The financial realities of end-of-life planning

Robert A. Valente, RAV Financial Services LLC

Let’s face it, financial planning is really about life planning, and life planning encompasses many facets, including financial, legal, retirement, and qualitative life-style decisions. One of the most delicate subjects arises around age 50. This milestone often presents a greater need to consider end-of-life plans for you, your spouse or significant other, and your parents. So before you explore the realm of taking care of parents or aging relatives, let’s make sure that you have your own plan in place.

Baby-boomers have been referred to as the sandwich generation. Boomers are caught in the middle taking care of their children and their aging relatives, leaving limited time to devote to completing all of the items on their wish lists.

Know what’s been done

Given the sensitive nature of end-of-life conversations, Virginia Morris, author of How to Care for Aging Parents, suggests integrating your own life planning checklist when broaching end-of-life plans with aging parents and relatives. Be forthright with your parents and explain that you are creating your own financial plan and want to ensure that their needs are accounted for as well. Initiating the mortality conversation is sometimes difficult, so look to outside resources as a primer for the discussion. One of the websites I have found helpful is that of the Hospice of the Western Reserve in Cleveland, Ohio. Go to and read the booklet, Courage in Conversation: A Personal Guide.

Discuss the status and whereabouts of wills, durable powers of attorney, living wills and directives for end-of-life care, life insurance, long-term care policies, and investments or bank accounts that they have earmarked for health care and end-of-life needs. Further, make certain you know where to find your parents’ recordkeeping system for financial accounts, insurance cards, Social Security cards, care providers, accountants and attorneys.   

Budget for the cost of care

It is possible to account for your own end-of-life care, and that of your parents, in your life plan, but you’ll need to project potential expenses to determine the best strategy. According to the American Association for Long-Term Care Insurance, only about 8 million Americans have long-term care insurance coverage, and high costs are typically the prohibitive factor. The earlier you initiate a policy, the more affordable premiums become. Marion Somers, author of Elder Care Made Easier, says that waiting until you are over the age of 60 to secure long-term care insurance may indeed make it too costly. You’ll secure a much better rate if you buy a policy in your 40s or 50s. There may be a need to maintain income replacement coverage while at the same time incorporating a long-term care policy in your monthly cash flow. So how do you plan for your own long-term care needs and still provide financial support to an elderly relative? What pressure will that place on your investment portfolio to generate the additional income to care for your parents? Are your siblings willing and able to provide financial and physical support to relieve you of the major responsibility in caring for your relative? Not only is a detailed cash flow analysis a necessity prior to your amending the strategic life plan at this midlife juncture, but you may need to call a family meeting to decide whether the responsibility can be absorbed by other family members.

Deal with parents

Work with your wealth adviser to determine how much you can truly afford to help your parents without derailing your own financial health. According to MetLife Mature Market Institute, 10 million adult children contribute an average of $3,500 a month to the cost of a parent’s assisted-living care. Although Medicaid program criteria varies by state, your parents may qualify for home or day-care assistance based on their income and condition, but may first need to exhaust their own financial resources. Remember to budget for the costs of burial, as well. Somers says that a run-of-the-mill funeral generally costs between $10,000 and $15,000.

As you focus your energy on your parents or elderly relatives, make sure to heed your own advice. Prepare yourselves and your immediate family for putting in motion those tools that will provide peace of mind to all when an emergency arises. As Americans live longer and the future of government-sponsored insurance plans is uncertain, there’s greater need to assume the costs of end-of-life realities in your life plan. But with the proper strategy and amount of time, your RAV Financial wealth advisor and life planner can guide you to develop a plan that will deliver your optimal financial life both now and at its end. Often a successful life plan becomes a family affair.

Robert A. Valente, CFP®, AEP®, is CEO and Managing Member of RAV Financial Services LLC. He can be reached at [email protected] or call us at 216-831-4900.

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