My Parents Are Showing Signs Of Dementia. How Can I Protect Them Financially?

As the country gets older, the mounting problem of dementia will only get more prominent. Already the sixth leading cause of death in the country, and the only killer among the top 10 that is completely unpreventable, the Alzheimer’s Association predicts that, by the year 2050, Americans will spend over one trillion dollars on treatment for dementia, five times the current price tag.  For those of us whose loved ones suffer from the disease, it’s a trial every day.  We can’t do anything about the emotional or physical toll the disease takes on loved ones and caregivers, but the devastating financial costs can be mitigated with a combination of planning, transparency and teamwork. 

Q:  I think one of my parents is showing signs of dementia. What can I do now, before the symptoms get worse? 

A:  Because dementia is a group of symptoms, rather than a specific disease, early identification is important, but a full diagnosis may be far off.  Those early days of uncertainty, in which the good days outnumber the bad, can be very tough.  Even if it’s difficult, though, taking decisive action early on is very important. 

The first step is to assemble a team of loved ones and caregivers. Unfortunately, this can be tougher than it sounds.  The sufferers of many diseases can readily identify their own symptoms, but one of the warning signs of dementia is forgetting things and also not realizing that they’re being forgotten. What that means is that the sufferer of dementia is an unreliable advocate on their own behalf.  It also means that, if they deny their problems, other family members may take their side in a misguided effort to show affection and solidarity.  Among the most likely culprits is the sufferer’s spouse, who has likely been shouldering an increasing load to compensate for the sufferer’s worsening mental condition.  Still, anyone who might be able to help should be made part of the early planning.  Also consider bringing in those who won’t help, but who have the ability to derail your plans, either through gossip and complaints or legal challenges. 

If you are your parents’ primary caregiver, you will be spending their money.  Someone in the family will resent that.  Be prepared. 

Q:  Okay, so what do I do once I’ve assembled my team of loved ones? 

A:  You need to sort out several aspects of caregiving.  If they have a will or living will, see if you can read it.  Find as many answers as possible before you have the meeting.  Talk to a lawyer.  Talk to your parents’ financial institutions and then come talk to us.  You’re going to need to find all of their money.  Maybe you’re very lucky and your loved one has left a detailed accounting of their finances. Most likely, though, you’ll need to get legal recognition as the primary caregiver or receive power of attorney before you can access the accounts.  You may not be able to do so before the family meeting. Do your best. 

Use the family meeting to make plans.  Who’s going to pay for what? What happens if the sufferer needs home care?  Will your parent go to a nursing home?  Will you bring in a nurse?  Will he or she move in with you or one of your siblings?  Bear in mind that planning at this stage is more about transparency, openness, and validating everyone’s feelings.  Few of the best laid plans made today will actually be followed.  That’s fine.  Flexibility is important and so is teamwork. Listening to others’ needs at this meeting will go a long way toward building trust when you need to make a financial decision with your parents’ money down the road. 

Q:  Is there anything I can do to help?

A:  Buy a big box of disposable pens and a bulk container of note pads and sticky notes.  Put them all over the house; at every phone, next to a favorite chair, next to the stove, even in the bathroom.  Your plan is to remove every barrier to writing so that the sufferer will be more likely to write things down. Not only does the writing help ease the symptoms of dementia, but having pads and stickies everywhere can be a coping mechanism to make the passage from the early stages to full onset dementia last as long as possible. 
Q:  What can Destinations Credit Union do to help?

A:  We’re not medical experts, but we are financial experts. Come see us and we’ll talk you through some of your options.  We can help turn your parents’ long-term savings into cash if it is needed now. We can help combine various accounts of theirs into consolidated accounts that you can access.  We can set up a home equity loan to bring in the medical equipment or any other changes you need to make to the house should you bring a parent into your home to live with you.
Most importantly, we can help make sure you haven’t forgotten anything. This is a tough time and we’re here to support you.

How Will I Ever Retire If They Keep Moving The Finish Line?

What happens if you’ve made it to the day you thought you’d be retiring, but you’re simply not financially ready? Perhaps you passed your “Plan B” date. Maybe even “Plan C” has come and gone. You know you’ve been making the right moves, but a temperamental stock market, kids who stayed home longer than expected or an unlucky series of events keeps pushing back your time frame.  So, in exasperation, you ask … 

Question: “How will I ever retire? When will it be safe to stop working? 

Answer:  Well, hopefully very soon.  We’re going to show you some ways to put luck back on your side.  It’s going to be part planning, part faith and a good deal of ingenuity, but we can get your pictured future back within sight again. 

Question:  “OK, so how do I know when I’ll have enough money?” 

Answer:  The first thing you need to do is realize that enough money is possible.  It’s scary to read headlines about Boomers running out of money because they lived so long, especially when they’re coupled with stories about how the 4% rule isn’t enough.  If you take these articles at face value, you’ve got to come up with 40 years of savings, assuming you’ll be taking out as much as 10 percent of your nest egg every year.  Because it’s difficult (if possible at all) to get to that point, it’s easy to give up. 

Instead, go back to 4%.  Or, if you’re being conservative, make it 5%. That’s a 25% raise! That’s a lot! Then, remember the lessons of your working life: Anything that happens far in the future should be weighted far less, because you never know what might happen between now and then.  You might find you don’t care for fly fishing that much or you no longer need that annual trip across the country. Your neighborhood’s home values could rebound.  Maybe you’ll stumble onto a strong investment.  There’s too much uncertainty in life to freak out about what’s going to happen far away into the future. Take 5% out, per year, until you’re 85.  That’s plenty. Anything beyond that is too much. 

Question:  “How can I make sure I’ve got enough retirement income? 

Answer:  One of the easiest ways to produce panic is realizing that money only flows one way once you stop working. You’ve been conditioned to treat any month in which you spend more than you earn with revulsion, shame and guilt. Now, that’s going to happen every month – for the rest of your life.

A lot of retirees feel more comfortable with money coming in on a regular basis. You can accomplish this in a variety of ways.  First, try to put off Social Security as long as possible.  The higher payout will make retirement much easier. Second, try to create passive income using investment products.  In the same way that dividend-producing stocks pay out on a regular basis, you can create passive income that can be accessed any time by moving chunks of your retirement into high yield savings products like money market accounts.  That way, you can still budget the way you used to without having to sell your stocks (while hoping you guessed the right time to sell).

You can also create passive income by using your home equity to fund a business venture.  Right now, mortgage rates are low, but a lot of Boomers are missing out because they paid off their homes in order to retire.  You use a home equity line of credit to buy a rental property (which builds equity at the same time it gives you a paycheck) or start an online business built around your hobbies.  If you love to knit, sell handcrafted items on Etsy.  Do you like to fish? Start manufacturing lures with the equity in your home.  These ideas can generate a monthly income for you and also give you something else to leave to your children.  In a pinch, you can even sell the rental property or sell shares in the business for a quick cash infusion. 

Question:  What about my health?  That can be a big cost, even with Medicare. 

Answer:  One of the best places to put some money when you retire is into various forms of insurance. You probably already have life insurance, homeowners, and insurance on your other big purchases, but you also probably only have Medicare to cover the health side of your insurance portfolio.  What happens if you need something Medicare doesn’t cover?  Is it worth it to go on and try to find a supplemental plan?

One way to keep your options open is to try a “do-it-yourself” Health Savings Account (HSA).  While traditional HSAs gain their benefits from your employer paying into them, you can get a lot of the same benefits simply from putting some spare cash into one of our high-yield money market accounts.  That way, you’ve got money put aside for a health emergency, but you’re not spending on a premium you’ll only need very rarely.  As an added benefit, you can access that money if you need it for things that aren’t health-related if some other kind of emergency comes up.

Hopefully, you’ve gotten a better idea of how to tackle retirement.  You need to have faith and protect yourself at the same time.  The best way to do that is to put your money with someone you trust and give yourself access to it, just in case.  If you need any more info, want more guidance, or just need someone to talk to about taking the leap, give Destinations Credit Union a call at 410-663-2500.