Do You Know Who Is Going To Take Care Of You When You Get Older?

While half of you have made a plan for your long-term care, many of you still don't know how you'll pay for it and haven't told your kids about it.
By Jason Notte ,

If you don't know who's going to be taking care of you when you get older, it's time to stop worrying about being a burden and start thinking about how to prevent yourself from becoming one.

Recent U.S. Census Bureau data show that the population of Americans aged 65 and older will exceed 80 million by 2050. Among them, the number of people likely to require long-term care is expected to more than double from 12 million today to 27 million during that span. With that reality looming, a report from UBS Wealth Management Americas (WMA) found that the greatest fear among wealthy investors as they age is being a burden to children (42%). By comparison, those investors are less afraid of trumping fears of surviving on life support (34%) or living in a nursing home (15%).

It isn't exactly as if those investors have a plan, either. Just 39% of investors have talked with children about who will take care of them in old age. Only half (50%) have made health care costs part their overall financial plan, while only 23% have saved for their future care.

"Maintaining self reliance is important to the vast majority of investors," said Paula Polito, client strategy officer for UBS Wealth Management Americas. "Having a plan in place for long-term care before they actually need it will help them avoid burdening their children."

However, it isn't as if those fears are unfounded. Among children, 47% of respondents who currently provide care described it as a heavy burden, 41% described it as a moderate burden and 12% said it was a minimal burden. While roughly a third of wealthy investors (36%) say that they plan to turn to family for support or care -- with the vast majority (64%) preferring to solicit outside help -- that's a bit outside the norm. Roughly 74% of wealthy investors say their grandparents relied on family for long-term care, while 57% said their parents did the same.

Longer lifespans are taking a toll, as 88% of investors says long-term care is more difficult, because “80 is the new 60.” The fact that 76% of investors see the price of health care as much greater than it was in previous generations doesn't help, while the fact that 33% of investors have no children living nearby also presents obstacles. However, that is no reason to put off planning for your care or to put off sharing that plan with your children.

“If you wait too long, it can create so much animosity between children, so when the issue does arise, each of the children probably believes they're in the best position to be the patriarch of the family,” says Margaret Paddock, Twin Cities market leader for U.S. Bank’s The Private Client Reserve. “It behooves each and every one of us to take ownership of what we would like to have happen should we become incapacitated.”

If you have certain ideas about how you'd like to be cared for in your old age, now is the time to say so. According to the UBS survey, 89% of investors would like to stay in their current home, while 54% consider assisted living an option. However, only 15% would want to live with a child, while only 12% would seek out a nursing home. A full 80% of investors want their spouse to care for them, while 67% want a home health aide and just 27% want a child to care for them.

None of that is comfortable to say, but all of it is worth saying before you're forced to live out your years in a situation that's uncomfortable for everyone involved.

“It’s important to communicate your intentions to family members during your lifetime,” says Benjamin Sullivan, certified financial planner and portfolio manager with Palisades Hudson Financial Group in Scarsdale, N.Y. “Although having the talk might be awkward, it can save a lot of money and controversy down the road.”

Money is no small part of that equation. Though 57% of UBS investors say their long-term care plan is important to them, just 48% think they'll be able to save enough for it. While 49% says they are “highly concerned” about rising healthcare costs, 77% have not set funds aside for future medical expenses.

Not surprisingly, 33% are worried about medical and long-term care expenses consuming a significant portion of the inheritance they plan to leave children. Meanwhile, those with a plan are more confident in their ability to pay for care when necessary (71% vs. 27% of those without a strategy).

“Even for those who have discussed future health and long-term care decisions, there still is a lot that goes unsaid and unasked between parents and their children,” says Sameer Aurora, head of client Strategy for UBS Wealth Management Americas. "It’s a tough conversation, and no one wants to even think about it, let alone talk about it, but it’s important to get everyone on the same page before it’s too late.”


Also, though parents don't want to be a burden, they'll take the option of being cared for by family if they have absolutely no choice. Of those who'll rely on relatives in their old age, 66% say they'd look to a daughter for care. The kids seem to at least begrudgingly accept that arrangement, with 29% of women and just 19% of men resigning themselves to the roles of primary caretakers. In fact, 26% of men would hand off responsibility for their parents' care to a sibling, compared to just 11% of women. Meanwhile, women say they'll take on that role because they have a closer relationship with their parents (52% of women vs. 41% of men), while men will do so primarily, because they live closer (41% of men vs. 32% of women). If none of that sounds great to kids in this equation, you may want to speak up as well. Advisors admit that while this is ultimately the parents' decision, it's a plan that a family should embrace together -- or at least be notified of well in advance.

“Our generations are living much longer now and the average age is much higher,” says Masood Vodjani, founder and chief executive of Bethesda, Md.-based MV Financial. “Some parents are thinking that they have to transfer some assets to their kids because they don't need all of that. How do they do that and what are the strategies? Those are all conversations that can happen at a roundtable.”

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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