A few years ago, Joanne Brennan of Summerland Key took early retirement from her teaching job to help care for her ill father in Pembroke Pines.
Brennan’s father died at age 88 in December 2010. Since then, Brennan, 66, has driven three hours twice monthly to check on her mother, who lives in Century Village in Pembroke Pines.
Brennan said her mother, 92, has a long-term care policy that provides a daytime caregiver. But the elder woman’s Social Security check doesn’t cover all the bills, and when her mother’s $7,000 in savings runs out, Brennan knows she will step in and help financially.
“I throw money at her whenever I can,” Brennan said. “I pay for groceries when I go up to stretch her savings so that she is not tapped out completely, because when she is tapped out, it will be my financial responsibility.”
While most of Brennan’s peers no longer have a living parent, she is one of many older adults sharing the cost of a parent’s care. According to a 2012 Pew Research Center survey, about one in five middle-aged adults have provided financial support to a parent age 65 or older.
Financial advisors say the best way to manage a potential blow to your budget if you take on the financial care of a parent is to anticipate and plan for it. A little preparation can go a long way, said Frank Armstrong, a certified financial planner and founder of Investor Solutions in Coconut Grove.
“There are all kinds of resources available, but they come at a cost, and if your parents didn’t save enough, it’s going to come out of your pocket,” he said. “The average family has only ‘x’ number of dollars, and if you don’t plan in advance, it may mean your kid can’t go to the college you want them to or you may impact your own ability to retire.”
Brennan, who works part-time doing social media, said caring for her aging mother has changed her life plan in subtle ways. She and her husband, Paul, had planned to sell their modest house in the Keys and move closer to their son in Portland, Oregon. “We wanted to sell our house to be nearer to him, but we can’t leave my mother and move cross-country,” she said. Brennan said she also worries about the future, if her mother will one day need an assisted-living facility, and whether Medicare will pay for it.
“I’m 66 and most of my friends my age don’t have living parents anymore, so I have no resources to ask. It’s very hard to find out information,” she said. “I was a teacher/librarian, and I have a master’s in information technology, and I don’t know the answers.”
If you are blindsided with a sudden financial responsibility to support an aging parent, there are resources to help ease the burden, said Johanna McMichael, a certified financial planner with Fusco Financial Services in Wilton Manors.
Learn about tax deductions and credits
If you are caring for a parent or have moved a parent into your home, you may be able to claim them as a dependent on your tax return. If you pay for their medical expenses, you may be able to claim credits on your return. Consult a tax advisor to see if you are eligible, McMichael said.
Find out if your parent qualifies for assistance
You can lower expenses through senior programs, like utility companies that offer breaks on energy bills, or free transportation services for the elderly to medical appointments, McMichael said. “It’s a little tricky because you have to look for them, but they’re out there,” she said.
Brennan learned about Lifeline, a government program that offers discounted land lines to low-income residents.
A geriatric care manager, www.caremanager.org, can help you find local resources for seniors. A certified senior move manager, www.nasmm.org, can handle the logistics if a senior wants to downsize. Many churches and synagogues have programs to find companionship for the elderly, or help caregivers. An elder care attorney, www.naela.org, can design a financial plan to take advantage of government assistance and handle estate planning, Armstrong said. Programs that benefit Florida’s elders can be found on the state Department of Elder Affairs’ website, www.elderaffairs.state.fl.us/index.php. Broward County Elderly & Veterans Services can be found at www.adrcbroward.org, and Alliance for Aging in Miami is at www.allianceforaging.org.
Have a frank discussion about finances
Take an inventory of resources available to you today and in the future and compare to the costs of medical care and housing. “That’s why it’s so important to not let this stuff surprise you, to have that frank family discussion,” Armstrong said. “Say ‘Look, Dad, if down the road I’ve got to take care of you, what’s available in the way of resources, to do that? How do you want to live?’ Those are painful discussions. But the more of those you have in advance, the better off you’re going to be.”
Get a list of assets, how they’re titled, account numbers and where they’re located.
Take a look at income, Social Security checks, assets, real estate and expenses. Sit down with a financial advisor, so you and your parent can review it together. Make a budget and decide where you need to tighten up, whether you eat out less or shop less frequently, McMichael said. But budget for entertainment each month, because you do have to enjoy yourself, she said.
“Caregivers have to be careful, because they can suffer health issues as a result of taking care of someone,” McMichael said. “It can be stressful. Sometimes getting a support group for yourself can be helpful.”
Enlist siblings who can’t help financially to assist with paperwork or putting in time packing or sitting with the parent.
Think about consequences
“If someone is bringing a parent into their home, and they’re thinking about quitting their job to take care of them, they really have to consider the consequences,” McMichael said. “You’re not only reducing your income, but possibly your future Social Security benefit.” If you one day want to go back to work, will you be able to go back at the same level?
“You really want to think about these big decisions before you do anything,” McMichael said. “You have to think about how you are going to help your parent, if you can’t take care of yourself, too.”
Look into long-term care insurance
You may be dealing with your own retirement, kids who want to go to college and your parents’ problems, and there are only so many dollars to go around. It’s a crap shoot, Armstrong said.
“Some of these things can be insured against — like long-term care — it’s expensive, but the odds that one of your parents is going to need long-term care are quite high,” Armstrong said. “So you can share the risk through insurance policies or you can bear the risk, and take the chance that you’re going to get wiped out.”
Set up a power of attorney
Set up a power of attorney so you can care for an incapacitated parent, handle their finances, cash their Social Security checks and sell their house, if that is necessary to pay for their care, Armstrong said. “If you have that power of attorney, you don’t have to go to court and have them deemed incompetent,” he said. “Some advance planning will avoid this. Care under a power of attorney is more dignified, less expensive and more efficient than a guardianship imposed by the state.”
Brennan said she is fortunate that both parents had the forethought to buy long-term care insurance, a luxury, ironically, she cannot afford for herself. But she is adjusting her personal financial picture to include her mother’s care.
“I’ve learned to tighten up, that’s why I went back to work part-time,” she said. “When my mother runs out of money, when her savings are gone, it will all be me.”