Maybe you and your family have already attempted to have "the conversation." You know the one: the discussion about your and your spouse's assets and what will be done with those assets during the rest of your lives and after you pass away. Perhaps, because of your children's sibling rivalries, the family conversation turned to one about gifts and inheritances and about who deserves more or less of the assets based on "good" or "bad" behavior. If things continued this way, you likely skipped over the most important aspect of this conversation: how the assets will be used to pay for your health care during retirement and how much that health care will cost.
Most people are aware that life expectancies are on the rise, but we put off thinking about getting older, getting sick or infirm, and having to pay for health care for a prolonged period. Medicare and Medigap premiums, deductibles, and co-payments alone will consume a significant portion of your income. And long-term care expenses can quickly drain even a large nest egg. Recognizing the complications posed by financing health care in retirement can make you fearful and even more reluctant to make any decisions on the matter.
But your family conversation won't yield a viable plan or a shared understanding without honest and insightful preparation and soul-searching. Asking yourself (and your family) questions about physical, financial, and legal matters is a helpful starting point. You may find it less stressful to review each concept separately. Once you have some answers, you can piece them together to arrive at guidelines for your family's conversations. And those conversations can lead to building an action plan.
Before you begin wrestling with your own ideas and concerns, think about your parents' and grandparents' experiences:
Now, think about how you want to age and how you want to use your assets for your care:
Even if a dementia diagnosis is not in your future, most people do experience some cognitive decline. So whom do you trust to manage your assets and carry out your financial plan if you are no longer able to? Your most reliable child may live across the country, and the son or daughter whom you (and your other children) are reluctant to trust resides nearby. What do you do?
Beyond these threshold questions, you'll want to consider several related and equally important issues:
Finally, ask yourself and your children whether they will be able to put aside long-standing differences to follow through on whatever your wishes may be. This may be the most difficult question to answer objectively.
The answers that guide the conversation you have with your family will be as individual as its members. Your children may not react well to the subject of your lifetime health care needs. But by persisting in your efforts—and factoring aging into the conversation—you can create your own stable framework and perhaps a legacy for your family. And, remember, even if the conversation leads to family strife, you still have a lifeline. Whatever the answers to the questions posed in your conversation and the consequences, you can find helpful guidance by consulting your attorney or financial advisor.