Before we Bid Adieu

It’s 2 a.m. Margaret, who has gotten up for the third time that night to go to the bathroom, drags her walker across the hardwood floor and crawls back into the king-sized bed that she shares with Barbara and her beau, Fixup. This is not a ménage à trois but an end-of-life arrangement. We spend our last days leaning against a row of pillows and tucked under a thick comforter. There’s a stack of all our books — our reading tastes are very different, a place for Margaret’s wine and chocolate, Fixup’s sleep-apnea machine and mask, which makes him look like Jacques Cousteau, and Barbara’s favorite New York Times newspaper and People magazine. We know that we’ll need to agree on TV programs, though Margaret’s love of old black and white movies may take priority. We have a contract to enforce our previously agreed upon rules: no crumbs in the bed, rotate who gets the cramped middle—Fixup, like Margaret’s late husband, prefers the aisle whether a bed, movie theater or plane; what time for lights out and on again in the morning, though we’re fortunately all early risers, and who and how often we allow in visitors. And if Margaret happens to meet some dashing age-appropriate guy during this stage, we’ve agreed to let him squeeze in, too. The more the merrier since we know that our sardine-like arrangement may not be everyone’s ideal but at least it resolves one of the biggest problems the very old experience—loneliness.

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 The sobering reality is far different. 

The cost and conditions of end-of-life elder care is enough to give anyone palpitations. (See our guest blog on Long-Term Care Insurance, May 17, 2019). Although some may avoid dealing with this issue, almost everyone we know is thinking about it, yet trying to purge it from their brains like a nightmare. Naturally, we, too, would prefer to focus on our next vacation or almost anything other than decide on the inevitable--a place where we would like to end up for our final years and dealing with all that’s involved. What is the best place and most affordable?  

We can sidestep thinking about this until we’re faced with a crisis. However, if we don’t deal with it now head on, we end up burdening our children, financially and emotionally. And that doesn’t include the physical aspect of dealing with all the stuff that’s piled up in our attics, basements or storage lockers. 

Right now, you reason, we may still have a lot of living to do on our healthiest, happiest days. After all, we’re not dead yet. But we’ve certainly inched closer to needing to make these decisions, based on our experiences with our parents or our friends’ and relatives’ parents. Having a front-row seat to these issues, most of us have had a chance to consider what we’d like if we live to a ripe old age. 

We’re not alone. According to the U.S. Census Bureau, the estimate is that by 2030, one in five Americans will be older than age 65. However, the number who spend time in nursing homes is decreasing, according to the Centers for Disease Control and Prevention. One factor may be the staggering cost; another may be the older population’s desire to live out their days at home. But that comes at a cost. In addition to the financial burden, the choices for a final resting place aren’t what most of envisioned for ourselves or our loved ones. 

Everybody talks about how great New York City and other big metropolitan centers are to retire. There are advantages in terms of public transportation choices when it’s prudent to give up the car, but it’s expensive, nevertheless. You get big hospitals with the latest research at your physicians’ fingertips, grocery stores on every block that deliver the freshest, best food, hair and nail salons galore to make you pretend you’re looking your best, banks, newspaper stands, shoe repair stores—a dying breed and more. These options are incredibly expensive. Consider the cost of one fresh bagel in whatever flavor you crave, add butter at one deli on New York’s Upper East side and it will be $3.25, with tax. Two hours north of NYC in Barbara’s tiny village, the same bagel costs $1.25. 

More key than a bagel is the need for help when you’re too old to tie your shoelaces, safely bathe or shower on your own, make it to the bathroom on time or prepare meals—even order takeout. If you want to age—and die—at home and need assistance, many turn to an agency that will carefully screen aide choices. In NYC, for example, 24/7 agency live-in help currently costs about $28 an hour or $245,280 a year. That doesn’t include a holiday or birthday gift or their cost of their meals in addition to yours. Yes, you read that right: $245,280. Long-term care insurance that one of us has will cut our part of the expense; the other one of us will have to reach deep into her pocket. Ouch. Of course, by itemizing deductions, making sure any aide hired is certified as a home health care aide to get those deductions, some of that expense might be offset, depending on income level and tax rate. Since we’re both living in New York, we’ll address this from that vantage point. 

If we find a caregiver through recommendations, our costs will be less. In NYC it’s roughly $18 to $20 per hour or $175,200 on the upper end. It’s a bit less, and the care is often as good. Some of the caregivers/aides may have worked for an agency but have gone out on their own to reap a higher income. Many are also certified, having gone through training that makes them better trained in bathing, helping patients navigate with a walker or in a wheelchair and prepare meals and dispense meds. 

When more care is needed, an extended care facility or a nursing home may be in order. A nice, clean but simple one in Barbara’s area costs $500 a day or $182,500 a year, three meals included. The rooms are spartan, the communal dining and activity rooms nowhere near five-star status, but the staff is kind and the care supposedly good. Nationwide, the average is less. According to one survey a private room in a nursing home costs an average of $8,121 a month or $97.452 a year; a semi-private room averages $7,148 a month or $85,776 a year. 

If we’re in better shape, can’t totally manage on our own but can manage getting into and out of bed and bathing and want more privacy, a nearby assisted-living facility that’s part of the same complex, offers 29 small apartments that are actually cheery with their own freshly carpeted living rooms with kitchen area—refrigerator, sink, microwave, counters and drawers--and separate carpeted bedroom and tiled bathrooms. That option costs between $7,000 and $8,500 a month, depending on the level of care i.e. help managing medications, or $84,000 to $102,000 a year. Again, three meals are included and the use of another, nearby facility’s indoor swimming pool. 

In addition to tax deductions, there is some cost relief that Medicare provides after an accident or illness. An aide is often available free five days a week for several hours, for a set period, say four to six weeks, and a nurse will also make regular home visits, just not as often. Palliative Care and Hospice are options too, covered by Medicare and supplemental plans. Both provide comfort to patients, but palliative care can begin at diagnosis and at the same time as treatment. When your disease reaches an advanced stage or when you’re in the final months of life, Hospice is available. Hospice begins after treatment of the disease ends and when it’s determined that the person is not going to survive more than six months. If their life expectancy changes after six months, they are no longer eligible. It’s important to address your concerns and questions to a financial planner, accountant, lawyer and physician or social worker. 

But here’s the bigger conundrum. How much money and effort do we really want to spend on ourselves or even our closest loved ones at this late stage of life when there’s often little joy in living or barely existing to be 100 or even older? Barbara believes that cleanliness in any facility is key. But niceties such as carpeting versus wood vinyl planking (easier to clean) may not make a difference especially when eyesight is worsening. Even more important is to consider the fact that those who are in their advanced ages and need assisted living or long-term care spend most of their time in bed, maybe watch TV, see staff hurry in and out and about, help a patient to the bathroom or to rehab, change their disposable panties, check their vitals, change their bed linens and bring in their food trays. The rest of their time is spent waiting—and hoping--for visits from family and a few friends. Is that a way to live? As one friend told us, our pets get better end of life choices than people.

Ways to afford care for an aging loved one:

• Find hidden equity in a life-insurance policy: Thousands of individuals have life insurance policies they are not aware of and billions of dollars in life insurance benefits stemming from long neglected or unknown life-insurance policies are everywhere. Too few understand they may be able to cash out with a  "life settlement," or sale of an existing life insurance policy to a third party. Use this Life Value Calculatorto estimate how much your life insurance policy will be worth when you sell it.

• Consider long-term care insurance: Consult with a local long-term care specialist to see how you can shift the risk to an insurance company.
• Anticipate and Protect against a Medicaid Spend-Down: You can also explore strategies that preserve and protect your assets for your loved ones while shifting the costs of long-term care to the state and federal government through Medicaid planning).

• Set up an Irrevocable Trust: This reorganizes your assets so that later those assets will not be counted for Medicaid eligibility purposes.  When planning, be aware of Medicaid’s five year look-back period related to the transfer of assets for less than fair market value.
• Delay taking retirement account distribution to 70.5 years.
• Consider a move to lower tax states like Florida.
• Consult with a tax expert to make sure you are receiving maximum benefits.
• Augment retirement funds with a part-time job: Almost 22% of Americans 65 and older expected to have a part-time or full-time job by 2026.
• Balance your needs with taxes, death, legacy goals.
• Manage your debt.
• Consider life insurance as an asset class which can diversify your portfolio and provide tax-free growth and protects against market volatility.

ABOUT DAVID KOTTLER:

David Kottler is a financial planner, national speaker, author, and entrepreneur who combines his legal and business experience to help his Americans fulfill their life mission both philanthropically and financially.