How To Balance Your Retirement and Your Parents’ Long-Term Care?

How To Balance Your Retirement and Your Parents’ Long-Term Care?
Medicare health insurance Medicare Supplement

It is critical to plan for and save for retirement. However, plans can quickly fall apart when elderly parents require additional care. Long-term care is costly. When their parents are unable to afford it, adult children may feel compelled to do whatever it takes. Providing care for your parents can have ramifications for your own retirement. You can't stop your parents from needing care, but you can balance your retirement by communicating and planning ahead of time.


The Expensive Nature of Long-Term Care

Long-term care may include assistance with daily activities such as bathing, dressing, and going to the bathroom. Medication management, assistance with activities related to a health condition, and even assistance with daily chores can all be included.

Long-term care can be provided in the home, an assisted living facility (ALF), or a skilled nursing facility (SNF). According to statistics, the average cost of assisted living is $45,000 per year. Meanwhile, expect to pay at least $20 per hour for in-home assistance. Nursing home care is much more expensive, costing more than $85,000 per year on average for a semi-private room.


Also Read Things You Should Know as a Family Caregiver


Many people mistakenly believe that Medicare will cover these expenses. However, in most cases, it does not. Following a hospital stay, Medicare will pay for a limited amount of time in a skilled nursing or rehabilitation facility. It will cover medical care as well as some home health care services. However, Medicare does not cover room and board or custodial care.

These uninsured costs account for the vast majority of long-term care expenses. Medicaid is another option for seniors with limited assets to pay for nursing home care. However, not everyone requires that level of care, and not everyone's family wishes to place a loved one in a nursing home.


Also Read: What Is Long-Term Care Insurance?


Adult Children Caught in the Crossfire

When parents require long-term care, their children are frequently in their 50s or early 60s—the same years when they are under pressure to maximize retirement savings. If the parents do not have enough money to fully fund their own care, the children are forced to make difficult decisions.

Some people, particularly women, retire early to care for their parents. They are no longer contributing to retirement funds, and they may be eligible for a reduced Social Security benefit at the age of 62 rather than waiting until full retirement age.


Also Read: Your Guide to Retirement Planning in 2021


Other families reduce or discontinue their own retirement contributions, dip into savings, or even go into debt to support an elderly parent. With medical and long-term care costs rising, sacrificing your own retirement savings to care for your parents is a risky strategy.


How To Balance Your Retirement and Your Parents’ Long-Term Care


Preparation is essential

Communication is the first step in planning for your parents' future. Find a way to speak with them about their finances, including their retirement income, money, and other assets. Determine whether or not they have long-term care insurance and what it covers.

Try to collaborate to develop a plan for their future care, if it is required. A consultation with an elder law attorney is another option for planning. These attorneys specialize in issues affecting the elderly, such as wills, trusts, Medicaid, power of attorney, and veterans benefits.


Also Read : How to Talk to Your Parents About Medicare?


An elder law attorney can review your parents' estate planning documents and explain whether they need to be updated, advise your parents on financial strategies to protect their assets as they age, and assist your parents in applying for benefits for which they may be eligible. If you have siblings, talk to them and involve them as well. This increases the likelihood that everyone will be on the same page when it comes to assisting your parents in making care decisions.


Taking Care of Yourself is Essential for Balancing Your Retirement

"You should put on your own oxygen mask before assisting other passengers"

This is a good way to think about balancing your retirement and the needs of your parents. If you haven't already, meet with a financial planner or use an online retirement planning tool to estimate how much money you'll need in retirement and what you need to do to stay on track.

Having a clear understanding of your own financial goals will assist you and your parents in exploring care options that you can all afford. You should also consider how much caregiving you can realistically do without jeopardizing your physical, mental, and emotional health.

When you understand your own personal and financial limits, you will be able to set boundaries without feeling guilty about not being able to do more. It is not easy to care for elderly parents. However, by communicating and being proactive, you can plan for their care without jeopardizing your own.


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