My siblings and I are discussing plans for taking care of our mother when she retires, which will happen within the next 10 years (she doesn't subscribe to ERE...yet).
My main concern is helping her to understand the importance of living simply and stop spending right now. I guess I am more aware of my future vested interest in her financial future and I want to make sure that we are being proactive (I realize we should have started planning sooner).
Is anyone taking care of their parents and if so, how is that affecting your budget?
Long Term Care for Parents
I'm not currently taking care of my parents, but I expect that I will have to do something in the future, probably in 5-10 years. My mother is retired and based on family history I would expect that she'd have Alzheimer's or some form of dementia. If not that, then probably in ~10 years she will have limited mobility.
She's thrifty but doesn't have a very good sense of the big picture. Still, I'm not concerned with how she'll live on social security, but rather what sort of medical care or supervision she might need eventually.
This is probably the single biggest thing that would prevent me from achieving ERE (and I'm ok with that). At this point, I'm just taking it one step at a time but anticipate potentially having to make a move or some kind of life adjustment.
I'm curious to see what other people have to say.
She's thrifty but doesn't have a very good sense of the big picture. Still, I'm not concerned with how she'll live on social security, but rather what sort of medical care or supervision she might need eventually.
This is probably the single biggest thing that would prevent me from achieving ERE (and I'm ok with that). At this point, I'm just taking it one step at a time but anticipate potentially having to make a move or some kind of life adjustment.
I'm curious to see what other people have to say.
My Mom lived independently until a stroke at age 68 put her in an assisted living facility. Fortunately, ten years earlier I purchased a decent State Farm LTC policy for her at just $1000 per year for $350,000 of coverage. That policy was a financial life saver - it paid 80% of the ALF costs right up until Mom died two years later. Full price at the ALF ran $40K per year!
Six years ago, when I left a former employer I was allowed to retain an employee-funded LTC policy with Unumm. It costs me just $250 per year for $150,000 of coverage.
My 73-year old Dad has a LTC policy with $150K coverage at a cost of $1500 per year.
Both of my (divorced) parents retired at age 55 (1994) from middle-class private-sector occupations, never earned more than $50K per year, and have lived quite nicely. The LTC policies will allow their assets (& mine) to be protected.
Six years ago, when I left a former employer I was allowed to retain an employee-funded LTC policy with Unumm. It costs me just $250 per year for $150,000 of coverage.
My 73-year old Dad has a LTC policy with $150K coverage at a cost of $1500 per year.
Both of my (divorced) parents retired at age 55 (1994) from middle-class private-sector occupations, never earned more than $50K per year, and have lived quite nicely. The LTC policies will allow their assets (& mine) to be protected.
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George the original one
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Mom entered assisted living in 2007, age 87. She's now at a level that costs $55k per year. I've been handling her finances since then and she's got a few more years before the money runs out. My wife and I make sure she gets to appointments and run errands for her, so there's more of a time commitment than a budget impact at this time.
Once her money is spent, should she still be alive, I'll be the one picking up the remainder of the tab that isn't covered by her pension and social security. Neither my brother (retired, only SS benefits) or sister (student on verge of retirement, age 59, no job, no savings) have the means to contribute to her care.
My in-laws don't talk about their finances. I believe they have an adequate pension (retired air force pilot), but I'm not certain since the money isn't mentioned. They did just buy their son a home, but I don't know if they're paying a mortgage or if it was paid in full.
Once her money is spent, should she still be alive, I'll be the one picking up the remainder of the tab that isn't covered by her pension and social security. Neither my brother (retired, only SS benefits) or sister (student on verge of retirement, age 59, no job, no savings) have the means to contribute to her care.
My in-laws don't talk about their finances. I believe they have an adequate pension (retired air force pilot), but I'm not certain since the money isn't mentioned. They did just buy their son a home, but I don't know if they're paying a mortgage or if it was paid in full.
My mother and I discussed LTC insurance. We decided against it. Most people who use LTC just need assisted living, which could be provided by a family member. Skilled nursing facilities are frequently covered by medicaid or private insurance for true illness. I'm really surprised to see ERE people promote long term care insurance. Wouldn't one of the advantages of ERE be the ability (free time) to care for loved ones instead of putting them in a home? I would rather care for my mother myself than get a job to pay for her to be cared for by someone else. OTOH, I only have my mother and mother-in-law to worry about and I'm very close with both.
Long term care insurance is a bet, it may pay off and it may not. But at some point your parents will become uninsurable--age or even a hip fracture can do this, so the decision will be made for you eventually.
Home care by children alone rarely works. I think that most people (me included) grossly underestimate the unrelenting physical and emotional burden, and the ones closest will become overwhelmed and burn out, even with all the love in the world.
Otherwise I think that preparation is a matter of personality. My mother is still alive and well, so I make sure that I retain some flexibility for emergencies, as well as maintaining her resources and mine if things head south. But I won't plan for every contingency, much less agonize over them. For all the statistics and probabilities, there will be only one course in reality, and I dislike spending time and energy planning for things that (1) may never happen, and (2) if they do, the chances of the preparations being timely and adequate are remote.
The best thing I and my sister have done is to rehab and declutter her house, taking our time and doing it inexpensively. Not only does this remove a future burden from us, it makes the house saleable if it comes to that, and in the meantime she gets to enjoy it while still alive and well (for me this is most important thing). This seems to be the best preparation for whatever happens.
Home care by children alone rarely works. I think that most people (me included) grossly underestimate the unrelenting physical and emotional burden, and the ones closest will become overwhelmed and burn out, even with all the love in the world.
Otherwise I think that preparation is a matter of personality. My mother is still alive and well, so I make sure that I retain some flexibility for emergencies, as well as maintaining her resources and mine if things head south. But I won't plan for every contingency, much less agonize over them. For all the statistics and probabilities, there will be only one course in reality, and I dislike spending time and energy planning for things that (1) may never happen, and (2) if they do, the chances of the preparations being timely and adequate are remote.
The best thing I and my sister have done is to rehab and declutter her house, taking our time and doing it inexpensively. Not only does this remove a future burden from us, it makes the house saleable if it comes to that, and in the meantime she gets to enjoy it while still alive and well (for me this is most important thing). This seems to be the best preparation for whatever happens.
Thanks for your input, folks!
We're going to try to get her signed up for LTC Insurance this week. There is an extensive process, including an interview. Hopefully, all will go well.
@Mirwen, Ideally, my siblings or I will take care of my mom in her old age (unless she opts to go to an assisted living facility, which I doubt but time will tell). My concern is medical expenses related to her care. She currently takes meds for a variety of things and I'm not sure how those expenses will add up down the road. God forbid, something major happens. Making provision for her care now might be worth it.
@Hoplite, I like the idea of decluttering her house. We will have to be more aggressive in helping her get rid of unnecessary things
I think at this point, besides getting her signed up for LTC Insurance, we will have to teach her to live as if she was already retired and on a very restricted budget. It's going to be a challenge.
We're going to try to get her signed up for LTC Insurance this week. There is an extensive process, including an interview. Hopefully, all will go well.
@Mirwen, Ideally, my siblings or I will take care of my mom in her old age (unless she opts to go to an assisted living facility, which I doubt but time will tell). My concern is medical expenses related to her care. She currently takes meds for a variety of things and I'm not sure how those expenses will add up down the road. God forbid, something major happens. Making provision for her care now might be worth it.
@Hoplite, I like the idea of decluttering her house. We will have to be more aggressive in helping her get rid of unnecessary things
I think at this point, besides getting her signed up for LTC Insurance, we will have to teach her to live as if she was already retired and on a very restricted budget. It's going to be a challenge.
@Mirwen: Thanks for the heads up. I was using the term 'Long Term Care' to include all of her future expenses related to her health and well being, not limited to housing. I borrowed that term from the insurance company, but I am ignorant as to what all it encompasses (still in the research phase)so I'm sure I'm making it confusing 
We are looking into New York Life right now. We will definitely research our options as it relates to LTC as well as medical insurance.
We are looking into New York Life right now. We will definitely research our options as it relates to LTC as well as medical insurance.@Mirwen: I agree with others that you may be underestimating the care a parent could need. I've worked at a housing facility (in the Netherlands) where people with disabilities lived; some were very ill and disabled, others had their own room and only rang for help when needed. But I don't think I would enjoy taking care of my parents if they ever ended up in the "lots of care"-category. I would go insane, and I think the fact that I would also be emotionally involved would make it worse.
Some of these people need constant care and attention. They will eat the soap while you're showering them, if you don't pay attention. They will not understand how to eat their meal, though. So you have to feed them. Their day/night rhythm is disturbed, so they will keep you up at night, and then set the house on fire during the day when you thought you could both get some sleep.
I could try to retire about twelve years from now (when I'm 44) and then my parents, who are now still healthy and taking very good care of themselves, would be around 73 and maybe could use some help. Also my sister, hopefully, will have one or more kids around the age of 12, then (I'm going to be an aunt! Woohoo!). So I am considering using some of my freed-up time then to help my family; but... this will be like a one-day-a-week thing, not a 24/7 thing. So if my parents need 24/7 help, I'm glad that they are insured and there's still some social security in the Netherlands...
Some of these people need constant care and attention. They will eat the soap while you're showering them, if you don't pay attention. They will not understand how to eat their meal, though. So you have to feed them. Their day/night rhythm is disturbed, so they will keep you up at night, and then set the house on fire during the day when you thought you could both get some sleep.
I could try to retire about twelve years from now (when I'm 44) and then my parents, who are now still healthy and taking very good care of themselves, would be around 73 and maybe could use some help. Also my sister, hopefully, will have one or more kids around the age of 12, then (I'm going to be an aunt! Woohoo!). So I am considering using some of my freed-up time then to help my family; but... this will be like a one-day-a-week thing, not a 24/7 thing. So if my parents need 24/7 help, I'm glad that they are insured and there's still some social security in the Netherlands...
This is a topic very near and dear to me.
My folks are healthy at 82 and 77, but have outlived their retirement assets. I expect at least one to live to 100. So now they live in a house I bought for them that is in town and close to groceries and hospitals. I also bought their old house from them (a first retirement home in the country), paid off that outstanding debt and gave them a joint-life annuity for the remainder (i.e., -- I pay them) so that they will be getting money above social security every month, but won't have access to any large pool of funds. Or more importantly, potential creditors and scam artists won't have access to any large pool of funds.
In the U.S. LTC insurance is very expensive for older people, but to qualify for Medicaid to pay for nursing care, you essentially need to spend down almost all your assets. My folks are pretty much in that situation anyway now, but making sure one qualifies is extremely important for planning that eventuality.
This is why people in the U.S. without some estate planning frequently end up exhausting all their assets right before they die. It is very tricky and can be very difficult on a surviving spouse.
It also reminds me that the most important ERE strategy in my view is getting in good health and staying there. You want to just drop dead some day or go quietly in your sleep and avoid long-term or chronic illnesses that will suck you and your wallet dry.
My folks are healthy at 82 and 77, but have outlived their retirement assets. I expect at least one to live to 100. So now they live in a house I bought for them that is in town and close to groceries and hospitals. I also bought their old house from them (a first retirement home in the country), paid off that outstanding debt and gave them a joint-life annuity for the remainder (i.e., -- I pay them) so that they will be getting money above social security every month, but won't have access to any large pool of funds. Or more importantly, potential creditors and scam artists won't have access to any large pool of funds.
In the U.S. LTC insurance is very expensive for older people, but to qualify for Medicaid to pay for nursing care, you essentially need to spend down almost all your assets. My folks are pretty much in that situation anyway now, but making sure one qualifies is extremely important for planning that eventuality.
This is why people in the U.S. without some estate planning frequently end up exhausting all their assets right before they die. It is very tricky and can be very difficult on a surviving spouse.
It also reminds me that the most important ERE strategy in my view is getting in good health and staying there. You want to just drop dead some day or go quietly in your sleep and avoid long-term or chronic illnesses that will suck you and your wallet dry.
About health: there is only so much a person can do to stay healthy. I hope people here realize that. It is often a process of chance: if you live healthier, your chances of getting a disease are smaller. But they are almost never zero. For example: people can get lung cancer even if they don't smoke and hardly ever were exposed to smoke by other people. Then it is just... bad luck.
Also, as I study genetics: some people get some diseases just because they have a problem with their genes. There is nothing, or at least not much, you can do about that. If your family has a lot of people with heart diseases, it could be worthwhile to check your blood pressure, cholesterol, lipids, and glucose; because you may be genetically predisposed to problems with one of these (which could then in turn give you problems with your heart). And in that case, 'healthy living' only can do so much; you may need medications...
So yes, live healthily, but do understand that that is not a guarantee that you will never need medical care...
Also, as I study genetics: some people get some diseases just because they have a problem with their genes. There is nothing, or at least not much, you can do about that. If your family has a lot of people with heart diseases, it could be worthwhile to check your blood pressure, cholesterol, lipids, and glucose; because you may be genetically predisposed to problems with one of these (which could then in turn give you problems with your heart). And in that case, 'healthy living' only can do so much; you may need medications...
So yes, live healthily, but do understand that that is not a guarantee that you will never need medical care...