Advance planning for retirement and healthcare can provide an extra layer of security. And for caregivers of seniors, it’s especially important to know what kinds of financial resources are available for the day your loved one will require paid care or the day you’ll have to step in and manage their affairs.

Why a Health Care Safety Net Is Necessary

Thankfully, many of those over 65 can count of the support of Social Security and Medicare. Social Security benefits can be quite modest, even for those who’ve worked their entire lives, but on the plus side, Medicare provides a partial safety net for illnesses that require hospitalization.

Unfortunately, not everyone over 65 is eligible for Medicare. Some employers don’t pay into the Social Security system. Public employees typically have a portion of their pay sent to the state or local government’s retirement system. And, many public employee retirement systems are underfunded.

Based on funding ratios, Wisconsin, Washington, and South Dakota have the best funded public pension plans in America. The worst funded plans are in Illinois, Kentucky, and New Jersey. Every year, state retirees from Illinois face the very real prospect of seeing their benefits cut back. This is but one example of why it’s a good idea for individuals to use a belt-and-suspenders’ approach when planning for retirement.

Put in place safeguards before the unexpected occurs. These safeguards can include a period of part-time work while getting all the pieces of a long-term plan in place. Or, it can include long-term care insurance purchased before the cut-off date of 69. Know what the big picture is before making big changes. Inform those likely to become your caregivers of your financial and health-care plans.

The Perfect Part-Time Job

Transitioning to full retirement is often a gradual process. After age 65, many seniors are glad to give up the stressors that go along with a day job. But for good brain health, it’s important to still be actively engaged. Painting, ceramics, writing, or music are ways to enrich a life well lived. Volunteering at the local library or delivering Meals On Wheels are activities that make life feel meaningful. Human contact is essential for our sense of wellbeing.

The early retirement years are also the perfect time to add an income stream. Updating an existing resume and finding part-time employment are good first steps. It’s never a bad idea to keep money flowing in as long as you are able. But look for a job while you and your partner are in good health. Scrambling for work while you have a sick partner only adds to your stress level.

A tip: Before agreeing to part-time employment, make sure you know how the work will affect your Social Security or disability benefits. At some point, you may have to decide whether working is worth it, or whether you’d be better off volunteering.

Smart Investing

Many seniors have invested wisely and created a retirement plan or health-care safety net that isn’t dependent on Social Security. Investments in stocks, bonds, mutual funds, IRAs, TIAA plans, and real estate investment properties can provide greater financial security than Social Security’s modest monthly income. But, even so, seniors need to protect those assets from downside risk. A fall in the stock market, a plunge in home prices, or a medical catastrophe can threaten the most carefully laid plans.

Online apps can help you do a quick assessment. Working with a financial advisor can help ensure that you’re investing wisely and getting the most out of your money.

Open a Health Savings Account (HSA)

A Health Savings Account (HSA) is an invaluable tool for anyone looking to save money on medical expenses. It allows individuals to set aside pre-tax dollars for qualified medical expenses like doctors’ visits, prescription drugs, hospital stays, and more. Knowing that you have extra funds saved up in case of unexpected health events provides financial peace of mind. The pre-tax feature means that you can reduce your taxes at the same time.

Save Money for Emergencies

Part of your safety net strategy is to set aside six months of living expenses. Total up your monthly expenses and then multiply by six. Don’t think, “Oh, I’m spending too much. I can economize if I have to.” No. Just stick with the actual numbers. Alternately, you could use AARP’s Money Map tool to figure out what a realistic amount should be.

Having an emergency fund is essential. By setting aside a certain amount of money, you can be prepared for anything that life throws at you. You should be able to tap into this money without selling any assets.

Buy Long-Term Care and Disability Insurance

Disability insurance is important for those who may become unable to work due to illness or injury. Long-term care insurance is equally important. It helps cover the cost of long-term care for those who are aged or disabled. And, while many people have car and homeowner’s insurance, surprisingly few have purchased insurance that will cover long-term care. According to our research, you must purchase this insurance before age 69 in order to be fully covered in your later years.

Long-term care policies provide financial security in case of an emergency. If there is no insurance, then the responsibility of caring for a loved one falls directly on a family member. It’s then that the family member wishes their loved one had thought about a safety net, either through socking away tons of money or by purchasing long-term care insurance.

Let’s look at an example. Caring for a senior with dementia means the caregiver must stop working. A person with Alzheimer’s can’t be left alone in the house. They’d escape or let a pot boil dry on the stove. Yes, the Family Medical Leave Act does allow caregivers to take up to three months leave in any 12-month period, while receiving sixty to seventy percent of their normal salary, but that’s not nearly enough. As is obvious to anyone who has been dealing with long-term caregiving, one cannot predict how long the caregiving stint is going to last. The uncertainty and open-ended nature of caregiving endangers that caregiver’s own financial future. And this burden falls, unsurprisingly, on women.

Thus, it’s important for women to make sure they protect their own financial futures. One resource that’s particularly good at helping women examine the impact of caregiving is www.WiserWomen.org. Even if you’re not a quantitative genius, their online calculator will help you figure out the impact that caregiving can have on your life.

With people living longer, it’s quite likely that children in their sixties and seventies will be acting as caregivers for frail parents in their eighties and nineties. Lynn Friss Feinberg, senior strategic policy adviser for AARP’s Public Policy Institute, says that it’s now common for Baby Boomers to be “caring for a parent in their 90s or older.”

Here’s the bottom line. If you’re likely to become a caregiver in the next few years, discuss long-term care insurance with your loved ones so that everyone’s welfare is considered.

Exploring the Cost of Assisted Living

Don’t think you’re alone in this. The government is well aware that our population is aging. At the same time, it’s going to be harder to find paid in-home caregivers. Increasingly, the responsibility for caring for those of advanced age will fall on the family. And, sometimes, the care is more than any one person can do.

For seniors with no financial resources, Medicaid can help. Medicaid can often cover most of a senior’s care, but there are stipulations as to how much money the senior can have in a bank, whether they own their own home, etc. Medicaid benefits vary from state to state, and with Medicaid, there’s a great deal of oversight.

Shifting money out of a senior’s account in order to qualify for Medicaid will not work. Accounts are audited. Issues like guardianship, power of attorney, and advance directives may also need to be addressed. And, this can be tough on the emotions. Very often, the person you’re trying to help will resist you every step of the way.

To give you a quick overview of how to tackle some of these issues from a legal standpoint, you might want to go to www.AskALawyerOnCall.com.

Make Sure You’re Staying Within the Law

Even if you would like to shift the physical care of your loved one away from you personally and into an institutional setting, that may not be easy. A loved one’s determination to continue living at home can derail your plans. And siblings may back them up. In addition, the reversal of the parent-child roles can drain you emotionally.

Eventually, the stress of caring for an elderly loved one can become too much. The day may come when it’s clear to everyone that the senior can no longer live independently.

Eldercare lawyers are a great local resource. They’ve dealt with many clients who are dealing with what you’re dealing with. Sitting down and talking to a neutral third party can be calming. In some circumstances, they may suggest legal guardianship, particularly in the case of someone with dementia. And if nursing homes, group homes, or assisted living apartments makes sense, you can then begin to compare the costs and quality of service.

Creating a retirement plan and healthcare safety net doesn’t have to be an ordeal. Individual caregivers don’t have to reinvent the wheel. The National Council on Aging has tons of information for aging adults and for their caregivers. Having a plan in place can give you and your senior peace of mind that their needs will be met as they age.

For a supportive community and inspiration for family caregivers, visit Marylee MacDonald online today!