An increasing portion of Americans over 60 are being diagnosed with Alzheimer’s and Dementia each year, and the effects can be devastating, for both those diagnosed and their loved ones. In addition to the physical and emotional toll it can take, it can also wreak havoc with a family’s financial situation. When thinking about retirement planning, one might want to consider long-term care and the impact an unexpected health issue might cause.
According to the Alzheimer’s Association (http:\\www.alz.org), those with Alzheimer’s and Dementia have more hospital stays, skilled nursing home stays, and home healthcare visits than average. Possible future costs one can incur are ongoing medical treatment, diagnosis, follow up visits, treatment for other medical conditions, prescription drugs, personal care supplies, adult day services, in-home care services, and residential care services, including assisted living and nursing homes. Consider the experience of Betty Williams.
Betty had been suffering from Dementia in varying degrees for over a decade when her husband passed away. After that, her daughter, Jan, took over managing her care.
“She went to several facilities that were secure and provided for people with Dementia,” Jan said of her mother, who passed away in 2003, “The cost was about $3,500 per month.” This was in addition to the $500 per month Betty’s medication cost, due to her not having a prescription plan. Since Betty’s finances had not yet run out, she didn’t qualify for Medicaid, and she had to sell her home to pay for her treatment.
There are many other stories like Betty’s, but the overall theme is the same; Alzheimer’s and Dementia can put a serious unexpected financial strain on the entire family. Fortunately, there are steps one can take to help soften the blow.
After diagnosis, a will, living trust, and advance directives are all options that should be looked into to ensure late-stage or end-of-life health care and financial decisions are carried out. Advanced planning is essential. Start planning as soon as possible, when the individual’s cognitive and communication abilities are least impaired. A living will, in particular, will state the individual’s choices for future medical care decisions.
Consider granting Durable Power of Attorney to a trusted relative. This will allow the individual to designate a surrogate to make treatment decisions for them. Also consider granting them Financial Power of Attorney, which will allow the surrogate to act on the individual’s behalf to pay bills, keep track of assets, negotiate with the bank, and more, should they not be able to manage their own finances.
Those recently diagnosed or their caregiver should formulate a plan for moving forward. This would include reviewing savings, investments, and insurance plans, assessing the need to increase or decrease life insurance or disability insurance, and talking with family members about the possibility of pooling resources together to pay for care.
There is also Long Term Care (LTC) insurance available. However, cost and eligibility can be an issue, so it might not be right for everyone.
Finally, don’t wait to begin planning and saving for retirement and possible catastrophic health situations. Setting aside adequate savings while you are working can help reduce the financial burden on your family in the future.
Alzheimer’s and Dementia are a difficult burden to bear. While they may be unavoidable for some, anything you can do to prepare financially will mean one less issue to deal with.