Watching your parents age can be tough, but harder still are the decisions you may have to make on their behalf if you're unprepared.
Here are a few of the most common questions we received during TODAY's "Taking Care of Mom and Dad" series.
Q: Can veterans get money from the Department of Veterans Affairs to assist them in living?
A: Yes, but not all veterans qualify. If you were in the service for at least 90 days of active duty with at least one day beginning or ending during a period of war and were honorably discharged, you are eligible for two “improved” pension benefits:
- The Aid and Attendance benefit is available for both veterans and their surviving spouses who need another person to help with activities of daily living (eating, bathing, dressing, etc.) whether you’re living at home, in a nursing home or in an assisted living facility. If you have a dependent, it can be worth $25,525 a year; for no dependents, it's $21,531.
- The Housebound benefit provides care for veterans who are housebound. It's a little less, but still valuable: $19,770 with one dependent, and $15,773 with no dependents to pay for unreimbursed long-term care.
Q: How can I get reluctant parties — both older parents and adult children — to step up and talk about these important issues?
A: Use the 70-40 rule. If by the time your older parents reach age 70 or you reach age 40 (and haven't talked about their wishes, their paperwork, their overall plan for the future), then it's time. If you have reason to have the conversation earlier (and, by the way, wanting to have it is reason enough), feel free to nudge the numbers to make them work for you. It could be a 65-40 rule, a 60-30 rule, or whatever you need it to be.
Q: You talked about adult children buying long-term care insurance for their parents, but when should I be thinking about long-term care insurance for myself?
A: You should be thinking about this as you enter your 50s. Before then, you're likely going to pay the premiums for too many years and that's not cost-effective. After 60, premiums go up a lot and more people get turned down for coverage based on reasons of health.
Remember, you have to be able to continue to pay the premiums in the long term. If you pay for a few years, then have to drop them for financial reasons, that's just money down the drain. If you have liquid assets of between $500,000 and a few million, it's something to consider. If you have less that that, you'll quickly spend your money and qualify for Medicaid should you need care. If you have more, you can invest the money and pay for care on your own.
Q: You mentioned that anyone with 90 days of active duty during wartime with an honorable discharge is eligible for certain VA benefits. I was told during a New York state unemployment compensation claim that because it says "for training" I am not eligible for any VA benefits. Can you clarify?
A: The best thing to do is to check directly with the VA. According to Ryan Guina, founder of The Military Wallet, it depends precisely on how your (or the service of other veterans) was coded. “Active duty for training counts for some benefits, but not all,” he said. Ask the VA to review your specific situation to see if you’re eligible.
Q: You talked about retirees taking 4 percent annual disbursements from their varied retirement accounts. Did that also include from a savings account in the total?
A: It doesn’t. The "4 percent rule," which was unveiled in an article by financial planner William Bengen published in the Journal of Financial Planning in 1994, is based on a couple of assumptions: One, that your portfolio is split 50/50 between stocks and bonds; the other is that you want the money to last 30 years.
As Mark Eskin, the executive vice president/wealth management of Janney Montgomery Scott notes, the higher percentage of your overall liquid net worth that you hold in ultra-safe places — like a savings account — the tougher it’s going to be to make that 4 percent work. If you’re in retirement (or within a couple of years of retiring) you absolutely want to keep enough money liquid (i.e. in cash) to help you “survive near-term market turmoil without having to sell under pressure to make ends meet.”