2 Oct 2017
In 2014, my father was diagnosed with Lewy Body Dementia which is the second most common type of dementia after Alzheimer’s disease. Little did my family know the difficult road that would lie ahead to provide my father with appropriate care.
My father never liked to seek outside help with his personal finances, but six years ago, while he was still well enough to make his own decisions, he brought me down to his office in the basement to go over his accounts in anticipation of his worsening condition. At the time, I was a trader on Wall Street and knew very little about how a retiree should manage their finances. But if I knew then what I now know, this is what I would have told him on that day:
#1 For your family’s sake, consolidate.
The binder my father used to keep track of his accounts was always up to date and accurate, but as I thumbed through the graph paper with numbers carefully penciled in, I noticed that as time went on, the pages weren’t as detailed and the dates between entries were farther apart. I didn’t know it then, but this was one of the earliest signs of his cognitive issues. When his condition worsened, I took over managing the accounts.
There were accounts at several banks, CDs reinvesting at almost no interest, paper savings bonds with no copies stored digitally or in another location, and a portfolio with little direction. It was comprised of investments that were collected over the years, but never revisited to determine if they were still suitable. We were able to consolidate those accounts and come up with a portfolio that reflected my parents’ needs.
#2 Dust off those estate plans.
It isn’t uncommon for a couple to establish their estate plans when they get married or have their first child and never reassess them. This is a mistake. I cannot emphasize enough how important it is to have a durable power of attorney with clear direction. A will, a health care proxy and a living will can also take a lot of the difficult decisions away from your family, by memorializing the wishes and beliefs of the individual.
#3 Long-term care isn’t cheap, so what’s the plan?
The cost of long-term care can easily dwarf the cost of attending a four-year private university. We spend years planning how we are going to pay for our children’s education, but very little time is spent on how we will manage the cost to maintain our quality of life in our later years. Long-term care insurance isn’t always feasible, but if added to the picture, it can be an extremely valuable tool.
#4 Can anyone help pay the bills?
In addition to long-term care insurance, Medicaid, VA Benefits, and certain supplemental insurance policies may help subsidize the cost of care. These were all areas that we explored after my father was already sick. In the early days, it took time away from getting him the proper help. Understand these programs and policies before you need them to see if they will be available to you.
#5 Work with the pros.
Talking to your children about your finances and your wishes is a great first step, but have a team of professionals and their contact information available for your family members so they can step in and do the heavy lifting when needed. A financial planner can act as the quarterback for your family and work between you and the other professionals that you’ve entrusted.
Nobody wants to think about the possibility of losing their cognitive abilities, but establishing a plan will assist your loved ones in the event they need to oversee your care. Reacting to unfortunate events leads to worse outcomes than planning for their possibility. Take the initiative, and speak with a qualified professional to assist you with your plan.
Latest posts by Paul Tramontozzi, CFP
- how housing plays into planning for a longer retirement - January 6, 2018
- 5 things i wish i told my dad - October 2, 2017