Yes, assisted living, memory care, and in case you don't know this, Medicare does not cover those costs.
What's a typical cost of that if somebody or their parents end up having to pay that out of pocket?
The average cost of assisted living is about $4,500 a month. That's average. A nursing home is 80-$90,000 a year.
Okay, so you moved back home to across the street from your mom, and you're learning about her situation?
Yes. I asked her to check in a long-term care insurance. She took my advice. She met with an insurance agent. Unfortunately, she did not qualify for coverage, because she had another preexisting condition that made her too high risk. At that point I should have said, "Okay mom, you can't get long-term care insurance coverage. Let's look at your financial assets, figure out where you stand, and figure out how we would pay for this care if you needed it."
I can look back and say, that's what I should've said, but I didn't. I didn't even think about it at all. Say being what it is, a few years later, she started having trouble with her memory. At that point, I knew I needed to act quickly and talk to her, but because I was already facing a crisis, if I wanted to start talking to her about money, I would have to explain to her why, "Mom, we need to talk about your finances, because I can see you're having trouble with your memory."
I didn't want to have to be the one to tell her that. I didn't care about talking to her about money. That didn't feel like a taboo topic to me. I didn't want to tell her that I thought she was losing her memory. Eventually, with the help of a doctor actually, I got her doctor to suggest that she get tested for dementia, and he did.
During that process I said, "Mom, I think we need to go meet with your attorney and get all your legal documents updated. Because the thing is you have to be competent, mentally competent to sign a will or a living trust, a power of attorney document, and an advanced healthcare directive. If you are no longer competent, you cannot sign those documents."
Then if you get into a situation like my mother did where she is no longer able to make financial and healthcare decisions on her own, if she had not named me power of attorney and healthcare power of attorney, I would have had to go to court, basically put her on trial to prove that she was no longer competent, spent thousands of dollars to get conservatorship for her. I act too quickly. I knew I had to do this. She was still competent enough. I dodged a bullet, but then I had to figure out her finances while she was already forgetting things, and it was so difficult.
Right. So how did that work? What did you find?
I had to approach it very carefully. I didn't want to look like I was going in and taking over, especially in the early stages of her dementia. I didn't want her to feel like she was losing all of her independence. So I just did things little by little.
One of the benefits of meeting with the attorney was that she suggested that we go to the bank, and put me on her account as her representative payee. That's certainly a big benefit of having a third-party involved with these conversations is because your parents might be reluctant to talk to you, but they're going to listen to the advice of someone else. So the attorney said go to the bank. We took her advice, and then that sort of opened the door to having some more conversations about what role I was going to have to play going forward.
She had all this cash just sitting in her bank account. Fortunately, she had not opened an online account. She was so old fashioned, she never used debit card. She used checks. So I was able to go online and set-up online banking for her and monitor her bank account, because one of the issues that she was having was writing checks to every organization that would send her something in the mail, like organization she had no ties to.
So, I had to make sure she wasn't just spending all her money writing these charitable contribution checks.
Which is something that happens to a lot of seniors.
Oh yeah, it's a big problem. Then you've got to worry about scammers and stuff. I decided to take that money and put it into an annuity. Not that you or I would necessarily recommend that everyone get an annuity, but I knew that it would be a safe place to put her money. It would earn some interest, hands off for several years, and then use it down the road when I needed it to pay for her care.
Cameron’s money lesson:
The lesson is please don't wait to have these conversations with your parents. A lot of people I talk to and hear from say, "Well, I don't need to have this conversation yet. We're not there yet. Mom and dad are still healthy." That is exactly the time you need to have it. You need to have the conversations when your parents are healthy. There's not a financial crisis, there's not a health crisis, because then everyone is entirely competent. Your parents know what assets they have, what they don't have, what legal documents they have.