A significant aspect of the caregiver's responsibility is financial management. In the instance though, where you're giving care you really can't just 'manage finances' or spend funds carefully until they are exhausted, but rather, financial management has to include some level of 'stewardship' or oikonomia. Lucky for Mummy, it looks to be my forté.
I've spoken in generalities of the costs of care, but today, let's do a little math shall we?
IF caregivers from a properly licensed and bonded agency cost $18.50 per hour, and a typical work day is 8 hours plus two hours travel time to and fro, we're looking at a 10 hour, $185 day. Basically, we're looking at a $925 care cost per week. Yes, that's nearly $1,000 each week. Don't worry, it gets better.....or is that worse? You decide.
IF a month contains 4 weeks (which, it still does no matter how I've begged for a break), we're looking at a $3,700 per month care bill. Just to clarify, this is a patient still living at home. This is not a full service assisted living facility. Those can cost significantly more. Consider also that if you haven't claimed your parent as your dependent, every dollar I'm referring to here is a post-tax dollar. Annualized, that's a hefty $44,000 out of your net salary.
To this we must next add the typical out of pocket costs such as: doctor's visit fees (either entire or co-payment), lab costs, dentist visits. Per an article I just read, a number in the vicinity of $5,000 is not unreasonable (see the article here). Please note that that number comes from an article written in 2009. It can serve only as a suggestion as to what any of us might face in the future. The article's authors offer a slightly higher figure for older adults (75 - 84) and higher still for the 85+ age group. Whichever bracket your senior is in, the numbers add up. Quickly.
SO, the GRAND total, and I do mean GRAND could be anything of the order of $50,000 per annum. So in a family like mine where we are blessed with longevity, a plan is critical. Five years of this is a cool quarter million. Ten years? Half million. I've got a relative who has been in need of care for a decade and a half. I guess now you understand fully why I strongly recommend both a long term care policy and a secondary stream of income! I say this all the time, and I've probably said it on this blog before, today's healthcare costs cannot be paid for out of today's earnings.
Every time I've come close to posting the actual numbers, I've told myself that it can't help; it won't help. People who don't want to know, will read these numbers and weep. Alternatively, they'll read these numbers and say, "Well, there's no way I can save that so I'd better not even bother to try." Or again, they'll say "To save that amount, I'll have to never eat again!" None of these responses is either true or helpful.
Start from a place of, "Well now I know" and move briskly from there to a place of, "Well, what do I do next?" and you will have taken the most important step to making a different future possible. My recommendation is not even that you try to out save the need, but rather that you try to out earn the need instead.
So, getting back to the stewardship idea..............
Once someone retires funds are limited. It is then that stewardship becomes crucial. Whomever is in charge of the funds cannot be like the servant in Matthew 25 (yes, I'm quoting the Bible), who, when given responsibility for 1 talent ($1000 in the Eugene Peterson version of the Bible "The Message") buried it lest he lose it. When the master returned some time later, the servant dug it up and handed it back. The master was not amused.*see the text below.
There is always a risk of loss, but I can guarantee that if you don't try to grow the funds/talents there will be loss (our best friend inflation) and whatever you have will likely be insufficient unto your needs. If you start early enough you have time to make mistakes, lose ground, regain it and still end up ahead. Talk to some professionals, get some advice and 'go brave' as my Granny would say. Take a chance. Start small. I did. Ten plus years ago I had a taxi. While I worked at my desk, it worked on the road and it earned quite nicely thank you very much.
Mummy's long term care policy pays for 5 hours per day of care. Huge help! Me staying at home, saves us the remaining 5 hours of care costs but that costs me even more. So it is. It is an extraordinarily high price I pay but well, I put my 'expertise' to use here on the blog and elsewhere.
If you don't want to have to make these kinds of awful choices, pick up a pen and paper and start making a plan, today. If you have no idea where to start, talk to someone, even me. I'm not that far away. Truly. Send me an email and I'll be in touch.
What I would have paid if someone had told us this stuff.....oh yeah, I forgot. I did pay, it's called MBA tuition! Too bad no one listened huh?
*From Eugene Peterson's 'The Message'
14-18"It's also like a man going off on an extended trip. He called his servants together and delegated responsibilities. To one he gave five thousand dollars, to another two thousand, to a third one thousand, depending on their abilities. Then he left. Right off, the first servant went to work and doubled his master's investment. The second did the same. But the man with the single thousand dug a hole and carefully buried his master's money.
26-27"The master was furious. 'That's a terrible way to live! It's criminal to live cautiously like that! If you knew I was after the best, why did you do less than the least? The least you could have done would have been to invest the sum with the bankers, where at least I would have gotten a little interest.