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This Hidden Retirement Cost Has Been With You Forever

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On this episode of the Retire Once Show, Johnathan and Melissa discuss what you should do to plan to care for aging parents. There are over 53 million adult caregivers that are unpaid. No parent wants to be a burden to their children, but as longevity increases with advances in healthcare, your parents may need you to help them out as they age. This is often a surprise for many people and can have a huge impact on your financial goals, your family relationships, and your long-term retirement.

Make sure you use the link below to download our Long-Term Care Planning Checklist


If you have questions or comments for the show email us  Retire@theoremwm.com or head to www.Retireonceshow.com

Read The Transcript

Right now, one in five people provide unpaid family care. There's over 53 million people. The financial and mental impact that comes along with that can be extremely overwhelming. And in this episode we're gonna talk about strategies that you could start implementing now in the event that your parents need help as they get older.

All that and more on today's episode of The Retire One Show.

Hello and welcome to The Retire Once Show the show designed to help you get to retirement, but most importantly, stay retired. I'm Rose Jonathan Rankin. I am the founder and CEO of the and Wealth Management, and I am joined as always by my lovely cohost. Hi, I'm Melissa Rankin. Thank you so much for joining us.

Thank you for being here. Hopefully you're getting all geared up for, uh, for Thanksgiving, which we all know is a fantastic holiday to get around with family. And, uh, we're looking forward to ours. That's a big food. That's right. And that's why today we're gonna talk about family care and really the, the part of family care that involves aging parents.

This is very common now where people are starting to have to care for their parents as they get older. And especially with people that we work with. We've seen a lot of clients go through this lately where they're entering into their pre-retirement years or even in their. And now their parents are needing a little bit more help, and a lot of this stuff wasn't thought about in the decades leading up to their retirement.

That's so true. But before we jump into all of that, which is very important, what do we want people to do? Absolutely, Mel. We want people to subscribe. Hit the subscribe button and join us on this retirement journey because at the end of the day, yes, today we're talking about aging parents, but this is ultimately in the, in the process of you building out your dream.

But we know that this is something that everybody goes through. At least a lot of people go. But yeah. Much more common than I think people realize it is. So yeah, hit that subscribe button, but I, I like when Mel says it, Mel, you say it, what your gonna do, we want you to subscribe, we want you to follow along in this journey so that you never miss an amazing episode.

That is absolutely right. So now onto caring for aging parents. Um, this is a very complex topic. It is, and it's a tough one and it's hard to have the conversation, but I think when you hear that number alone, 53 million. Americans unpaid family care. That is astounding. I mean, that's a huge number. It's a very large number, and there are so many different factors that come into play.

It's not just the financial aspect, it's the emotional side. It's figuring out. You know, where is, where are your parents gonna live? Who's going to, you know, do their daily activities or help them with that, with all the things to consider? Where do you start? Well, the first place to start is with a conversation, and this is a conversation with your spouse if you're married, then with your parents, and then also your siblings.

Uh, one thing that we did put together is a long-term care planning checklist. You could download that in the show description or the show notes depending on where you're listening to this or watching this, and that's just a guide to help with that conversation. Very helpful. And you know that first conversation with your spouse.

This one's important because you wanna make sure that you're on the same page. Cuz if we had to care for either one of our parents, it's going to be something that we need to make sure that we're partners. Absolutely last communication is a very big part of this. Wait, you don't want my dad just showing up, saying, okay, I'm ready for you guys to take care of me.

Here we go. And just catching you off guard like, okay, Harvey Emmy. Time for you guys to jump in and help grandpa. That's right. You wanna make sure you, you figure out how far are you willing to go to help, you know, are you willing to have somebody else live with you? Are you willing to. You know, do you just want to stop by and, and help prepare some meals every now and again?

Do you even wanna help at all? These are all things you wanna make sure that you get on the same page. I hope you wanna help. I mean, you hope, but you know, you gotta understand all the duties that come along with with caregiving, you know? Or for example, are you going to be assisting with daily living activities?

Like, I don't know if I want to, you know, do I want to help my dad get showered every day? I mean, you can get dressed. He can get dressed. I mean, those are things that you've gotta start thinking. As you're going through that conversation, because if you want to hire someone to help with those things, I mean, you know, long-term care is not cheap, whether it's skilled nursing care or in-home caregivers.

So it's not cheap. And you know, the earlier you start addressing this, the, the more potential there is for your parents to be long-term care insurable, because at some point, if they need long-term care, At the time they need it, they're probably not insurable. Probably a little past that at that point.

Yeah. So the earlier you start having these conversations and you realize, okay Mel, I love my dad. You love my dad, but you know what? He's not moving in here with us. Then we might not have to come up with a strategy for, okay, who's gonna do this? Is there gonna be someone that's gonna pay for this? And then start talking about insurability at that point.

So that's the first conversation that's important to have. And the next one is obviously you gotta have a conversation with your parents, which honestly. Thinking of our parents, my parents, your parents, that can get uncomfortable. I mean, that can be a fight. Most people think, okay, I'm in good health now.

I don't really wanna talk about this. I don't wanna be the topic of being the burden here. You're absolutely right. And it's funny because I've had this conversation with, you know, a number of clients over the past couple months. You know, for decades before their parents were actually planning for long-term care, they had long-term care policies, but then when it came time to actually use that policy move outta their house and go into some sort of facility, it was a big fight.

And a lot of people don't wanna accept it. No. It, it's hard to accept that, you know, at some point raising your hand saying, Hey, I need help. That's a, that's a vulnerable position to. And nobody wants to feel like they, like you said, like they are a burden or they don't wanna get vulnerable, especially with stuff like that.

And then the last conversation you want to have is with your siblings, because hopefully if you are going to be the primary caregiver, hopefully there's some support that you can get from other family members if you have them. If you have them. That's right. It's not, I mean, that's still, it's important across the board just to have communication, but once you've had the difficult conversations, what are the next.

Well, so the next steps, what you wanna do is you want to consider the options that you have. And this is really a three step process. You wanna understand the needs that are, that your parents need. You wanna understand your care options, and then the financial aspect. That's a big one. So when we dig into that, you know, that first part of it, you want to figure out those activities of daily living.

You'll often see ADLs as, you know, a acronym out there for that. Uh, but this is the basic, essential needs for someone to function on a day to day basis. You know, self feeding. Dressing themselves. Personal hygiene kind of goes back to like, I don't want, I don't wanna have to shower with my dad. So, you know, those are, those are things that they still need to be met, but comes down to, do you want to do it?

Do you wanna have someone else do it? Um, are they, do you have time to do it? I mean, are they, yeah, are they gonna be able to do it themselves? Is that something that maybe they aren't gonna need somebody to help, but maybe they might need help in other areas. So understanding how much help is going to actually be, And then the second part is where you start looking at the options.

So this is, okay, where are they gonna live? Are they gonna live at home by themself? And if they are, who's going to assist? Is that gonna be you? Are you driving, you, you know, are you going over there every day? Are you helping with groceries? All those type of things. What about in-home care? So those are all things that you want to figure out, um, if they're going to be living at home, because in home care can get extremely expensive.

Some things that people don't think about, are you wanna make sure that you're doing some changes to the home or modifications to make sure that it's safe? I mean, the, there's a bunch of stairs that do have probable railing, showers, all that kind of stuff. Well, I mean, and it, it kind of starts too, like all of our parents, I mean our parents actually, I guess I should rephrase that.

All of them, all of them, , they live outta state. I mean, so it's, there's so much more that goes into it because then it's. Even bigger questions. Are we having them move? Are we relying on extended family where they're currently at? I mean, there are so much to think about. Yeah, because if they are moving, if they're, you know, are they moving into a facility?

Are they moving in with family? Those are all things that you want to figure out. Okay, those are the different options, and which ones going to be best to fit those needs. But then comes that third part, you know, which is understanding the financial. And that really starts with, you know, obviously your parents' finances, so you wanna figure out what is their current income, what are, do they have any savings?

What are their expenses, liabilities, you know, how much of their income or their finances can actually be spent on care. Because one of the biggest worries that caregivers typically have is how to pay for the care that's needed, you know? Yeah, absolutely. And because the reality is everybody thinks that Medicare is going to cover.

But in reality it only covers, you know, professional help. If a physician certifies that the parents require nursing care and if those services are provided by a Medicare certified home, and then at the end of the day it's only covered for a certain period of time on a short term basis and very limited there,  well, and there's more, and the benefits are restricted to low income individuals with very limited assets.

So you have that part. Um, then you also have some tax considerations cuz you may be able to claim a federal tax credit that will enable you to take up to $3,000 off the cost of in-home care or daycare. And then another option that a lot of people don't consider is a flex spending account. Uh, this is, you know, that FSA we talked about last week where at the end of the year, if you don't use it, you'll lose it.

But this type of account lets you pay for certain, uh, and a certain amount of care each year for your parents in pre-tax dollars, and those are offered through your employer. I mean, those are all things that you have to start thinking about, but I feel like when you're going through the whole process, what can make it easier?

This, this whole process is, like you said, it's a process. It's not something that's gonna be handled in one day. This is a long-term process of conversation after conversation, and that's why we suggest download that long-term planning care checklist. It's gonna help you with those conversations, but the first step is writing down the actual plan.

Partner with your parents because this is going to be an emotional conversation. They spent years feeling like they were supposed to be the ones responsible and the ones taking care of you. Yeah. Now that role reversals, it can be very hard to handle. I even for the kids, I mean, yeah. It can go both ways.

It's, it's a tough thing to talk about. I mean, I couldn't imagine at some point just, you know, Harvey. Dad, it's time for you to go to shower and it's time for you to go to bed and you know it's, here's what's for dinner. You're like, wait a minute. Hey kid, I was the one cooking you dinner. I'm the parent.

I'm the boss. What they always say, at least I grew up my house, my rules. Ah, yes. Yes. How many times did we hear that? Often? So are you putting a curfew on mom and dad at some point? I mean, these are all things that role reversal can be very hard. And so research has shown that having a long-term care. Not just long-term care insurance.

So this isn't, you know, a pitch of long-term care insurance. This is simply a plan to figure out how you're going to handle care if it's needed. That can alleviate some of the emotional, financial, and physical stress that comes along with this process. And even those who had a plan prepared, so they had it all documented, here's what we're gonna do.

78% of those people wished they had done something earlier and started that process earlier. You wanna make sure you're starting to think about the little details, whether that's, you know, your parents have a will. I mean, you wanna start there? Is it up to date? I've seen people that have a will or that's 25 years old, that's got people listed that they don't even know or associate with anymore.

Might not even be around anymore. I mean, exactly. You never know. You know? Do they have prepared letters of instructions, powers of attorney on the healthcare side and financial side? You know, even on the financial. We've worked, you know, we've in finance for a long time and each financial institution might have different requirements for becoming a power of attorney.

So getting those documents on file with the institutions could be important as well. You never wanna wait until it's kind of the time of to start thinking about it, because then it's gonna feel so much more hectic and chaotic and stressful for you and your parents, or your loved ones, or whomever it may be.

I mean, I think that's the main thing is you've gotta. Somewhere. Start early. Yeah. And so having that written detailed plan is going to be very important. And that's, that's where we say that's gonna help make the whole thing easier. When you have all the details covered, what are the next steps? Well, all that work that you just did.

So you have those conversations, you put together this plan of how your parents are gonna be cared for. That's to make sure that things go smoothly and they get cared for the right way possible. But that overlooks the caregiver's actual financial. In their life. And that's, that's the struggle that I've seen clients go through where they do all this work to make sure their parents are okay, but they neglect themself.

So you wanna start looking at your individual, uh, financial plan. Understand what direct expenses you're going to incur because this is gonna cost something if you are going to be the caregiver. Yes. You know, how active are you gonna be? Are they gonna live at home, as I mentioned, are you going there daily?

You doing the grocery shopping? You know, are you paying, you're paying for extra gas to get there? I mean, there's, you might be paying for the groceries. Yeah, because I don't know about you, but I would have a hard time just, you know, sending dad a, uh, a Venmo request to get some money or say, Hey, look, you're like 62, 75 for this week's groceries.

You know, I get that. That's the practical way to do it, but I don't. Think that many people operate like that? No, most people operate from the emotional side. Yeah. It's like, okay, look, this is hard. I'm obviously doing the grocery shopping, you know, you haven't been to Kroger in years. Which honestly then it would turn to me doing the grocery shopping.

Exactly. I mean, in our scenario, but that's right. I wouldn't even know how much the thing costs until I see it in the bank statement. So all these different things, and I know we would never get reimbursed from dad on that one. So, um, you know, nor would we want to. But then there's obviously if they move in with you, you know, if they move with.

That's gonna, you gotta pay for the move. It's gonna cost an increase in utilities, feeding an extra mouth. I mean, there's additional groceries there, extra water, extra electricity. There's an extra person to care for, essentially. I mean, and that, that's not even talking about the aspect of, you know, the actual healthcare.

You know, they care for them. Are you gonna hire a home health person to help you? So hiring a home health aide, which according to Genworth, was an average of $5,148. So that's per month. It's not per year. That's $5,148 per month to have someone come in and help you with those things. And if you don't hire them, are you gonna hire someone to come in and do some remodeling to make your home safer?

So those are all the kinda some of the direct expenses that you're going to incur. But then there's indirect expenses that get overlooked all the time, and those, when you think of indirect expenses, the number one is, Absolutely. And you know, the one study showed that 70% of caregivers miss time at work to care for aging parents.

Well, yeah. Like you said, if the home's not safe, for example, you can get a call during the day and might have to rush home or something. I mean, it's stuff like that that it's hard to even. Plan for, I mean, it is. Well, and then you think of, well, someone's gotta probably take 'em to doctor's appointments and you know, the older you are, the more appointments you probably have.

And as Melissa said in a long episode ago, that, you know, people as you get older, you're held as deteriorating. So, um, that's a call back to an older episode where called our clients. It's so relevant, deteriorating. That's right. Um, when, and you consider that the average age of caregivers is 51 years.

That's right in kinda the peak earning years that, that people have. And so you think about missing time during your peak earnings, that's, you know, that's money that's not in your pocket. Um, and then there was a, you know, I saw this example on Fidelity. Uh, they talked about this example. Laura, who was 56 years old, left a job of $70,000 a year to care for her mother for three years.

And you think of, you know, $70,000, that's a pretty good. It's a pretty good job. But when you take into account that you said it was close to $5,200, I mean, that's 62,000. So when you factor in taxes and everything else, a $70,000 salary wouldn't even cover it. Essentially. It would, it'd be cheaper just to quit it.

It's isn't, it sounds like the same argument that everybody always has when you have a new kid and you Exactly, yeah. You have to start planning out, okay, are they gonna go to daycare or is somebody gonna stay home? And I mean, and does is is it worth, is it worth it to even go to work? You know? And so those are all the things that you have to think about because yeah, on paper could or could be cheaper to quit.

But then they also talked about, it's not just the salary, but they also factor in $67,000 of lost social security benefits, which brings it to a total of over $283,000 over those three.  and not even factoring in the opportunity cost of contributing to, you know, an employer sponsor plan like a 401k, which might have a match.

So you start thinking about all the different benefits, the financial benefits that you're missing out on by staying at home. There's tons of ramifications. I mean, there's a lot to consider. There isn't, and that's why. If you are thinking about being the caregiver, you wanna make sure that you're starting to incorporate that into your financial plan as really as a what if scenario.

What if you did have to care for your parents? What if you did stay home for a few years and then eventually reenter the workplace? What if you never enter the workplace again? I feel like that's all the practical side of it. I mean, you're thinking very logically about everything, but what about the balance?

Like now you have this whole added stress, like how, how can people find. The balance of, okay, I, I say I, you do quit your job and now you're the sole caregiver. What kind of impact is that gonna have on your personal life? I mean, I mean, you just gotta think that's got that, that's gotta add so much stress just to, that's what I mean.

The whole family would suffer, I feel like, not suffer per se, but it would be an adjustment for all. Well, they show that, uh, research shows that the average caregiver spends almost 19 hours a week in that caregiver. And that's, so that's a part-time job. It is a part-time job. And you think about 57% of caregivers have kids there on their own, that are under the age of 18, that you're missing out on 19 hours of time with them.

Yep. Or your spouse, which makes sense that this study showed that 31% of those people that have children under age 18 have said that their relationship with their own kids has been negatively affected. Which makes sense because if you think about. I mean, I would have to assume that if you're going to doctor's appointments or grocery shopping, things like that, it's gonna be in the, the middle of the day or after work or what have you.

So yeah, that's direct time you're missing out on with your own immediate family. Well, and then you also have your spouse or your partner, you know, they say that, uh, 72% of caregivers are either married or in a long term partner. And 43% of those people have said that it's natively affected their relationship with their spouse or partner.

So you could see that's an added level of stress that someone in the home's going under. So to take on this role, and it becomes emotional for the caregiver as well, you think about. You know, the last thing you wanna do is see your parent, or even, you know, if you don't wanna see my dad in a scenario where he's, you know, vulnerable and starting to, you know, need a lot of help.

And likewise with your parents, you don't wanna see someone's parents go through that because it's, it's hard, it's tough, of course, but at the same time, There does have to be some kind of a balance there does, and that's why you, you have to take time for yourself. Most importantly, you really have to take time to have that mental break.

You've gotta maintain hobbies, connections, friends, family, make sure that you're purposeful with your time, uh, with your kids, with your spouse, setting that time aside. And having someone else fill those gaps, you're not the primary person to delivering the care because even if you, that's now your primary role, you, you know, you're like, Laura, you quit.

You're staying home. You're taking care of an aging parent. That might be a full-time job at that point, but even with a full-time job, you get time off, you get vacations, you get a break. It's important to make sure you build those into, to all those different things. There's a lot to consider when it comes to thinking about all of this and.

Potentially being a caregiver for somebody, but that's why it's so important to have the conversations early and start before you're in a position to where it's like, oh, hey, grandpa's gotta move in. Yeah. It you hopefully want to have those conversations years in advance. Absolutely. Let's talk about how we can help.

Well, obviously we're not going to be in the room caring for parents, but what we do is we can help you understand the impact to your financial goals, your long-term retirement, and how it is going to impact your financial situation. And one of the ways that we often help is we help guide clients through the conversations.

With their parents and family just to make sure they're, that everything's being considered because you don't want anything to be overlooked. And, you know, those are, those are intimate conversations. You wanna make sure everybody's on the same page? Yeah, you do. Because they're, they're hard conversations.

They're not easy, they're private. You know, we're not gonna be involved in those conversations, but we're there as. Kinda a partner after the fact to debrief and make sure that, you know, you have a detailed long-term care plan, not insurance, long-term care plan. Well, the last way that we can help is we also, I know I mentioned a few times we have that long-term care planning guide.

Uh, it's a checklist. This is just to help you through those conversations, to make those conversations a little bit easier so you're not forgetting anything. Uh, because when you're having difficult conversations, the last thing you wanna do is have 'em over and over and over. Honestly, the hard conversations are usually the most important ones, uh, that you a hundred percent right?

So I know this was kind of a heavier episode. Uh, we appreciate you being here and hopefully this stuff was useful. You can always schedule time with us. There's a link down below to get on our calendar. We'd be happy to walk you through this process, wherever you're at in your, uh, your caregiver journey, if you are gonna be one.

Uh, but with that melt, before everybody gets outta here, what do we want them to do? We want you to subscribe. We want you to follow. But you never miss another episode. Join us on this journey because we're here to help you maximize your retirement and make sure that ultimately you only have to retire once.

So, uh, once again, I am Jonathan Rankin. I'm Melissa Rankin. Thank you so much for joining us.

Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC.– Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. –  Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. – Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. This communication has not been reviewed for completeness or accuracy, does not necessarily reflect the views of Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and is not a recommendation or endorsement of any product, service, or issuer. Third party posts do not reflect the views of Theorem Wealth Management or Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and have not been reviewed for completeness and accuracy. All further communications from this representative must be sent from and received by johnathan@theoremwm.com. For additional information, please refer to one of the following consumer websites: www.FINRA.org, www.SIPC.org.

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