Planning Smart for Your Clients’ Senior Caregiving Duties

Investment advisors who really want to help clients maintain a healthy cash flow plan need to address a burgeoning issue – the financial burden of caregiving for seniors.

“While some may make a living caring for others, millions of caregivers nationwide provide services that go unpaid -- most notably, folks who care for family members in need,” SCAN Health Plan stated in a recent report. “While it's clear that caregiving can take an emotional toll on those who provide it, the financial toll is often overlooked.”

Overall, 47 percent of caregivers have had to tighten their belts financially because of their caregiving responsibilities, the report found. Of those:

• 34 percent have cut back on own discretionary spending
• 20 percent have used personal savings to provide care
• 8 percent have accrued credit card debt to provide care
• 5 percent have asked for donations or financial support from friends or family
• 2 percent have taken out a loan to provide care

A separate study by Merrill Lynch and Age Wave reveals that 40 million family and friend caregivers in the U.S. collectively spend $190 billion per year on their adult care recipients. Also, 92 percent of caregivers are acting as financial caregivers for their care recipient.

Craft a Plan

If your client comes to you with a senior caregiving issue, and can’t afford to pay for it, it’s up to you to craft a plan to ease some of that financial burden.

“Caring for seniors is challenging,” said Robert S. Seltzer, founder of Seltzer Business Management in Los Angeles. “If it’s for the clients themselves, then long-term care insurance should always be considered. If it is for a parent or other elderly relative that is already in declining health, LTC insurance is not an option.”

There are a few ways to address this issue, Seltzer said.

“One is to spend down that person’s assets and then they will qualify for government care,” he explained. “However, this is usually not the best option as the facilities that accept government payments are not the best.”

If your client has to pay for the care out of pocket, reach out to literally everyone they know to try to find a referral for a caretaker.

“The care provided by agencies for home care is hit and miss at best and is much more expensive than doing it privately,” Seltzer said. “When my mom was in declining health, I was able to get a referral from a friend and the caretaker was wonderful and thousands less a month than going thru an agency. You do have domestic payroll responsibilities if you take this route, but it is totally worth it.”

Others say that insurance should play a huge role in senior caregiving, mainly by getting ahead of the issue.

“Clearly, insurance is the best funding option,” said Nicole Gurley, founder of Gurley LTCI in Phoenix, Ariz. “Why pay dollars when you can pay pennies for long-term care insurance coverage?”

'Pretty Significant Impact'

The cost impact of senior caregiving on individual female caregivers averages $324,000. For men it is $284,000, noted Gurley, citing MetLife Mature Market Institute data.

The estimated total of lost wages, pension and Social Security benefits of these caregivers is nearly $3 trillion.

“Depending on adult children to provide care can have a pretty significant impact on their future financial security,” Gurley said.

Advisors can steer clients toward technology tools to reduce the high cost of senior caregiving, but still get the job done.

For example, for $299 up front, and a monthly fee of $39, caregivers can use a product like TruSense, a smart home technology designed to help older adults stay in their own homes longer.

The product uses sensor and GPS technology to discern the way a person lives -- time spent sleeping, in the kitchen, or getting out of the house. When a pattern shifts, TruSense notices, and updates the user and the circle of people who they’ve chosen via custom notifications. It can even notify the 24/7 emergency monitoring center through a voice integration with the Amazon Echo Dot.

TruSense can also report how much time caregivers or other visitors spend in the home (something that can become problematic when they bill at a high hourly rate).

Clients might not bring it up – perhaps they don’t want anyone to know they’re spending all that money on senior caregiving. So it’s up to investment advisors to ask clients with elderly family members how they’re getting along financially – and if they’re need in financial guidance.

Brian O'Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC's Guide to Creating Wealth. He's a regular contributor to major media business platforms. Brian may be contacted at [email protected].

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