“Dementia is not just a medical journey, but it’s a financial and emotional one.” — Devon Banning, CFP, Moran Wealth Management
Are you avoiding the financial conversation with your loved one because it feels uncomfortable or overwhelming? Do you find yourself wondering how you’ll afford care as your loved one’s needs increase? Are you concerned about making the right financial decisions during this challenging time?
We are Sue Ryan and Nancy Treaster. As caregivers for our loved ones with Alzheimer’s and other types of dementia, we know that money is often the last conversation we want to have, but… it’s inevitable. We have to have it.
This episode supports step three of our Navigating Dementia Caregiving Roadmap Guide: Understand the Financial Situation. If you’ve been putting this conversation off because it feels uncomfortable or overwhelming, you’re definitely not alone. This is an area many of us as caregivers hesitate to step into. It’s deeply personal. It can feel intimidating, especially if we wish we’d addressed it sooner.
Today, we’re sharing five essential tips for navigating the financial aspects of dementia caregiving with Devon Banning, a Certified Financial Planner and senior financial consultant with Moran Wealth Management. Devon has more than 15 years of experience across a range of roles in the financial industry. He also brings a valuable depth of experience with dementia family caregiving. The majority of Devon’s career has involved managing financial lives for individuals and families, many of whom were suddenly thrust into their caregiving role due to dementia.
It will be easier to have this conversation when we respect our loved ones dignity, independence, and wishes throughout the conversation. Today is about helping you learn options to take your next step that feels more manageable, without feeling like you need to have all the answers at once.
Tip 1: Get the Financial Conversation Started
The most important thing is simply to begin. But how do you start this conversation when it feels so awkward and emotional — especially if it’s with your parents or somebody you don’t typically talk to about finances?
Don’t start by directly talking about their financial situation. Instead, open the door softly. Here are some gentle ways to begin:
- Use a real-world example: Share the result of a life event experienced by a family member or friend, such as a grandparent’s move into a long-term care facility, or a friend who is helping their parents find home care and sorting out how to pay for it.
- Mention a friend who’s helping their parents find in-home care.
- Share about your own financial planning situation first. Let your loved one know that you have a designated person lined up to take over your finances if anything happens to you, then pose the question of what they have planned.
These are good soft entries into starting the financial planning conversation with your loved one. Just by starting this conversation, you’ve broken the ice — and that will give you an opportunity to have either the rest of the conversation at another time or maybe the whole conversation later. But at least you’ve opened the door. Great job just getting that far.
Tip 2: Use These Eight Steps to Guide the Conversation
Once you’ve opened the door, these eight steps will help you navigate the conversation in a way that preserves your loved one’s dignity while getting the information you need.
As we’re getting the conversation started, it’s best to use “I” statements. For example, instead of saying: “You need to make a plan now,” try “When I think about the future, I want to make sure you get help if you need it”. Sue Ryan
Step 1: Start with the purpose, not the details. This helps reduce the fear your loved one might have that you’re trying to take over. For example, say something like: “I’m not trying to change anything, I want to understand so I can support you the way you want.”
Step 2: Ask permission before asking questions. This is another way to help preserve their dignity. Ask: “Would it be okay if we talked a little bit about this?”
Step 3: Frame it as planning together. Try saying: “I want to make sure we’re both prepared for whatever comes next.”
Step 4: Name the awkwardness out loud. This is awkward — you know it is — so acknowledge it. Say something like: “I know this feels uncomfortable, but it also feels important.”
Step 5: Start small. One category, one question. Ease your way into the conversation by start small and just beginning the conversation.
- Who normally helps you with your taxes?
- Where do you keep your important papers?
- Do you have someone that you trust with financial decisions?
- Do you have a financial plan or a financial analyst that you work with?
Step 6: Use timing strategically. Good moments to start conversations are ones that make it easy to transition into. Consider having these conversations:
- After a medical appointment
- After doing taxes
- When a third party is involved — maybe a doctor, advisor, or attorney.
Step 7: Normalize revisiting the conversation.
There’s a lot to cover when talking about financials and financial planning. We don’t have to cover everything at once. You can definitely frame it as an ongoing discussion. Devon Banning
Say things like: “We don’t need to cover everything today” or “This can be an ongoing conversation.”
Step 8: Accept that “not now” doesn’t mean not ever. Resistance is natural, especially when we feel overwhelmed. A little bit of pushback is not unexpected. Bringing it up at all is a step in the right direction and progress.
It’s definitely okay to pause and take a step back and revisit it at a later date. For example you can say: “We don’t have to do this today” or “We can revisit when it feels more manageable.”
Tip 3: Understand the Different Stages of Financial Considerations
Devon breaks down financial planning for dementia caregiving into three distinct stages. Understanding these stages helps you plan more effectively and manage costs as they evolve.
Stage One: Essential Documentation and Roles
The most important conversations you need to have involve getting proper documentation in place:
- Powers of attorney for healthcare and financial decisions
- Living will
- Clarifying family roles and expectations — Make sure the person you’ve named is willing, capable, and comfortable handling finances or healthcare decisions. They may be terrible at handling finances or may want nothing to do with healthcare decisions. They may not be close enough to take on these responsibilities. Getting clear defined roles and expectations within the family helps reduce stress later on when decisions need to be made.
Costs at this stage are minimal, primarily involving legal fees for documentation.
Stage Two: Ongoing Assistance
This stage focuses on what ongoing, day-to-day care looks like:
- Is it in-home care?
- Is it in a care community?
- What are your loved one’s wishes? (If possible, involve them.)
- What is feasible financially?
Costs begin to increase as you implement these ongoing care solutions.
Stage Three: Long-Term Care
This is the largest financial consideration. Long-term care is the biggest financial drain, and the duration is unknown. It can last a lot longer than we think.
From Devon’s family experience:
My wife’s great-grandmother had dementia and lived with us until we could no longer take care of her. Two facilities later, our family was sure she would only be in a care community for a couple years. She lived 10 more years — she almost lived to 100 years old.
The cost of healthcare is significant and continues to rise, especially when dealing with dementia. From the financial planning standpoint, it helps to figure out:
- What financial planning stage you’re in now and what you think costs are going to be
- Where you expect to be in two to five years
- Where you expect to be long-term.
While these are assumptions and things change, this framework helps you plan so you’re able to use your resources most efficiently.
Tip 4: Understand the Financial Position of Your Loved One
This tip is extremely important. This is where you take a full inventory of everything financial in your loved one’s life. Here’s what you need to gather:
- Real estate
- All accounts (checking, savings, investment accounts)
- Income sources: Social Security, pension, VA benefits
- Account titling: Making sure accounts are titled correctly — this may require a conversation with an attorney.
- Account types: Are they taxable, non-taxable, or retirement accounts?
Debts:
- Find out what debts exist that you may not know about
Insurance:
- Long-term care insurance — If you have it, what does your policy look like? Some policies end up barely paying for anything, so knowing the ins and outs is crucial.
- Life insurance — Is there a cash value? Is there a long-term care rider?
- Annuities — Are you in a surrender stage or not?
Assess Liquidity and Allocation:
- How accessible are accounts?
- How long will the accounts last if you need to start using them to pay for care?
- Review your total asset allocation. For example, perhaps you were heavy in growth and stocks at some point, and now you move to a more conservative mode. You know you’ve got an undetermined amount of time to pay for rising costs, so you need to shift how things look from an investment and allocation standpoint.
Consolidate and Simplify:
Whatever is going to make your life easier and simpler is very helpful. This organization of the finances will reduce stress, especially when you have to start utilizing these accounts. For example, consider consolidating accounts into one institution. This means:
- Fewer passwords
- Less paper
- Fewer statements to track
- One point of contact.
Create a Centralized File:
Have one place to document everything. If you’re a computer person, create an online file. If you’re a paper person, we recommend you use a three-ring binder. Keep all these policies, insurance documents, copies of accounts and numbers, and all the other important information organized in one place. When and if you need something, you’ll know where it is and be able to easily access it.
Yes, there is a lot to consider. Here’s the good news: You don’t have to do this alone. This brings us to tip five.
Tip 5: Consider Leveraging a Financial Planning Expert or Advisor
If you can work with a financial planner and/or financial advisor, it’s definitely beneficial. Here’s what a financial planning expert can do for you:
Provide Guidance and Expertise: They work with complex decisions and conversations daily. They can point out things you’re not thinking of — or don’t know to think of, especially when you’re focused on your loved one’s care.
Optimize Asset Allocation: Make sure you’re comfortable with the amount of risk in your portfolio. The focus shifts to preserving assets for the long haul, making sure there’s money to pay for what you need as the cost of care goes up.
Implement Tax-Efficient Withdrawal Strategies: Taking money from the most tax-efficient accounts. You want to avoid being pushed into income brackets you don’t need to be in and incurring extra costs on your Medicare premiums. The experts ensure you’re utilizing funds in a sequence that makes the most sense.
Simplify Through Consolidation: Your planner or advisor can pull all the assets from different firms into one location, so you have only one person you’re working with.
Coordinate With Your Care Team: Your financial planner and/or advisor will work in tandem with all the other members of your team, for example, your attorney, CPA, or care placement specialists.
Sue shared a powerful example from her own experience: When her husband Jack was diagnosed, they had done significant financial planning based on their lifestyle and how they saw the future. All of a sudden, that changed — changed in an instant. When they worked with their financial advisor, the advisor knew the answers to questions they had no idea how to even consider. They introduced them to things they wouldn’t have understood.
But here’s what was most valuable: Sue was immediately going to focus everything on her husband — how to make sure they had enough money for however much care would cost. She was fearful because she had no idea how long their journey would be. (The doctors had estimated her husband would live for around four years; he lived nearly 12 years.)
The financial advisor stopped and said: “Now Sue, when Jack has passed away, you’re still going to need money for you to live on. We want to make sure from the very beginning that we’re being intentional, both about supporting his care, but also putting you in the position when he’s gone that you’ll be able to support your lifestyle as well.”
This perspective was incredibly valuable. It was something Sue had not been considering because she was so focused on the care of her husband.
Start Now, Start Small
Financial planning for dementia caregiving is an emotionally charged experience, which is why it’s so important to begin this process early. The earlier the better, and the more involved your loved one can be, the better.
These are difficult conversations that nobody really wants to have, but they are necessary. Everyone’s situation is unique. Talking to a professional and leveraging whatever help you can is an excellent way to start.
If you haven’t done it yet, now is the time to get started. Start small and start soon.
Devon reminds us:
Start small. Ask questions. Find out what’s most concerning to your loved one and what’s important. One conversation, one step at a time.
Have you had the financial conversation with your loved one? What strategies helped you get started? Share your experiences in the comments below or on our Facebook or Instagram pages.
For more information about Devon Banning and Moran Wealth Management, visit moranwm.com.
Moran Wealth Management Disclaimer: This podcast is for educational and informational purposes only and does not constitute investment, legal, or tax advice. The views expressed are those of the participants as of the date recorded and may change without notice. Nothing discussed should be considered a recommendation or solicitation to buy or sell any security or to engage in any particular investment strategy. Listeners should consult their own financial, legal, or tax professionals before making any financial decisions. Moran Wealth Management is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.
Download our complete Navigating Dementia Caregiving Roadmap Guide on our website under guides and worksheets.
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