The two most common reasons why people create a long-term care plan are to:
- Preserve as much independence and dignity during later years of life
- Protect loved ones from the physical, emotional, and financial toll that long-term care can wreck on the family.
A well-designed long-term care plan can allow you to receive the majority of your care in your desired care environment—which for most, is in the comfort of their own home—while minimizing the impact to your spouse, children, or other family members. A long-term care plan can also mitigate your financial risk from long-term care expenses to preserve your wealth for your spouse and family.
The Real Reason Why You Need a Long-Term Care Plan
I can cite all of the statistics about risk and potential costs, but what I’ve learned over the years, is that most people don’t expect it to happen to them. Regardless of what the statistics might say about our likelihood of needing long-term care, most people still think it will happen to someone else, but not to them. I get it. I’d also like to think that I won’t need long-term care in the future. I try to eat well and exercise. I’m in a profession that helps keep my brain sharp. But I recently learned about one of my colleagues that recently retired…and is showing significant signs of memory loss and early signs of dementia. My point being that none of us is immune from the risks of long-term care impact us or someone close to us.
I’ve learned that the real reason why most people engage in long-term care planning is due to the potential consequences to their loved ones.
Let’s look at an analogy:
The statistical likelihood of someone dying during their working years is only about 2%. Yet most people buy life insurance. Why? Because the potential consequences of a premature death to their loved ones can be so financially devastating.
According to the National Alliance for Caregiving, only about 6% of long-term care is provided by a spouse. A whopping 83% of care is provided by other family members—the most common being the oldest daughter.
Adult children caregivers are often have full-time jobs and have immediate families of their own, including children that are still dependent or semi-dependent. They are the sandwich generation—caring for their own children while also caring for parents or older relatives. Many family caregivers eventually cut back on their hours or stop working entirely in order to care for their aging loved one.
- The average family caregiver spends more than four years of his or her life caring for a loved one.
- A 2011 MetLife study found that the total financial impact to a family caregiver is $303,880 between lost wages, lost social security and pension benefits due to the lost wages, and out-of-pocket expenses. (Some studies have estimated that this figure may even higher as it is difficult to quantify lost wages, lost opportunities for promotion, and similar.)
- 26% of adult children caregivers wind up spending their own retirement assets paying for their parent’s long-term care.
Professionally, I have found it interesting to observe parents that will go through great lengths to figure out how to pay for their children’s college education, but then will fail to put a long-term care in place. While I’ve yet to see a study with a side-by-side comparison, my guess is that the financial detriment of failing to have a long-term care plan may exceed the financial benefit of helping a child graduate college debt-free.
And the above statistics are focused primarily just on the financial impact to family caregivers. But what about the physical and emotional impact? Many caregivers suffer from increased blood pressure, increased stress, and often, depression. It’s common for family caregivers to neglect their own well-being. When you’re busy caring for a loved one day in and day out, it can be difficult to near impossible to make time for healthy eating, exercise, and regular wellness checkups.
As one caregiver summarized in the PBS documentary, And Thou Shalt Honor, with regards to caring for her husband with Alzheimer’s disease:
“When I got married, I never understood what ‘in sickness and in health’ meant. Now I do: His sickness, my health. For it to be easy for me, it would have to be over for him, and that’s unacceptable. I often wonder: Will there by anything left of me, will there by anything left for me.”
Sometimes you’ll hear the expression “he suffers from Alzheimer’s.” But the reality is that he probably isn’t suffering—his family is suffering from Alzheimer’s.
Psychological Benefits of a Long-Term Care Plan
It’s not discussed as often, but the psychological benefits of having a long-term care plan can be tremendous.
Psychological Benefits for You
First, there is the peace of mind for yourself of knowing that you have plan for the worst-case scenario and you have done what you can do preserve your independence and dignity and protect your loved ones.
Second, it gives you more freedom during retirement. We’ve seen many retirees who prior to retirement dreamed of their “golden years” including traveling and taking up new hobbies. But when retirement arrives, they fear running out of money during retirement. What if there is a recession that wipes out a significant portion of your retirement savings? What if you have significant health care costs or long-term care costs during retirement? If you have a long-term care plan that protects you from future long-term care costs, this gives you more financial freedom to enjoy yourself during retirement.
Psychological Benefits to Your Family
Many financial advisors are notorious for telling their clients that they can just self-fund long-term care expenses and that they don’t need a separate long-term care plan, but consider this story from a colleague:
Jane’s mother was diagnosed with Alzheimer’s disease at age 67. Jane’s family was somewhat wealthy and they had been advised by their lawyer, accountant, and financial advisor, that they could afford to pay for long-term care out-of-pocket. Yet Jane still decided to visit an elder law attorney for advice about Medicaid Planning. “Rationally, we understand that Medicaid planning may not seem appropriate,” she said, “but the disease is running our lives. We don’t know what to do, and we are still afraid that there won’t be enough money.”
Years later, Jane called the elder law attorney. Jane’s father had died before Jane’s mother. Jane thought that the stress of caring for her mother contributed to her father’s death. She said that he was always worrying about money and that there would not be enough.
If the family had had a long-term care plan, they would not have had to worry about running out of money and they likely would have sought assistance with caregiving sooner. We see this all too often with clients. If they don’t have a long-term care plan, the family members burn themselves out trying to care for their spouse or parent before finally seeking help, all because they’re worried that there won’t be enough money or the money won’t last long enough.
We Can Help You Develop a Long-Term Care Plan
Having assisted many Wake County clients with long-term care planning, our team at Carolina Family Estate Planning understands that developing a long-term care plan is about not just protecting your own independence and dignity, but also protecting those you love from the physical, emotional, and financial toll that caring for a loved one can take.
We’ve helped many clients take an interdisciplinary approach to their long-term care planning by exploring both legal and financial options. Usually, a well-rounded long-term care plan will involve a combination of legal, health care, and financial tools to meet your goals and maximize your protection. To get started, register an upcoming seminar to learn more or call our office at 919-443-3035.
Long-Term Care Planning Series
This article series explores how a well-rounded long-term care plan can help protect and preserve your independence and dignity while avoiding financial devastation and unnecessary stress to your family. This article series explores long-term care planning options beyond government assistance planning such as planning for eligibility for Medicaid or Veteran's Benefits.