find out if they are willing to work with Long-Term Care Insurance Polies.   Not every Home Care Agency does; however, it may be possible for you to submit for reimbursement of out of pocket expenses the insurance company.   

Point being, it is important as a Caregiver to know when there is a LTC Insurance policy in place, where to find a copy of it and most importantly understand how it works.   

  • Transportation Discounts for Seniors - Some areas offer FREE public transportation to seniors.   For example, in Pennsylvania, Seniors may ride public transportation for FREE.   Septa offers FREE annual passes to seniors.    Your State Representative will have information about this.   In Central Bucks County of Pennsylvania, Doylestown offers FREE bus transportation in and around a 20 miles radius for senior riders to various places such shopping centers and the  Doylestown Hospital Health Pavilion.

  • Area on Aging - This organization is extremely helpful.    Your loved one may qualify for certain benefits based on their income.   Benefits include discounted rates on:  Daily Home Meal delivery, door-to-door transportation services, care aides and other support services.    To Learn More about benefits like this in your area, visit the link about Public Assistance. 

  • Low interest loans - Making purchases on a fixed income is hard, however, the purchase may be necessary.    Some merchants may provide an opportunity for a low interest loans.    Qualification requirements may apply on these types of purchases.    

  • Becoming better educated about Medicare/Medicaid Benefits- For example, before purchasing any big ticket items, such as: a stair climber, wheel chairs, power chairs, bedding - check with Medicare/Medicaid to see if that it would be a covered benefit.     Visit Benefits.gov - the official benefits website with information on 1,000+ assistant programs.    NCSL offers prescription drug help for seniors.   Benefits CheckUp helps in finding out if your loved one is eligible for extra help to pay for Medicare prescription drug costs.

By understanding Medicare a little more, you will be more informed about entitlement; especially the ones which renew annually or periodically - such as on mobility devices.  Mobility devices are things like  wheelchairs, stair climbers, power chair and even canes.   So before spending any out of pocket, Medicare may cover the cost of these purchases every five years. 

 

Here is why this is important, when your loved one is being discharged from Rehab, pay for the cane out of pocket and use any available benefits to cover those big ticket items; such as: beds, stair climbers etc. 

Being better educated and informed about the financial aspect of caregiving will result in making these decisions with confidence.    Connect with a Financial Professional on the Forum.

Tip Jar

Even before the Caregiver takes on the management of their loved one's finances, it is necessary to become involved to set up some watchdog measures.   This may also be a great way of starting the transition process or a way to start the conversation with your parent's about their finances.   

 

This article is not only informative, it also gives the Caregiver a more subtle way of getting more involved with their loved one's finances.    Our parents are very protective about this because they fear that someone is going to take their life's savings from them.    There are many horror stories about this but this article presents ways of protecting a loved one's finances.   

 

The title is somewhat intimidating but it is the content about streamline one's finances which is most valuable - How to Death Clean Your Finances.    Consider these as suggestions for your parent to take to protect themselves.    For the future Caregiver, use this as a catalyst in getting the planning process going. 

Use these action items as talking points to help break the ice.    "Hey, Dad, I read this great article.  How about we look at streamlining some of your finances?"       

  1. Consolidate financial accounts - Fewer accounts are easier to monitor for suspicious transactions and overlapping investments, plus you may save money on account fees. 

  2. Automate payments - Memory lapses can lead to missed payments, late fees and credit score damage. Set up regular recurring payments in your bank’s bill payment system or charged to a credit card.   Set up overdraft protection to cover any overdraft transactions.  

  3. Prune credit cards - Certified financial planner Carolyn McClanahan in Jacksonville, Florida, recommends her older clients keep just two credit cards: one for everyday purchases and another for automatic bill payments. There are some negatives to closing accounts and impacts to credit scores.  If there are no needs for any loans in the future, you may want to close them gradually over several months or even years to minimize the credit score impact.   
  4. Set up a watchdog - Identify whom you want making decisions for you if you’re incapacitated. Use a legal professional to create durable powers of attorney.   Also create “in case of emergency” files that your trusted person or heirs will need. These might include:
    • Your will or living trust​
    • Medical directives, powers of attorney, living wills
    • Birth, death and marriage certificates
    • Military records
    • Social Security Cards
    • Car Titles, property deeds and other ownership documents
    • Insurance policies
    • A list of your financial accounts
    • Contact information for your attorney, tax pro, financial adviser and insurance agent
    • Photocopies of passports, driver’s licenses and credit cards
  5. Storing information - A safe deposit box are an option but may be troublesome if your trusted person needs access outside bank hours.  Another option is a  fireproof safe or at minimum a locked file cabinet in your home.   Scanning paperwork and keeping an encrypted copy in the cloud could help you or someone else recreate your financial life if the originals are lost or destroyed.

 

Article was from the Associate Press called How to Death Clean Your Finances.  

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Aging Parents Management, LLC

Doylestown, Pennsylvania, 18901 USA

Tel. 215-997-6580

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