Make Elder Care Part of Your Financial Plan

Planning for your late-in-life years is a key part of a financial plan.

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Scott Holsopple

When you create a financial plan, there are several categories to cover: retirement planning, estate planning, debt reduction and budgeting. And, a less popular category called elder care planning.

Each element of a financial plan should include a set of objectives and a strategy for achieving them. When conducting estate planning, you’re focused on what will happen after you die. When you focus on elder care planning, you’re focus should be on living to an advanced age.

When I say elder years or advanced age, I’m talking about an age when you’re no longer physically and/or mentally able to work. So you’re confronted with a challenge you may not have faced before: even if push comes to shove you make more money. Furthermore, your health, physical abilities and/or mental capacities will deteriorate, so you’ll likely require more medical care.

As you create your elder care plan, be sure to establish objectives to cover each of these issues: living expenses, Medicare, Medicaid, long-term care insurance and power-of-attorney documents.

Covering living expenses during your elder years will be different from the earlier part of your retirement. You could work as a consultant or in a new industry or even as a part-time sales associate for several years of retirement, but you can’t depend on that extra income during later years. You may lose the ability to run necessary errands if you can’t drive or take mass transit – think about shopping for groceries, going to the doctor, attending religious services and visiting family. Will you need to pay someone to help or can you count on your family? Your retirement saving and investing strategy should mesh with elder care planning to ensure you’ll have enough money for your whole life.

Retired couple.

Medicare is the government-organized-and-subsidized health insurance system currently available to all seniors who aren’t covered by employer-sponsored health insurance. Virtually no one who reaches elder years is covered by an employer’s plan, so it’s important to keep up with Medicare changes so you know what to expect.

Medicare doesn’t cover nursing care, but Medicaid does. However, most states require a low net worth to qualify for Medicaid. Still, the program varies by state, and it’s worth checking to see how Medicaid looks in the state where you hope to retire.

Long-term care insurance is privately purchased insurance that will cover long-term care costs like nursing care. It’s a way to preserve your retirement wealth because the costs of long-term care, if you need it, could exceed all other living costs combined.

Power-of-attorney documents designate someone else to take control of your financial and health decisions if you’re unable. These documents protect you, your wealth and your family. A viable power-of-attorney is important at every stage of an adult’s financial planning, so if you don’t have one today, start the process to get one.

If the research necessary for elder care planning is too much, consider retaining an attorney who specializes in elder care issues to help you and your family navigate the process. And remember that it’s never too early or too late to create an elder care plan.

Scott Holsopple is the president and CEO of Smart401k, offering easy-to-use, cost-effective 401(k) advice and solutions for the everyday investor. His advice has been featured on various news outlets, including FOX Business, USA Today and The Wall Street Journal.