Geriatric care management and financial planning intersect around serving families with aging parents. In a nutshell, when I teach my graduate students in geriatric care management about “care plans”—plans to help solve older people’s problems created by a geriatric care manager—I tell them they have to look at it two ways. You can have the Hundi plan or the Jaguar plan. You can’t create the very expensive care plan if your client is on a Hundi budget. So in essence a reputable financial planner, someone who can help a young-old person come up with the money to fund the long-term care older people inevitably need, is a crucial link to geriatric care management.
What financial planners need to know are a few important facts. First of all gerontology is not about an older client. Gerontology is about the family with an aging family member. A geriatric care manager and a financial planner share the same client—the family- generations of parents, siblings and grandparents.
What do these families do? Well, a giant task they carry out is caregiving. The AARP found that 22.4 million household in the United States (nearly 1 in 4) are caring for older family members at home. In fact we have become a nation of caregivers. In 1988 only 7% of U.S. household were caregivers. In 2007 a staggering 45% of all U.S. households are caregivers, according to a recent Met Life caregiver study.
So for both the financial planner and the geriatric care manager, the client is this very burdened family. The geriatric care manager is there to manage the care of the old-old, and the financial planner is there to help the young-old or midlife baby boomers help finance the care of their old-old parents. They also help plan how to finance the care of the young-old (60–85) when they get to be old-old (85 and over). Inevitably the burden of care becomes too heavy, and their families move older people to nursing homes, or private duty home care is brought in. Medicare does not pay for nursing homes unless you are on Medicaid, and Medicare does not pay for home care.
One of the problems Americans face today is a problem of wealth span, a term coined by my old professor at UC Berkeley’s School of Social Welfare, Neil Gilbert. Professor Gilbert came up with the term “wealth span,” which, in a nutshell, is the time we have to accumulate wealth when we are younger and bringing home that proverbial bacon. Wealth span encompasses half our financial stages in life. Just like those stages of life that we go through emotionally—childhood, adolescence, and young adulthood— there are financial planning stages—the twenty-something stage, parenthood, and then retirement. The first financial planning stage is accumulation, a stage that covers being a worker bee in your twenties, and parenthood in your thirties, forties, and a little bit of your fifties. This accumulation stage is a time to lay in the wealth. The second financial planning stage is your expenditure stage, where you literally lay out the cash or that piled-up wealth. You must have accumulated enough in the first stage to pay for the second stage, and here is that Shakespearean r
The very sore rub with our wealth span in 2012 as opposed to 1950 or before is that, it has pulled up short. We used to have a very short expenditure stage because we just did not live that long. However, now people are living into their hundreds, ending the Today show recognition of hundred-year-olds. There were just too many hundred-year-olds to recognize. The fastest-growing population in the United States is people over 85.
So a critical job for financial planners that relates to geriatric care managers is that the financial planners have to help the younger workers in the accumulation stage pile up that wealth a lot more quickly and make a much bigger pile. Why?? Again, we live longer and we retire earlier, and we have that boundless life expectancy. In 1940 we had only a 7% chance to live to 90. In the year 2000 26% of us live till 90. So we just have fewer years to accumulate that pile of gold that must fund many more years of retirement.
Financial planners need to assist older people, at both the expenditure stage and the accumulation stage, because our whole way of funding retirement has changed. We used to have a tried and true, traditional system of pensions where every month we received a defined pension benefit. This was the system where “They are responsible”—no worries—the check is in the mail.
In our new system of retirement, that check is rarely in the mail, and we have gone from “They are responsible” to “I am responsible.” In this brave new world of retirement, we now fund our retirement and the big bill in our future, long-term care, with new funding mechanisms like 401(k) s, which the employee manages. Now, most of us are not investment experts, and the “I” who is responsible is on overload at a critical time. So the young-old need experts such as financial planners to help them be financially responsible so they can fund their expenditure stage, especially for that scary and sometimes totally unknown cost, long-term care.
It used to be that the financial planner had Ozzie and Harriet as clients. In the old family system, Ozzie worked and Harriet cooked, took care of little Ricky and his brother David, wearing those elegant ’50s dresses while she managed her ’50s postwar nuclear family. And just as on TV in the old family, Ozzie retired (the series ended in 1966), and he got that defined pension from the TV network. Ozzie never had to deal with a 401(k) so he could take those storied trips to Europe and help support Ricky’s and David’s kids, their grandchildren.
In our new world financial order of the 21st century, Ozzie and Harriet are now Dippies (double income plural pension). Harriet goes to work every day along with Ozzie, they have double incomes, plural pensions, two social security benefits, two IRAs, and two 401Ks. Yikes, poor Ozzie and Harriet. They need a financial planner to help them figure out how to fund that expenditure stage, the end of which may have Ozzie in a nursing home that Medicare does not pay for, or both of them at home with 24-hour care, where David has to forget Medicare again. This long-term care expense could amount to oodles of money because Ozzie and Harriet may live into their hundreds.
On top of that- what if the 2012 Ozzie and Harriet lost their jobs or their 401K were demolished in the recent recession?
And while Ozzie and Harriet were in their fifties, they also had to support the unseen Mr. and Mrs. Nelson Sr., Ozzie’s parents. It was easier because in the ’50s, those folks did not live so long. But now poor David (Ricky had a hard life and died tragically in a fiery plane crash) had to fund Ozzie in his nursing home, or as an alternative, keep Ozzie and the lovely Harriet at home with 24-hour care.
So we Americans need financial planners to manage our money as much as we need geriatric care managers to manage that long-term care. Ozzie and Harriet’s long-term care will be funded by out-of-pocket accumulation, not Medicare (which funds only 4% of long-term care), and not long-term care insurance (which now funds only 1% of long-term care). What will fund Ozzie’s nursing home, or his and the happy Harriet’s 24-hour care at home, is money from that shorter “I am responsible” accumulated pile of gold.