projecting future costs and availability of funds

HollyBerry · October 17

Today I learned that your investment person, or financial advisor, or ??? can put your information into a spreadsheet that projects how long someone's funds will last if they enter memory care at a given date. Intuitively I knew this could be done but it had never been suggested to me in a "you ought to do this now" sort of way. So I pulled some numbers from a bank statement and reached out to our investment guy and we'll see what he comes up with.

For those of you who have done this already, what other information is important to consider during this process? Funds in, from all sources. Assets in the PWD's name. Liabilities. Estimated monthly cost of a couple different MC facilities in the area. Other than the monthly cost of MC, how have you budgeted for the unplanned and the incidentals? Do you include the out of pocket limit on your insurance as a budget item, or just the deductible and project medical expenses based on the past couple years? Income tax on the investment income? All household expenses, property taxes, etc become the responsibility of the partner who remains in the house, correct?

In my mind, this is sort of a hybrid of the exercise they do at retirement time, and a look-ahead to the need for Medicaid. I'll have a longer conversation with the investment guy later in the week, but I'm wondering what I might be missing. What did you plan for and what surprises did you have, in terms of budget?

sherryandwilliam · October 17

Only thing I know if I self paid the money would be gone so fast then he would have to go on medicaid. It is so expensive!. Either you are rich enough to be able to afford it or poor enough to be able to go the medicaid route without losing anything. The middle group is the ones that pull their hair out trying to figure it out

allit · October 17

https://alzconnected.org/discussion/comment/225844#Comment_225844

I just said the same thing to my wife today! Pretty much the exact same thing! Freaky

Jeanne C. · October 17

you may also want to consult a CELA (yes, I know we always say that - insert eye roll). The reason I say it here is because I found my investment guy to be clueless about longterm care in our state. The CELA was able to help me move assets legally out my husband’s name and into mine using a Medicaid compliant annuity. We’re solidly middle class, but we were able to qualify him for Medicaid through careful planning. Not saying your investment person will be clueless but mine would have steered me very wrong.

HollyBerry · November 26

I realized I never followed up on this. I was disappointed in the result. While he's been reassuring me for a couple years that she has plenty of money for memory care, in the end, I'm not sure he really understood what I needed to know and how much life will cost! I am going back to my own spreadsheets, trying to figure out what we really spend on things now, what I will need to assume when she's no longer contributing to household expenses, what else she will need funds for besides memory care (insurance… health care…). On the positive side, he moved some of her investments into different funds that provide more income and we have a long term plan for that (I guess). I'm still concerned but not quite as worried.

Jazzma · November 26

I strongly recommend a CELA lawyer. There are ways to legally shelter some of your assets, and to qualify your LO for Medicaid assistance. Memory care expenses are horrific.

cdgbdr · November 26

I am new to this but am working with a CELA. Even at a high level, I know how long I could pay for MC or AL privately and how I can manage what we have and apply for Medicaid protecting as much as possible under current rules. I recommend this. I'm pretty savvy but she has helped me a lot.

DWTired · November 26

That depends on state you live in correct!

Victoriaredux · November 27

"On the positive side, he moved some of her investments into different funds that provide more income and we have a long term plan for that (I guess). I'm still concerned but not quite as worried."

An investment person does, well -investments ; a LTC agent sells insurance etc. You need a comprehensive game plan from someone who plans for the situation you are in . Who considers taxes, medicaid, inheritance, how to title assets, trusts, etc . That would be an elder law attorney .

Grinding numbers is good but having the assets in the right place first is better.

[That the investment person moved funds and wasn't, obviously a retirement planner,which you were seeking, bugs me— I'd check if these funds were no load. They pay more but do they present more risk? I'd just be sure that your retirement benefitted from the changes made and not just theirs.

My fav stock broker joke: A long time ago, a visitor from out of town came to a tour in Manhattan. At the end of the tour they took him to the financial district. When they arrived to Battery Park the guide showed him some nice yachts anchoringthere, and said, "Here are the yachts of our bankers and stockbrokers.""And where are the yachts of the investors?" asked the naive visitor.]

Quilting brings calm · November 27

in answer to your original question about a future budget… you include all income and savings your loved one has, and all expenses your loved one will be responsible for.

My parents have been in an AL for 5 years, so here’s this for an example.

Income

Social security ( each) average of 2% increase a year. But so will the Medicare premium that is deducted before the money goes to your checking account.

Pension ( each) a pittance for mom, neither increases ever.

Their savings - including the money from the sale of their home ( they moved into a camper). They had cashed out their 401k long ago and put everything in a lowly interest bearing checking account. Don’t bother budgeting for interest income

Expenses

Rent at AL - second person charge, first person charge goes up at least 5% every year. Sometimes an unexpected increase due to inflation or ‘whatever’.

Health insurance -Medicare supplement - goes up at least 10% every year. Dental, eye insurance.

Any medical, dental, eye bill that isn’t covered by insurance. Including the bill at the local pharmacy that delivers to the AL.

Car/car insurance/maintenance - some people in AL still drive.

Cell phone or landline.

Groceries - snacks, personal hygiene, hearing aid batteries, depends etc. AL supplies none of this.

Clothing and other items like it.

Haircuts.

Any item they might buy on an outing.

Roku, Netflix, cable, etc.

Net result - income was less than expenses. They began using their savings the day they moved into the AL. They were up to pulling $2000 a month out of savings when he died in February this year and mom needed $1200 a month since then. The ‘savings’ would have been gone in two more years.

fmb · November 27

To add to QBC's list: If the ALF or MCF charges a base rate for the room (incl. meals & housekeeping) and then charges extra for different levels of care (everything from meds management on up), be prepared to factor in those charges, too. My DH entered the ALF a year ago as a low Level 4 ($2000/mo. extra). The head nurse and I just went over his assessment yesterday, and he is now a high Level 5. This will mean an extra $500-1000/mo. (he didn't know the exact rate). The base room rate for a medium studio is $5150/mo., I expect it to go up 10% in January. Laundry and cable TV are extra charges.

This fee structure may sound outrageous, but I found that only facilities with this type of fee structure were willing to take a resident with a chronic catheter and who was a 2-person transfer assist. He is now in Stage 7 ALZ, requires assistance with everything, uses a Broda chair and Hoyer lift (provided by hospice), and eats (with assistance) puree in the special needs dining room. His needs are great. My only other option would have been a skilled nursing facility. Despite being private pay, no SNF would return my call. SNF charges a year ago were $15,000-$18,000/mo. We live in the greater Pittsburgh area, YMMV depending on where you live.

Medicaid is not an option for us, as DH's pension is greater than the monthly allowable income, though our total income is nowhere near enough for his care. In Pennsylvania, Medicaid does not cover ALFs or MCFs. He worked hard all his life, and we are very frugal, so we had built up a nice nest egg. This nest egg also has to last through the rest of my life, and I'm only 64. It is an absolute travesty and shame that in one of the most prosperous countries in the world, our elderly must spend most of their life's savings on care in the last few years of their lives.

Quilting brings calm · November 27

@fmb

Excellent point about the extra care charge. Mom’s AL changed from all inclusive to additional charges a year or so ago. She just got moved from the base rate to Level 2 in October. I had to ask what that meant. Shower help, dressing help, bringing meals to her room. The charge landed as soon as she went on hospice. However I think the shower and dressing help preceded that, but they just weren’t charging her. Around the date she went on hospice, she started refusing to go to the dining hall and within a few days all meals were being delivered to her. She’s been on hospice 5 weeks.

I could not make it through the last 3 weeks or the coming week ( I hope it’s only 1 more) without hospice, the AL nurse and the resident CNA and aid ( those two positions are on every shift). I’d gladly pay multiple times the extra monthly charge of $200 for the two on one care she’s getting, while they also take care of everyone else.

fmb · November 27

@Quilting brings calm

Here in PA, the facility is required to periodically update and review the resident's care plan with the POA/responsible party. I can't remember if it is every 3 mos. or 6 mos. They are also required to review the plan with you if interim changes are made. I imagine your state has similar regulations. You shouldn't have had to ask.

I am so grateful that DH's Medicare Advantage plan covers his hospice charges. His last statement showed that hospice charged over $5700 for the month of September. The plan paid nearly $4500. We wouldn't have made it through the past year without the exemplary care DH is receiving from his hospice team. They are well worth every penny they charge.

I could not make it through the last 3 weeks or the coming week ( I hope it’s only 1 more) … Still praying for your and your mom (hug)

Bill_2001 · November 27

This is a very needed, and quite frankly, frightening topic.

It seems to me that all of the budgeting advice being given by financial advisors ought to include saving for nursing care starting in one's 20s. Let's see how far that goes. Young people are struggling to just move out of their parents' house. It wasn't easy for us older people either, but today's youth have it much harder.

The immense expense of nursing/memory care cannot realistically be budgeted and planned in advance. A few very lucky ones out there have long term care insurance, but most of us will be scrambling to figure it out on demand. For most of us, it might as well cost a million dollars a month.

An elder law attorney and financial advisor are necessary to help us put together a plan. I will offer this: Many retired people do plan on spending money travelling and enjoying their golden years. When dementia enters the scene, those plans end anyway, so those funds can go toward care. This is heartbreaking; no one wants to spend their life savings on care when they had dreams of retirement bliss. However, at least there is a source of funds, even if not quite enough. After much kicking and screaming (at the death of a dream), I promise you that logic will set in and you will come up with a plan.

You may need to give up something and downsize. You may need to search far and wide for a more affordable facility. There are so many variables, and many of us here have cobbled together very different solutions to the same problem.

I learned years ago that the Cavalry is Not Coming, and that includes the financial Cavalry. If you Google "how to pay for memory care," the solutions are as painful as the problem itself. "Sell the house." "Tap retirement funds." "Ask family for help." "Apply for Medicaid." UGH. Wow, artificial intelligence telling me how to slowly go broke. Gee whiz.

I feel for everyone in this ordeal. But I like to give solid, hopeful advice, so here you go.

Consider all income: Social Security, pensions, etc. Now look at your own expenses, plus nursing/memory care for your loved one.

Any monthly shortfall must be pulled from retirement accounts and savings. Do some quick math to get an idea how long your funds will last. Take this information to your elder care attorney and financial advisor and let them help you protect your funds and/or make your funds last as long as possible.

Much Love, Bill_2001

projecting future costs and availability of funds

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