Financial Planning For The End Of Life

Tell Me More continues its series on aging and the end of life. Many older Americans need long-term care providers like nursing homes or assisted living, which can be too costly — even with help from Medicare and Medicaid. Michel Martin discusses the economic challenge of aging with Marion Somers, a geriatric care manager and author of Elder Care Made Easier, and NPR Senior Business Editor Marilyn Geewax.

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MICHEL MARTIN, HOST:

I'm Michel Martin, and this is TELL ME MORE from NPR News. This week, TELL ME MORE has been exploring how families in our country are grappling with aging. We've been talking about financial security, caregiving, health and faith as we age, and we know that these may be difficult conversations to have and to hear, but we think they're important because they can also help us prepare for the challenges that most of us will face, if we're lucky enough to advance in age.

Later in the program, we'll be talking about some of the personal and emotional challenges involved in taking care of aging parents or other loved ones. But first, we want to talk more about the financial issues involved as you or a loved one nears the end of life. This is important because many people are living longer but as we age, many people will find it difficult or impossible to take care of themselves.

So many people are turning to long-term care providers, like nursing homes or assisted-living arrangements. But these are expensive and getting more so, even with some help from government programs. Late last week, in fact, the White House announced it was scrapping a provision of the 2010 health-care law that was designed to help seniors pay for long-term care. The Obama administration said the so-called CLASS Act was not financially viable.

So we wanted to get some advice on how to prepare yourself and loved ones for the financial challenges of aging. So we've called, once again, on Marion Somers. She holds a doctorate in gerontology. She's a geriatric-care manager. She's known as Dr. Marion. She's the author of the book "Elder Care Made Easier." Also with us, once again, is NPR senior business editor Marilyn Geewax. Thank you both so much for joining us.

MARILYN GEEWAX, BYLINE: Hi, Michel.

DR. MARION SOMERS: My pleasure.

MARTIN: So Dr. Marion, I want to start with you. And I'd like to ask you: When we talk about long-term care, what are some of the things that we're talking about?

SOMERS: When we're talking about long-term care, we're talking about what are the health issues you may be facing, and what are the expenses that are going to be incurred from that? What are your medical issues? What are the living arrangements? Are you going to stay home, in your own home? Are you going to move in with some family members? Are you going to go to a retirement facility, assisted living, a nursing home? Whatever it is. But people don't think about these things beforehand. They think about it when there's an emergency. And my whole thing is, start planning now.

What is your health? What is your family's health history? And start thinking about that, and start taking care of your own health, and think about long-term. Who's going to take care of you in your old age? Is it going to be children, family members? Is it going to - move in with friends? When we plan, then we have some control over our lives.

MARTIN: OK.

SOMERS: If we just wait for something to happen, then things are out of control.

MARTIN: OK. Marilyn, I'm going to ask you this because – and I'm sorry for your loss.

GEEWAX: Thank you.

MARTIN: I understand that you lost your father last year. And you strike me as a planner, and coming from – I would assume you come from a family of planners, but you were shocked, as I recall, by the expenses and all that was involved in the very end of life. And he did not have – he was not ill for very long, as I understand. Would you tell us a little bit about it, if you wouldn't mind?

GEEWAX: My dad was 88, and he really was only very sick for the last week of his life. But that last week, you know, I was really shocked. I'm a person who has been involved with business news and financial planning kind of issues my entire career, and yet I really didn't realize how much was going to be involved between the hospice care, and getting a room at a nursing facility so that he would have a good place to be, and then the funeral expenses.

He has already prepaid for a plot at the cemetery where he wanted to be buried, but there's the - all the expenses related to the funeral, including things like having a meal for your family and friends. By the time you add it all up, you really need to think in terms of having a good $10,000 set aside for a decent burial.

I'm not talking about bells and whistles and fancy coffins. I mean, just a plain old, normal burial in a regular market in America will cost you about $10,000, $15,000 in more expensive cities. And that's not counting all the things like maybe flying relatives in. These funeral homes are not going to tell you well, go to the bank and try to get a loan. All of that has to be cash on the barrelhead - or have a good credit card to be able to pay for that.

MARTIN: We asked our listeners, in fact, if they were prepared for the cost of long-term care, and what options they had explored to keep the cost down. We got a lot of responses. I just want to play one from Linda Monroe. She's from Oklahoma City, Oklahoma.

LINDA MONROE: My husband and I plan to be cremated, but we can't afford a long, slow decline. I don't want others to be in control of my destiny, and I don't want to burden the kids with the worry. I'm hoping we have the courage to end it before all dignity is lost.

MARTIN: Now, I understand that that's something that many people will hear and find shocking and offensive, but just focusing on - Marilyn - just the fact that she's saying, we cannot afford a long, slow decline. And what I think she means by that is that she believes that she feels that her savings are such that she believes that any long-term illness would outstrip their savings. Is that a common scenario?

GEEWAX: An awful lot of people feel like that but, you know, some of it is this fear that we think, well, I can't afford it so I'll just have to kill myself. If you stop and plan a little bit earlier, you really can prepay for a proper burial. You can get long-term care insurance. You can have life insurance. And it's kind of interesting at how little time we really put into this.

You know, people will sit down with their 401(k) and think a lot about, should I be in stocks or bonds? They might think a lot about how much money they will have to live in retirement. But they give really no thought to how they're going to die in retirement. I mean, sooner or later your retirement will end, and if you set aside a certain amount of money for that and plan for that as well, you're in better shape.

MARTIN: Dr. Marion, start us off, and talk about what are some of the steps that people should be taking to plan financially for this period - you know, after working, after the act of working years, when you might need some help. So what are some of the steps that people should be taking?

SOMERS: One, they should start thinking about it while they're young and healthy, such as long-term care insurance. They get a better price on a yearly basis if they are healthy. They need to also be taking very good care of themselves so that they're not, you know, exacerbating their problems. You know, if you're smoking or drinking or overeating, you're declining your own health. And they also need to be aware of what are the costs if they want to make any changes, such as going into an assisted living or a nursing home.

So look at what are your options that you think you may have, and how can you start utilizing and prepare for what is inevitable.

MARTIN: If you're just joining us, you're listening to TELL ME MORE from NPR News. We're talking about preparing financially for long-term needs, for aging, and for end-of-life care. Our guests are NPR senior business editor Marilyn Geewax and Marion Somers. She's known as Dr. Marion. She is a geriatric care manager, and has a doctorate in gerontology. Marilyn, what about long-term care insurance? Is that something that would have helped with your father's expenses in that last week?

Because obviously, one of the concerns is if he were the only surviving parent - if he were the only parent then you could say, listen, you could spend whatever his assets were and just spend it all to make him comfortable as possible. But one of the concerns is that your mother. You needed to have some money left for her. So is long-term care insurance something that people should consider? Who should have it?

GEEWAX: And that's one of the things that is a problem, where we don't think ahead on that. My dad had enough savings to cover everything for himself, but we did get long-term care insurance for my mom - but only because I started thinking about this, you know, getting ahead of it. She picked up long-term care insurance at the last possible minute, at 73.

After that, you're really too old to acquire it. So you need to think about it before you get into your 60s and 70s. As she said - as Dr. Marion said, you really need to be looking at that in your 40s and 50s, when the premiums are more affordable.

MARTIN: Dr. Marion, I wanted to ask you about that. I can see a scenario where people who are younger might say look, I need every dollar I have now to send my children to school, to pay my living expenses now. And how do I know that these people, you know, given all the turmoil we've seen in the financial markets, that if I put money into one of these policies that it'll be there when I need it? What do you say to people who have those concerns?

SOMERS: Well, when you're looking for an organization and long-term care insurance company, you want a company that's been around for a long time. You want an agent that's going to show you all the different policies that are out there so that you have options. And it is geared to you individually. So you tell the agent what you think you can afford, what you think you need in the way of coverage. And you work with an agent, and they will find a policy that will fit your needs to the best of your financial ability.

MARTIN: As I mentioned, we did put a call out to our listeners, and we asked them how they plan to pay for long-term care. Here's Phil Covington from San Diego, California. He had kind of an unusual idea.

PHIL COVINGTON: My plan for death? Cruise ships. Multiple cruises in a row are significantly cheaper than a nursing home. And when I pass, a sea burial is relatively inexpensive and requires minimal manpower: lift, push, splash, sail away.

MARTIN: Well, OK. Marilyn, again, I think some people might find that offensive but what about that? Is that realistic or is he just being funny?

GEEWAX: Well, the burial-at-sea services are actually becoming more popular out in California. In Southern California, there are sunset cruises where you can go. And it really is designed to be a funeral service, and your ashes are scattered in the ocean at sunset. But this idea, it's sort of spoken like a young person - that, well, I'll just get on a cruise ship and go around and sail around, and it'll be fun, and it won't cost that much.

When you actually become very elderly, you need medical care. And being on a cruise ship becomes really painful and uncomfortable. And what you really need is somebody to help you with your medication. So it's back to that insurance and planning idea. And I looked up some statistics that AARP had done a survey in the '90s a couple of times and then again in 2007, to look at among people over 50, were they planning at all, preplanning for funerals and burials. And the proportion actually has been dropping.

People were more focused in the '90s on prepaying for plots. It's down to, as of 2007, only 23% of people had paid anything or done any planning towards their burial or funeral service. And I think some of that is related to baby boomers are now replacing the World War II generation. People like my dad, he was very rooted in his community. He grew up in the same place, and that's where he wanted to live, and that's where he wanted to be buried.

So it was kind of easy to plan that. I've lived in a lot of different cities. I've moved around a lot. I'm a journalist, and I'm not sure where I'll be when I die. And so it makes it a little bit more complicated to preplan.

MARTIN: Dr. Marion, we're down to our final minute here and I want to give you the final thought. What's the biggest misconception you think people have about their planning for the end of life? And how do you want them to address it?

SOMERS: The end of life is going to happen to all of us, and my concept is if you fail to plan, you're planning to fail. And people just need to be aware that this is a serious issue that has to be discussed amongst themselves and amongst their families so that it becomes not just a personal issue, but the family gets all involved. And get the families to start thinking about it. I talk about the word care. Consider your risk, assess your needs, research the cost and educate yourself. If you do those things, then you are ahead of the game.

MARTIN: Marion Somers is a geriatric care manager. She's known as Dr. Marion. She's author of the book "Elder Care Made Easier." She joined us from NPR West in Culver City, California. Marilyn Geewax is NPR's senior business editor, and she joined us from our studios here in Washington. Thank you both so much for joining us.

GEEWAX: You're welcome.

SOMERS: My pleasure.

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