Social Security and Dementia

This week’s report on the shrinking Social Security Trust Fund raises pressing questions for families involved with dementia care. Social security is a life raft for many who live with the disease long after retirement. It’s a resource families need to cover costs like testing, medication, companion care, and, often, nursing homes. How could we navigate without it?

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Economists say the Social Security Trust Fund will be solvent until 2033, but that’s only two decades away. Some cases of dementia can last over twenty years. By the year 2030 about 51 million individuals will be 65 and older and statistics show that nearly twenty of every one hundred people who reach age 85 will develop some form of dementia We are racing toward a perfect storm for  bankrupting U.S. families.

Money management always seems more stressful to me than providing care. But I now believe that careful, long-term financial planning is one of the most important actions a family can take.  It’s essential to take steps to protect the assets you have and learn as much as you can about the true costs of care. If you are looking after someone with dementia, you should also consider buying yourself a long-term care policy.

My own morbid example illustrates the problem. If I were to get dementia at the same age my mom did, I’d only have 14 good earning years ahead of me. That would bring me to Year 2027. If our political leaders keep failing to make the changes needed for long term solvency of Social Security, I’d get only 6 years of benefits to help me cover costs for a disease that would likely last at least 7 years. Since I’m self-employed, I won’t have a pension. So my retirement contributions should be at least three times as high as my Mom’s were to cover the difference.

Add to this scenario, the vast number of families who did not foresee the long term costs of dementia. Many must spend all of their parents’ assets on care and will inherit nothing. When families can no longer transfer any wealth from one generation to the next, the middle class will shrink even more.

If your day is already filled with the endless tasks of caregiving, I don’t want to compound your weariness. But financial planning deserves your attention. Talk to families who’ve been through this process. They can explain how setting up a trust, transferring property, or buying a long-term care plan could save you from economic disaster. A financial professional who understands dementia care costs can also help. But check every aspect of their recommendations before you commit to buying items like an annuity or a long term care policy. Every financial product is different, and they are NOT all good. To reduce risk, look for advisers endorsed by AARP or the Alzheimer’s Association. Relying on Social Security to be there for the long haul is high risk bet. That will only happen if our elected officials are brave — and I’d never bet on that.

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