The markets were up again last week, despite a drop on Friday. Through Thursday, the S&P 500 was up 8.9% for the year. The expected news was that the Federal Reserve Bank did increase rates by a quarter of a percent. Chair Jerome Powell indicated that the Fed may raise rates two more times before holding, although many analysts are expecting only one additional rate increase.
Corporate earnings have largely been positive, with 70% of reporting companies beating earnings-per-share estimates. Late Thursday reports from Apple, Amazon, and Alphabet are pointing to a reduction in consumer demand. Inflation is down. And the labor market has been surprisingly resilient, with unemployment dropping to 3.4% in January.
One industry in particular that is facing headwinds in hiring is senior care. As the population ages, more and more seniors need help with activities of daily living, as well as skilled nursing care. And children of aging parents are stuck in the middle, caring for their own children and worrying about their parents.
It’s important to discuss your wishes with your adult children. This includes thoughts about end-of-life medical care, aging in place, moving into a facility or hiring caregivers, and your eventual final wishes. A great book to start with is “Being Mortal” by Atul Gawande.
If you want to age in place, staying in your own home as long as possible, what changes need to be made? Do you need to widen doorways, install a walk-in shower or grab bars in the bathroom? Can you live on one floor? Do you have a smart watch with a fall detector?
You also need to plan for the cost of care. A nice facility is easily $8,000 a month in this area, for assisted living. If you need additional help, the cost rises. Memory care is even pricier. Regular health insurance and Medicare do not cover assisted living. Medicare will cover some skilled nursing care, if it is in conjunction with a hospital stay and you are improving medically. If you run out of money, you may qualify for Medicaid, but that level of care is not as good as private-pay. You won’t have a private room, and the menu choices may be fewer, as well as the activities offered.
Long-term care insurance is one option. These policies have changed considerably since they were first introduced. The newer ones are designed on a life-insurance platform, which does mean your premiums won’t be increased later in life. They are marketed around the “Three L’s: Leverage, Liquidity, and Legacy.” Leverage is the idea that you would receive more in benefits than the amount you pay in premium. Liquidity, because there is a potential for the return of premium. Finally, legacy, because if you don’t need to use the policy for care, there is a death benefit for your heirs.
Whatever you choose, communicate the plan to your children. Or include them in developing the plan. What happens if you fall, or have a stroke? What’s the short-term plan for recovery? What if you can’t go back to living alone? Do you have someone come in to provide care, do you move into a facility? Does a family member move in with you, or you with them? I’ve seen multi-generational housing work amazingly well, usually when the senior has their own living space and entrance. I’ve also seen it fail miserably, usually when the senior is living in a bedroom in their child’s house. Other options include Golden Girls-type living arrangements, where friends share housing and companionship, or Continuing Care Retirement Communities like Bay Woods or Ginger Cove.
Discussing your wishes with your children now is the most critical part of the plan.
Your action item this week is to change the filter on your heater.
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