Explanation:
If your parents own a home, consider tapping it to pay for caregiving expenses.
“Think of it as an investment that can be used to pay for care,” says Joy Loverde, an eldercare expert and author of the new book “Who Will Take Care of Me When I’m Old?”
That might mean selling it, downsizing elderly parents into a smaller space, and using those funds for long-term care. It might also mean that adult children buy the place, lease it back to the parents and potentially tap the home equity.
Or it might mean a reverse mortgage, which allows homeowners to borrow money against the value of their homes, receiving proceeds as a line of credit, fixed monthly payment or lump sum.
Medicaid can cover long-term care costs like nursing-home admission, but only for those under a certain level of personal wealth. That might require shifting assets in a thoughtful (and legal) way.
“One of the most effective planning strategies has been to encourage our clients and their elderly parents to consider gifting their assets into irrevocable trusts, including their primary residence,” says Ian Weinberg, a financial planner in Woodbury, New York.
Long-term care policies can definitely help with eldercare costs, but only 8 percent of the population is currently covered by them, according to Genworth. The trick is to secure them while you are healthy and early enough - say, in your 50s - so that they are still relatively affordable.
“I have at least one client dealing with these costs for his parents, and thank God we had the good sense to buy LTC insurance,” says Kashif Ahmed, a financial planner in Woburn, Massachusetts. “Otherwise, their assets would be depleted in no time.”