Dear Helaine: I’m in my mid-50s, and I left the workforce (where I made low six figures and socked away money) to move back to a city I left decades ago and back to my parents’ home to take care of them. They are both in their early 80s and ill with neurological diseases that rob you of movement or mind, but don’t actually cause death. Both need more and more help, and it’s expensive. They have no long-term-care insurance; it’ll all be out of pocket.
They have a net worth of about $2 million and receive about $12,000 a month from a pension, Social Security and required distributions. I’m trying to figure out how to best invest their money (I have power of attorney) to cover their increasing medical costs, yet also leave me and my sibling (he lives in Europe and gets half of what’s left) something to somewhat make up for the cost of leaving the workforce to care for them full time.
Family values have always been that we earn our own way, so their view is that “we can spend it all.” Technically, I support that, but I really supported that before I had to leave the workforce and stop making my own money and contributing to my own Social Security and savings. What’s your advice? -- Dutiful Daughter
Dear Dutiful Daughter: I reached out to Carolyn McClanahan, a certified financial planner specializing in medical expenses and issues, on your behalf. She and I agree. The first thing you need to settle is what you are going to get paid in return for giving up a six-figure job to take care of mom and dad.
If you make this a formal arrangement, you can get paid market rate, still continue to contribute to Social Security, and your parents can deduct it as a medical expense on their taxes. I also think it would be beyond fair if you received some additional compensation in their will as well, especially since your sibling is leaving all this caretaking to you.
If your mom and dad won’t do all that, you need to seriously re-evaluate returning to your professional career. It’s one thing to teach a child to earn her own way, but it’s not fair to prevent her from doing so. One thing you do not need to worry about: If your parents have an income of $12,000 a month, combined with their substantial assets, they will likely be able to afford both assisted living and live-in aides. You don’t need to sacrifice your financial future, not to mention your personal and professional lives, to make sure they are taken care of adequately.
As for investments, I would attempt to calculate what your parents' cash needs will be going forward before coming up with an investment plan. It’s quite possible they will need to move into assisted living or even a nursing home at some point in the future, and money will need to be available for that. There is only so much a middle-aged daughter can or should be expected to do.
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