Do your clients have a plan for custodial care? Do they recognize the urgency? One of the foundations of a comprehensive financial plan is having a well thought through strategy to handle custodial care, the help many of us will require with normal activities of daily living. In short, our clients need assistance thinking through who will provide this care, the resulting consequences in this person’s life, and the costs associated with this care. If properly handled, this conversation should lead to modifications in the financial plan to support the care provider and handle costs.
Demographic trends and technological innovation are creating both disturbing and encouraging developments. We must recognize that most care is provided at home usually by a spouse or daughter. Formal nursing home care can certainly be a necessary step, but once again, the place to begin the conversation is with handling the challenges of home care. Demographics are not our friend in this regard:
- The ratio of care providers to care recipients peaked in 2010 when the age 65+ population was 16 million.
- By 2020 this age 65+ population will explode from 16 million to 56 million.
- In addition, 33% of middle-age adults are heading toward retirement without a spouse.
(Wall Street Journal; America is Running Out of Caregivers, Just When It Needs Them Most; 7/20/2018)
Compounding these challenges is the fact that parents are having fewer children and these children are increasingly mobile. Will your client even have a daughter living close by or a spouse who is willing and able to provide care?
Private industry is responding by increasing the number and quality of in home care providers. Apps designed for the care-giving daughter provide medication reminders, daily instructions for professional care-givers, transportation options, food delivery, and scheduling of care providers. This technology strives to allow retirees to remain in their homes as long as possible. Also, the number of innovative Continuous Care Retirement Communities is increasing. One can find everything from hot air balloon rides and elaborate model train layouts to retirement communities integrated with child daycare facilities. The questions become can private industry keep up with the staggering demographic shift and if so, will your client have the financial resources to utilize their services?
Without a liquid and robust cash flow to employ these resources, care-giving can crush those wonderful daughters’ lives. The insurance industry is responding with asset based custodial care products uniquely designed to provide this income. Clearly there is an urgency to incorporate these solutions into our financial plans.
Continue to help your clients think through:
- Who will provide custodial care?
- The consequences to this person’s quality of life.
- Do I have a custodial care product, to provide the needed cash flow as part of my comprehensive financial plan?
Start by sharing this video the next time your client is in your office.
The information in this presentation is provided as a general overview. It is derived from the Internal Revenue Code, Medicare.gov and other government publications, all subject matter sources reasonably believed to be reliable. Tax law and the laws governing Medicare/Medicaid are complex and subject to change. Clients should consult with their attorney and/or qualified tax advisor when making decisions regarding these matters.