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Why It Matters:
The average lifetime cost of care for dementia has skyrocketed to an estimated $322,000.
Forty-three percent of unpaid caregivers cite “just getting by” as a current financial priority.
Your clients deserve trustworthy insight on how to form a financial strategy in the shadow of dementia.
Some of your most responsible clients may be walking a six-figure tightrope.
For the millions of dedicated individuals who care for loved ones living with Alzheimer’s disease or other forms of dementia, the emotional and physical cost of the role is sky-high. Tack on the financial cost of care, and the toll can seem insurmountable.
According to the Journal of the American Geriatrics Society, the average lifetime cost of care for dementia in the U.S. is about $322,000, with families footing about 70% of the bill.
Given the fact an American is diagnosed with dementia every 66 seconds, there’s a good chance you’ve already provided services to an individual affected by the disease. If not, consider preparing for the inevitable.
To better understand the financial impact of dementia, consider these findings from the 2017 Inaugural Study of Caregivers, a comprehensive study by the nonprofit Transamerica Institute.
In a survey of more than 3,000 non-professional family caregivers nationwide:
- Seventy-five percent don’t receive any form of financial assistance or payment for their work.
- Fifty-five percent say their own health is taking a back seat to the health of their care recipient.
- Forty-three percent cite “just getting by” as a current financial priority.
Aside from the larger financial picture, caregivers cited they have saved just $68,000 (estimated median) in total household retirement accounts.
Keys to a caregiver’s financial strategy
Navigating conversations around dementia may seem difficult, but clients depend on your trustworthy guidance. Consider following this five-step framework to build a financial strategy for clients impacted by dementia, provided by the Massachusetts Institute of Technology AgeLab. For a more in-depth look, check out our Field Guide to Dementia program.
Step 1: Assets
Beyond assets already under management, like retirement savings or investments, consider your client’s possessions, household items, real estate, and other assets. Whose name are they in? What is their estimated value?
Is the client’s primary residence currently titled? If your client shows interest in gifting or transferring assets, make sure he or she understands the five-year rule for Medicaid eligibility.
Step 2: Income and insurance
Identify all your client’s existing income sources, including disability payments, Social Security, annuities, and pensions. Consider how these could be affected by changes in family circumstances.
Be sure to look over your client’s insurance plans to ensure they fit current and future needs, and discuss whether additional policies make sense to fill future coverage gaps.
Step 3: Intentions
Dementia planning is ultimately a family matter. It’s imperative that you work to understand your client’s wishes and how they’ll be fulfilled.
This can include where clients want to live as the disease progresses, how they want care to be managed, and who will be in charge of their finances (i.e. power of attorney and representative payee).
Step 4: Banking and administration
As the health of a loved one with dementia declines, he or she will need more help managing day-to-day finances, including tracking expenses and paying bills.
This is a good time to discuss automated billing services and possibly establishing a representative payee for government benefits. It may help to share the Social Security Administration’s representative payee page with clients.
Step 5: Care management
Lastly, your client and his or her family may want to discuss how to finance and facilitate care, especially when the disease progresses and caregiving becomes more demanding.
Does your client prefer in-home care to nursing care? What about assisted living? Is there a long-term care policy in place? The Health and Human Services’ LongTermCare.gov has a “finding local services” page to help get started.
Things to Consider:
If clients ever mention caregiving duties or dementia in their family, you shouldn’t wait to offer guidance.
For clients unfamiliar with dementia, consider sharing the 10 warning signs of dementia.
Conversations around dementia may feel awkward – consider these 3 Tips for Helping A Client With Dementia.
Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.