You need this. Start preparing.
Your chances of getting dementia.
1. A documented 33% dementia chance post-stroke from an Australian study? May 2012.
2. Then this study came out and seems to have a range from 17-66%. December 2013.
3. A 20% chance in this research. July 2013.
4. Dementia Risk Doubled in Patients Following Stroke September 2018
5. Parkinson’s Disease May Have Link to Stroke March 2017
The latest here:
The risk of dementia is high. Here’s how to prepare
5 ways to protect a loved one with dementia
I vividly remember the day my husband and I walked into my father-in-law’s normally meticulously kept home 12 years ago and found piles of papers and unpaid bills covering every surface. We were shocked — and we immediately knew something was wrong.
We were right.
Shortly thereafter, he was diagnosed with Alzheimer’s disease. In the weeks, months and years that followed, my husband and I scrambled to get his financial and personal affairs in order, all while arranging what eventually became nearly 24/7 care.
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It was exhausting — both mentally and physically, but because of my day job, I was very familiar with the steps we had to take to protect my father-in-law’s assets — and ours. As a result, we were able to avoid some of the financial pitfalls that typically accompany the disease.
But I know most families aren’t as fortunate. In fact, a dementia diagnosis is one of the biggest risks Americans face going into retirement.
Read: Deaths from dementia rose 20% this summer — here’s what you can do to help a loved one
That’s why my employer recently commissioned a survey of 1,000 caregivers across the U.S. to better understand the financial impact of cognitive decline so that our firm and its advisers can better help individuals and families mitigate the financial risks associated with the disease.
The survey took a look at the behaviors of individuals with cognitive decline that put them at risk, but also delved into the concerns and contributions of caregivers.
Read: Half of Americans over 55 may retire poor
The study found that the top concern of those caregivers was that their loved one would outlive their savings, due to the huge lifetime cost of care for cognitive decline patients. Indeed, the survey revealed that the overall lifetime cost of care for dementia can be financially devastating, often exceeding $750,000 in direct and indirect expenses.
The price tag on the disease is further escalated by the propensity of individuals with dementia to make poor financial decisions that can further impair their finances. In fact, 80% of caregivers surveyed said they witnessed some level of financial mismanagement by their loved one. We certainly saw signs of this with my father-in-law, but because we identified the issue early, we were able to intervene.
The financial impact of cognitive decline isn’t isolated to just the individual affected by the disease. More than 16 million Americans provide unpaid caregiving to someone with dementia, according to the Alzheimer’s Association.
Caregivers, too, carry a financial burden — and one they are seldom prepared to manage. While we already knew this was the case, we had no idea to what extent. Turns out the financial magnitude of caregiving is greater than the cost of paying for college.
Read: 3 things I want from my remaining years
The study found that 83% of caregivers make a financial contribution of nearly $750 a month to support daily expenses, an amount that increases at different stages of cognitive decline. By the time the affected person reaches severe decline, expenses for caregivers are estimated to climb to $1,216 a month.
It’s not just out-of-pocket expenses that pose a risk. The survey found that 41% of caregivers have made changes to their work arrangements to accommodate their caregiving responsibilities, primarily taking early retirement and going from full-time to part-time work. These changes impact not only a caregiver’s current income, but they also have a negative residual effect on 401(k) contributions and growth as well as Social Security contributions and benefits.
This is particularly concerning given the fact that most caregivers are women. Already struggling to close the pay gap, women who step into a cognitive decline caregiver role are at greater risk of falling even further financially behind.
So what can families and caregivers do to protect both the financial well-being of their loved one with dementia and their own? While the list of to-dos in such an instance is long, these five steps are critical:
1. Communicate with older relatives in advance. If a parent or other older relative has been diagnosed with dementia, or even if they haven’t, it’s a good idea to talk with them about their desires for managing their health care and make sure they have a health care directive.
2. Consider long-term care insurance. A typical dementia patient will spend three years at home after diagnosis and then five years in a long-term care facility. The costs of skilled nursing care represent a large portion of the overall costs of caring for a person with cognitive loss, so long-term care insurance can be financially lifesaving. Take time to talk with the older adults in your life about long-term care insurance and even consider helping to pay for it, as the cost for insurance premiums is likely to be lower than the cost of handling their care yourself.
3. Ask for help. Even if it seems like you may have to quit your job or reduce your hours to manage caregiving responsibilities, that’s not always the case. Sometimes it makes more sense financially to pay for a sitter than to give up working or cut back at work.
4. Talk with your financial adviser. Your adviser is prepared to help you plan financially for the future, including for long-term care events. He or she can also help you develop a wealth plan that includes the possibility of becoming a caretaker and think through the impact of your decisions as a caregiver over the long term.
5. Take care of yourself. Just as an airline passenger is instructed to put on their own oxygen mask before helping others, a family caregiver must also take care of himself or herself in order to do a good job caring for others.
It is rare that anyone factors a dementia diagnosis into their wealth plan, but given the rising prevalence of the disease, it may be a good idea to at least consider doing so — even for families of means.
Angie O’Leary is head of wealth planning at RBC Wealth Management-U.S. RBC Wealth Management is a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.
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