Estate planning, hospice, aging...oh my.
A listener asks, "How can I plan for my parents' later years in life, and how can I start that conversation?" Katie and Henah reflect on conversations they've had with their own families, what to do (hint: Prep a life audit!), and caveats to consider. (And if you want us to go into this topic more in-depth, email us at firstname.lastname@example.org!)
Welcome back to #RichGirlRoundup, Money with Katie's weekly segment where Katie and MWK's Executive Producer, Henah, answer your burning money questions. Each month, we'll put out a call for questions on her Instagram (@moneywithkatie). New episodes every week.
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Katie:Welcome back, Rich Girls and Boys, to the Rich Girl Roundup weekly segment ofThe Money with Katie Show. I'm your host, Katie Gatti Tassin, and every Monday Henah and I will engage in an interesting money discussion. And do we have a riveting one for you today! And as a reminder, these episodes will hit your feeds on Mondays for your morning commute or, I don't know, your Monday session of affirmations, if you need a little motivation. But before we get started, here is a quick message from our sponsors. On to the roundup. Henah, how are you today?
Henah:I'm good. I'm really excited about this topic. I know that it's super sexy to talk about.
Katie:So sexy. Yes. This week's question from Melanie G. “How can I make a plan for my parents’ later years in life, and how to have the conversation?” I am gonna punt this one to you, Henah, because my own mortality makes me really uncomfortable.
Henah:It's true. She's had a breakdown about this many a time. My own mortality also makes me uncomfortable, but it's something I think about often. I'm a millennial, so I have kind of aging parents who are hitting their seventies, and it's really relevant to me because I've watched them go through their own health struggles, and realizing like, okay, I have to plan for these things and get on the same page. But the person who wrote this question in, they also talked about they lost their dad to Covid, kind of suddenly. And so how invaluable it is to kind of keep that conversation open with her mom, and to make sure that they're all on the same page, so that what happened before doesn't happen again. Her question about “How do I have the conversation?” is a really, really important one. And so I was reading up about it and I saw that according to this 2018 national survey…I feel like I'm Katie.
Katie:Per the survey…
Henah:Per this survey by The Conversation Project, over 90% of Americans believe it's important to discuss their wishes for end of life care, and they would be willing to do so. But only 32% have ever actually had the conversation. And so I think kind of from a pragmatic standpoint, you wanna at least open the gates of that communication and you also have to ask the hard questions and prepare the hard documents. So for me personally, when I went home…
Katie:Yeah, how did you start this conversation with them? I wouldn't even know what to say.
Henah:My parents started it with me.
Katie:Ooh, how did they start it?
Henah:So I live cross-country from my parents right now, and they said, “While you're here, we wanna make sure that if anything ever happens to either one of us, you and your brother kind of know exactly what needs to happen, or what our wishes would be for long-term care or end of life.”
Henah:Yeah, my parents, when I was growing up, I was like “Losers.” And now I'm like wow, besties and also really, really smart. Thanks, Mom and Dad, if you're listening. So what they did is they opened up this master document that had everything you could imagine, that had what their health records were, what their financials are, what was the kind of audit of their entire lives, their logins to certain things. And so it really gave us…
Katie:Oh my gosh.
Henah:Yeah, it gave us this really comprehensive look of like okay, if this person gets sick, then this other parent is gonna do this exact thing. If this one parent dies, the pension goes from this person…it was so specific and so helpful.
Katie:That's so comprehensive. Did they have a template that they used?
Henah:No, my mom just built it in Excel. Anyway, so “Here were all of these things that we're thinking about.” And I really liked it because it also gave us the chance to run different scenarios of the different like runways that my parents would have based on what their health could be, or their income at that time that they just retired, whatever the future of Social Security might be, the kind of lifestyles that they have, the house they currently live in. So it was able to give us a really good understanding of like, if end-of-life care is something that is financially draining, where are the places we can downsize and trim costs? What kind of care do they most prefer? Whether that's like in a nursing home or in-home, or they don't wanna do hospice or they do whatever.
Henah:It was super scary. Not a conversation you want to have, but it is so necessary to have. And so that was…
Katie:Yeah, how do you feel now? Do you feel relief about all of it? Or what do you think now?
Henah:I mean, I still dread that we have to have these conversations, 'cause obviously as things evolve, they'll change the document and update me. But I feel so much more prepared and more relief that if anything were to happen, I know what their, I think it's called like advance directives for medical care are. I know what their wills are gonna say, what their estate planning…all of those things feel very clear to me now, and as much as I hope I never have to use them—knock on wood—anytime soon, it's something that's inevitable. It will happen to everybody. And so I think in a really sexy, exciting way…
Katie:I know. We're like death and taxes: Welcome to the inevitabilities of your life.
Henah:I have multiple friends who, their parent died and they had no idea where to start. They found out they owed thousands in one scenario. One person found out about all this random housing they never knew about. The more transparency and honesty you can bring into the conversation, the better. But also, it's okay to kind of emotionally detach yourself and kind of stick to the pragmatic angle.
Katie:The hard facts. Yeah.
Henah:Yeah. Because I think otherwise it'll just be very draining.
Katie:So it's funny that you mentioned that because when my Papa John died, RIP, he died very suddenly, and it was something where he had had a chronic illness that had gone undetected and that it turned acute really quickly and basically like in a matter of hours he was gone.
Katie:And he was in his eighties, so he lived a nice long life and we thought he was super healthy, and my grandma Jean had been asking him to kind of tell her like, “Hey, what do we have? Where is everything? What are the logins?” 'Cause for their whole marriage, he just handled the insurance planning and the investments, and she did like the checkbook balancing and paying the bills, but she really had literally no idea what they were working with or where any of it was. And so he kind of had it as one of those things like, “Oh, it's on my to-do list. At some point we're gonna sit down and talk about this.” But it kind of goes to show that even though he lived a long life, you never know.
And so I think it's really important that you're highlighting the fact that you wanna have these conversations before you think you're going to need them, or before it's even on your radar. And when he passed, my dad and I basically engaged in this…we basically distracted ourselves from grieving with this big forensic accounting project, where we just buried ourselves in their home office and went through every filing cabinet. We looked for the books of the passwords and we were trying to piece together all these financial statements to figure out where the money was and what they had and what insurance policies he had. And it would just, it would've been so much easier had all of it been laid out for us and for her.
And I know it was just such a huge source of stress for her, which is already obviously the undertone of everything we're saying, is when a loved one dies, that's already an extremely traumatizing life event. And so then to have the financial stress on top of it, of having to worry about money too. It's like, if nothing else, I almost think about it and I'm gonna have this conversation with my parents from the same standpoint of like, I'm gonna let the discomfort of having this conversation now and confronting your mortality and my mortality and you know, how life ends for all of us, with letting it be less stressful than the alternative, which is having to figure it out when you're also dealing with grief.
Henah:Yeah, that's a really great point, is the less you can have to worry about when that time comes, the better. And I think the other piece too is, it's not an absolute. A lot of times it's gradual, but you have to sort of plan, like my parents were very clear that the money they have in this retirement account can fund X amount of months for 24-hour nursing. This amount can fund six months of…
Katie:Yes. So smart.
Henah:It helped us see so many different scenarios. And so I think that that is the most beneficial part of just getting the plan on paper, talking about it, and just understanding where they're at, because end-of-life care can look so different for so many people.
Katie:And it can be so expensive.
Katie:I don't know how much at-home care costs, I'm sure it's even more, but if you want to go to a long-term care facility, isn't it like a hundred thousand dollars a year? I know that there is long-term care insurance, but I've honestly heard really kind of polarizingly opposite takes on whether that's worth it and who it's worth it for. So I wouldn't go out on a limb and say you should definitely have that, or that anyone should definitely have it. I think it's a case-by-case basis. But this is obviously a super complex topic. So if this is something that you wanna hear more about or you want us to do a big deep dive episode that's more research-heavy, we absolutely can. Just email@example.com. Let us know.
But there are those levers that you can pull, like those types of insurance or I've heard of things like reverse mortgages, where if you are strapped for cash and you need some liquidity, that you can in retirement, if you don't have other assets, you can get a reverse mortgage and kind of pull equity out of your home. Which can be an option for people who maybe don't have as much saved for retirement and are looking for alternatives.
So I know that there are options and I think for me, my advice would be, if you find yourself in this situation where you are like that child trying to prep for your parents and they have not saved or they need your assistance, it might be worthwhile to take the issue or take the question to a financial planner that can look at everything they have, and look at what you have and kind of assess the options with you, and help you make a plan that's gonna really make the most sense and be the most cost-effective way to approach it.
Henah:Yeah, I think that makes a lot of sense, 'cause a lot of times you may be dealing with accounts you are not familiar with or they have a lot of caveats you don't know how to work around. It obviously has a cost up front, but the benefits will be far, far more worth it, in my opinion.
Katie:I agree. I also feel like I wanna say that I think it absolutely sucks that people are left to figure this stuff out on their own. It's terrible that this is a humongous financial burden that everyone has to deal with, and that it's not something that we have more, I guess, public funding or support around. But I'm not surprised anymore. I'm like, oh, childcare? No. Elder care? No. Healthcare? No. It's like, okay, great.
Henah:I think the other piece of it, though, is we are in such an individualistic culture that the default is sort of like, you're on your own, or we're gonna, you know, you have to go live in a nursing home or assisted care facility. And in my family, which is more from a collectivist culture, that's just not an option. Like of course your family is gonna live with you, or of course you're gonna take care of them in-house. So I think that just having the transparency of, what is the realistic situation you're gonna be in? Like if you don't think you can live with your parents, then that's valid, but then what are the options? So not the most exciting topic, but what I think is really necessary for this week.
Katie:We said, let's do something really just like fun and light…
Katie:…and sexy this week. Elder care. Yeah. We love that.
Katie:Not emotional at all. Well, thanks for sticking with us. Thanks for listening to this week's Rich Girl Roundup. Like I said, if this is a topic that you think warrants a deeper dive or you have an interesting story to share, we are all ears. Reach out, send us an email. And Henah, thank you for taking the lead on this one and sharing your own situation and how you guys prepped, 'cause I think it's a perfect example.
Henah:Thanks, Sheila, you are the best. Love you, Mom. Thanks, Katie. We'll see you guys next week. Bye.