Thursday, July 2, 2009

Estimating What Your Parent Can Afford

In my last post, I shared with you some average costs of eldercare, but the most important figure you need to know is what your parent and your family can afford on a monthly basis for caregiving. No matter whether your parent will remain in his home or move, the calculation is an easy one:

For home care, remember that home, food and clothing expenses must be paid in addition to the new expenses of caregiving.
(Parent’s Current Income) - (Parent's Current Expenses) = Funds Available for Care
In other words, the difference between your parent's income and his current expenses is what you have available for care. If you and other members of the family are willing to pitch in, that can be added to the "Income" side. If your parent can economize household or vehicle expenses, then that can be subtracted from the "Expense" side. Be as accurate as you can when making the calculations; this will help when you begin to research available services.

The "Income" side of the financial picture is probably stable at this stage of your parent's life. However, you have room to maneuver with the "Expenses".

Moving to a long-term care (LTC) community, for example, replaces many of the expenses your parent already has. To determine what's available for a new living situation, add up:
  • Your parent's current income
  • House payments or rent
  • Utility expenses (electricity, gas, propane, sewer, water)
  • Telephone
  • Food
  • Transportation (car insurance, gas)
  • Property Taxes
  • Cable fees
  • Home Insurance
  • Home maintenance (gas for the lawn mower or snow blower, light bulbs, carpet cleaning, for example)
Whatever your parent pays for these basics and all her income will now be shifted toward payment for a retirement or LTC community or for living with you. If there are any LTC insurance benefits available or financial help from the family, this allows for more options.

I was speaking with one caregiver at the Caregivers Conference last week who said that her mother resisted moving into a community because she was sure that it would cost her less to stay in her home. When her daughter did the math, she showed her mother that, in fact, moving to the community they'd chosen would cost exactly the same or a little less. And her mother would no longer have to do laundry, cook every meal, or clean. She could join in activities and would have time to explore some hobbies and visit friends. Her mother made plans to move that day.

Take the time to do the math. Keep the figures handy when you start deciding on care and housing options. Open up conversations with your parent about finances and try to work as a partner with your parent to find financial solutions that work for him and for the family. You'll be glad you did.

Blessings on your caregiving today!

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