Caring for elderly loved ones without going broke
By Rosemary Carlson • Bankrate.com

For a while you've suspected that your parent couldn't live alone much longer. Now you know the time has come to do something about it. You've heard about the high cost of caring for the elderly and the difficulty in finding adequate help and support. Not only are you frightened for your parent, you're frightened for yourself and your family. Your whole world is about to change and you know it.

The elderly boom
According to the U.S. Department of Labor, the fastest growing segment of the U.S. population is the over-85 age group, which is expanding at more than 3 percent per year. The over-75 age group is next on the list of rapidly growing population segments. This puts the now middle-aged baby boomers squarely in the center of what experts are calling the "sandwich generation" -- adult children caught between caring for children and looking after aging parents.

According to Eldercare Advocates Inc., an Ohio-based organization dedicated to helping seniors remain independent for as long as possible, only about 5 percent of the non-independent 65 and older are in nursing homes. The remaining elderly, who are past being independent, are being cared for by children in their own or their child's home, or by a caregiver employed by the family. Between one-half and three-quarters of the caregivers share a home with the elderly relative. Usually a daughter, who has a home, family and career of her own, is the primary caregiver, Eldercare reports.

Caregivers find that the emotional and financial stress is staggering. Most cope with the emotional stress because of the special rewards it offers. But the financial stress is a different story. Elder caregivers find themselves wishing that money grew on trees in the backyard and many end up sacrificing their life's savings, and their nest egg for their own retirement, in order to care for their parents. The American Medical Association reports that one-third of families that care for an elderly, ill relative spend most of their life savings.

But it doesn't have to be like that. Children can care for their parents without forfeiting their own financial security if they engage in careful planning before that bewildering day comes when the tables are turned and a parent needs their help. Here are some tips on preparing to become an elder caregiver:

• Plan ahead -- Even though it's difficult, have a frank discussion with your parents about their wishes concerning their assets, their place of residence and other important decisions before you and they actually have to make those decisions.
  
  
• Decide who the primary caregiver will be -- Together with your parents and any other interested parties, decide who will be their primary caregiver. Will it be you or one of your siblings, or another party? Be sure and include any other interested parties in your discussions.
  
  
• Have the appropriate legal documents prepared -- If you're going to be taking care of your parents, you will need a power of attorney so you can manage their finances and make medical decisions in the event they can't. You also should have them discuss the possibility of creating a living will. If they don't have a general will, now's the time to make one.
  
  
• Sort out savings and investments -- Locate and review your parents' bank accounts, investments, property, retirement accounts, pensions and Social Security benefits. You'll need all this information to develop a plan for their care whether they are living on their own, with you or in some sort of long-term care facility. Try to prepare an estimate of what your parents can contribute to their long-term care on a monthly basis and what you will have to contribute. Encourage them to move toward more conservative investments as time goes by in order to safeguard principal.
  
  
• Review your parents' important papers -- Ask them to grant you access to their safety deposit box so you can review and store their important papers such as mortgages, deeds and stock certificates. But keep a copy of their wills and living wills at home. If a parent becomes ill and you have an emergency situation, you want to have their living will ready to hand to the hospital or the emergency paramedics. Since lockboxes are sealed upon death, keep their original will, living will and any other papers you would need short-term in a fireproof box in your (or their) home.
  
  
• Review your parents' insurance coverage -- Generally, your parents will have Medicare. But Medicare isn't enough. It doesn't cover, for example, prescription drug costs. Check out their supplemental health insurance policies. Find out if they have life insurance and how much. Have your parents invested in long-term care insurance? If not, perhaps they should do so depending on their age, resources and health.
  
  
• Discuss joint ownership of assets -- If you will be handling your parents' affairs, then they may want to add your name to bank accounts, mutual funds or property deeds. Not only will this expedite your decisions, it can help you avoid heavy inheritance taxes later.
  
  
• Check out community and government resources -- Even though your parents will prefer to use their own money for their expenses, find out what type of assistance is out there in case you need it. Look at the eligibility rules for Medicaid, veteran's benefits and home health benefits, just to name a few.
  
  
• Hire professional help -- Tax accountants, lawyers and financial planners may be able to assist you, depending on the complexity of the situation.

Care for the elderly, either in the home or in a nursing or assisted-living facility, is extraordinarily expensive. Monthly costs can run from $1,500 to $3,000 a month in the home. Nursing homes are more expensive than that. Assisted living facilities aren't quite as expensive, but they require their residents be able to, at least partially, care for themselves.

So enlist your parents' help and plan ahead. Conversations like these with your parents are difficult but necessary if you are to protect them, and yourself, as they grow older.

Rosemary Carlson is an elder caregiver for her 78-year-old mother, who has a terminal illness. Her mother has lived with her, in the author's home, for 13 years and has been an invalid for three of those years. As an only child, she has full responsibility for her mother, although often even in a larger family, one child ends up with most of the responsibility. She has a part-time elder caregiver, who is also a LPN, helping.

-- Posted: Dec. 1, 2000