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BETH PINSKER: My mom was a high school teacher in a small town in Pennsylvania, just about the most competent person I've ever met in my entire life. So to be in the position where I had to make decisions for her was very scary and strange.
SANGEETA MOORJANI: Being a financial caregiver can be really complicated, and that's why you've got to get the details. You need to know how much money there is. You need the right documents in order to access it. And you need to know your rights of how to use it.
The earlier you start the conversation, the better.
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ALLY DONNELLY: For some families, it might happen gradually. For others, it's triggered by a health crisis that changes everything overnight. We're talking about becoming a financial caregiver for an aging parent or other loved one. Hi, I'm Ally Donnelly, and this is Fidelity's personal finance podcast, Money Unscripted. It's a tough topic, but we're here to help.
I have two guests today–Beth Pinsker, she's a financial columnist and certified financial planner who wrote the book My Mother's Money-- A Guide to Financial Caregiving, and Sangeeta Moorjani, a senior leader here at Fidelity Investments. They're going to break down the essential steps every financial caregiver needs to take-- getting the right legal documents in place, taking a financial inventory, building a sustainable budget, and protecting your own finances while making sure your loved one's needs are met. Beth, Sangeeta, thank you so much for being here.
BETH: Thanks for having me.
SANGEETA: It's great to be here.
ALLY: Beth, let me start with you. You were living in Brooklyn. Your mom was in Florida, and she needed you to come and take over her finances while she had spinal surgery. What was supposed to be temporary really turned into something much more complex. Were you ready for that?
BETH: Not at all. [LAUGHS]
ALLY: Tell me why.
BETH: I thought what I was going to be doing was temporary. I thought my mom was going to have this operation and bounce right back. It would be maybe a week or two in the hospital. And it turned into about nine months of ups and downs, where I had to completely take over her finances.
ALLY: Yeah. You are a certified financial planner. You are a financial columnist. Why weren't you ready? What did you find?
BETH: These aren't things that anybody teaches you in a book. We have general prescriptions that we put out there. You should have a power of attorney. And I did not realize at the time that I was saying all those things that actually using the power of attorney was much harder than it seems from first glance.
ALLY: We're going to dig into power of attorney in just a second. But is your experience with your mom why you wrote this book? And I have to say, I wish I had had this book when my mom started to decline because it's so helpful in laying it out so clearly and unemotionally, frankly.
BETH: Well, thank you. The reason I wrote it is because I needed that book when I was going through it. The red tape, the emotions of it is really hard. And I thought people needed a guide, and I had the skills to put that together for people.
ALLY: Sangeeta, let me bring you into the conversation. What's the first step, or the first couple of steps, someone should take if they're stepping in to take over their parents' finances?
SANGEETA: I would say, first off, it's so important to start these conversations early. Because you don't want to wait for the moment where you have to have the conversation. It's almost too late. You're in a crisis, and crisis is not the right time to have the conversation.
And I would say often, anticipate that this conversation will not be smooth because parents may not know exactly where to start. In fact, what we've learned through our research is 52% of parents have not shared their net worth with their children.
So you have to start at a very basic level. Have you thought about the future? Have you made a plan? And so tease at it and gradually get into a conversation. You want to know everything possible, everything from how much money they have, what are their needs in terms of how much they spend to take into account and build a full picture.
I highly encourage people to enlist professionals. So your parents may have a banker, a lawyer, a CFP. Bring them into the loop. And that way, the conversations aren't just the emotional piece. It's also the math piece, which is really important.
ALLY: Yeah. Yeah. Your father was ill. Tell me more about that.
SANGEETA: Yeah. My father, at the age of 62, he was diagnosed with cancer. And he lived a wonderful 10 years after that. But he wanted to make sure he traveled as much as he could through those last years of life. And so it was me and my brother, and we had to make sure that we talked about not just taking care of our father, making sure how he wanted to live his life, but how were two of us going to contribute financially, just our time, where he was going to be treated. And that's why these conversations are so important as a family.
ALLY: What else should someone keep in mind when they're getting down to the business of the financial part of the conversation?
Everything is the answer. And so let me break that down right. It's every source of income they have and every expense. And so start with every account-- a bank account, an investment account, a 401(k). Look at every account. Put it on one side. I almost think of it as a balance sheet. And then start to write down all the expenses they have-- utility bills, mortgage, if they are paying that, right. If there's caregiving that's happening currently, you need to account for all of that.
Once you have it all, you then start to see, OK, where is there potential dysfunction, or where aren't things matching? So that's really important. And once you start to put all of this on paper, what also becomes clear is where can you simplify? Can you automate the payments?
Because you want to leave least amount of work to any one person, whether it's them or yourself. You want to automate. And that's why I say take every time, every piece of-- every minute of time you can get with your parents to document the details.
BETH: Yeah. I wish I had had that advice before I started, which is why I'm trying to give it to people now. When my mom was first sick, I had to go and reconstruct all that stuff from scratch. And it was really hard because she wasn't in any position to answer any questions at that point. And so I literally had to sort through papers on her desk and try to reverse engineer a budget for her.
I'm literally looking at her account statements and saying, OK, that must be her Social Security payment. That must be her pension. I wonder if there's any other money that comes in? Oh, no? OK. Well, then here's the list of expenses that we're going to start to build out.
And then I saw very quickly that the number of expenses at the bottom was way bigger than the number of expenses-- the number of income at the top. And then I knew that there was like a big problem going on, and I had to be the one to fix it. Because otherwise, if she were short money, it was coming out of my pocket.
ALLY: Yeah. Right. Right. I mean, I think you had talked about your mom was making political donations to a larger degree than probably was good or necessary.
BETH: She was giving to everybody who asked her. And she got on every possible list, and she got solicitations constantly. And she just gave money to everybody.
Yeah. Yeah. I mean, we're talking about expenses. And I assume one of those expenses could be an insurance bill. So how to talk about what insurance documents you should get a handle on?
SANGEETA: I would say, look at all of their insurance. Do they have life insurance? Do they have long-term care insurance? Because it's going to be really-- one, healthcare is expensive. Let's get that straight.
So you want to get all of the policies together because if they have long-term care insurance, then that is going to help you a lot in terms of paying the coverage and the costs compared to what Medicare and other insurance plans will cover.
People think of long term as not a separate bucket. But long-term insurance is actually a separate thing, where you get insurance to take care of your health if you need long-term care, whether it's in a rehab or sustained care. So it's really important to sit down and look at all of that.
ALLY: Had you had any of those conversations before your mom was in crisis?
BETH: No, we had had some general conversations about what was going to go on, especially after my father died. My father died five years before my mother. When my dad needed caregivers, that cost blew up their budget. And so my mom talked to me about her fears and anxiety about that. But we didn't talk about any of the nitty-gritty stuff, not any of the functional information you need to run somebody else's life.
And you had told a story about your mom's caregivers and coming to the hospital. ALLY: Tell me more about that.
BETH: Well, the first thing that I came across was my mom had surgery on a Tuesday. And then by Friday, her caregivers needed to be paid. But she was in no position to write out a check. And so I was sitting there with the power of attorney papers in one hand and the checkbook in the other, but no legal authority to write out a check for her.
And so I had to figure out what to do. It was either forge her name on a check, or write out a check of my own for $3,000 or so. And that was a difficult position to be put in.
So when we first started, I wasn't the official power of attorney. I had the paperwork, but I hadn't turned it into the bank and got it authorized. And so I couldn't legally write a check for her.
ALLY: And I'm assuming that was a little bit of a fluid situation with other expenses.
BETH: That was. In particular, her long-term care insurance policy was past due when I first took over her bills. And what had happened is she had lapsed in her paperwork. She had gone out of claim, basically, is what the term is. Her claim had lapsed, and they wanted a premium from her again.
So the first thing I had to do, as her caregiver, was write out a check for almost $7,000 to cover that cost. And one way to forestall policies like that from lapsing is to get named as a trusted contact on those accounts. We could put another name on that account and say if something happens, if you don't get a payment, please notify me or my brother, and let us know and we will help take care of this problem. You can do that on brokerage accounts or banking accounts, life insurance accounts, any account where if something messes up, you're going to have big problems, you can be just this standby, please call me in the case of emergency person.
And that's very, very helpful.
ALLY: Yeah. I want to go back to something Sangeeta said, and I think you probably said it too, but it's like that idea that yes, have these conversations as early as possible. But so many of us are kind of thrust into caregiving, and we just didn't. We didn't have those conversations. And now here's a crisis. So help me understand where to start if I didn't have those conversations, or I had them high level and now I'm in it.
BETH: Yeah. The number one thing you need to have is the financial access to the accounts. Because you really can't do anything without it. You're really just locked out. And it's one of those hard nos. You think that you can call up and talk your way into it. You can't.
If you want to call up and even get a form from a brokerage company, they're going to voice recognize you and know that you're not your parent. They're going to see a signature on a check and know that it's not their signature. And even if you have their password sometimes, there's two-factor authentication. And so the idea that you can string along in some sort of gray area for very long is gone. Those days are over.
Yeah.
ALLY: And that's that power of attorney.
BETH: That's the power of attorney. And for medical decisions it's called a health care proxy. You need two separate documents just to make life easier for yourself.
ALLY: Tell me more about the power of attorney. I want to get this right. You said-- in your book, you say, "Having the power of attorney in place early is an act of love." Why do you say that?
BETH: Yes, it's an act of love. Because the thing that we try to do for our children is not put burdens on them. And so the best thing you can do for your kids is give them access that they otherwise would have to go to court to get. If you are incapacitated in some way, and you don't have that power of attorney, which is so easily downloaded off the internet. Just get one. If you don't have it, somebody has to go to court to get the power to do things for you. And it's an onerous process.
SANGEETA: And one other thing I would say, it's so important, to your point, Beth, to do this. Because too often I hear cases where people have to take loans. They have to dig into their retirement savings to basically take care of their parents.
BETH: I had to.
SANGEETA: Yes. And I think parents would be so devastated if they heard that's what it took to take care of them.
ALLY: But you had power of attorney, and you still hit roadblocks. Tell me more about that, and then how people can try to avoid problems using a power of attorney when they're taking over their parents' finances.
BETH: So, the first roadblock with power of attorney was getting the bank to accept it. Most of the time, the bank wants the person who is giving power to somebody else to show up in person, but that's not always possible. My mom was already in the hospital incapacitated when I went to use the power of attorney. So it was like, no, that's not going to happen.
So I had to stand my ground. It took three different appointments to get that power of attorney settled. I had to go in. I was there for about two hours. And I had to make an appointment where I was there for two hours, and then another appointment where I was there for two hours before I could finally get access to that one bank account and the safe deposit box.
And then I had to repeat it at all the other institutions that required it. And it was a really tough process. And the only way to do it is to stand your ground. You have to go into these banks and say, I cannot proceed further in my life as a caregiver unless I have this settled. And so you're going to have to help me.
ALLY: Yeah. But also, too, government agencies don't accept it.
BETH: Yes. So then you have the next roadblock, which is that there is more than just banks that you have to deal with. There's Medicare. There's Social Security. There's the IRS. If it counts for your family, the Veterans Administration. There's a lot of government agencies involved in the care of an older person.
And they don't take a civil power of attorney. They have their own forums. And if you have to do something for somebody with any of those agencies, you have to get a special form. And they don't have a central form for the government, of course. It's all separate forms. So to deal with the IRS, you need one form. To deal with Medicare, you need a different form.
ALLY: Know your rights came up as a theme for you a lot in the book.
BETH: Yes.
ALLY: What were the most important things to know about your rights as you navigated other things?
BETH: I think the most important thing is to know when to stand your ground. And then if you know your rights, you know when you have the ability to stand your ground. Because sometimes the answer to some of these questions is no. Like, if you show up at the bank with a power of attorney that is out of date or from another state, the answer is no. And that's actually no. You can't do anything about that. With Medicare, Medicare has certain rights and regulations. There's a rule book that says you get a certain number of days for hospital care. You get a certain number of days for rehab care. But then the hospital wants to discharge them. So you have to know your rights as to what care and coverage your parent is entitled to.
And that's just knowing your rights.
ALLY: We all know that health care costs have been on and remain on the rise. Whether you're bringing in a caregiver, like you did for your mom, or perhaps an assisted living facility, it's all expensive. So how did you balance protecting your own money, and ostensibly, protecting your mom's nest egg with actually needing to spend the money. I mean, you need it for the care.
BETH: Yeah, absolutely. It was tough. I often had to lay out large sums of money. I think the average out-of-pocket spend for a caregiver is just over $7,000. I hit that in the first month that I was helping my mom. A lot of the money got reimbursed at some point. It was just that we needed access to cash, and I had to lay out the money for the caregivers, for the whatever it was.
And then I kept really good records because my mom kept really good records. And I knew that if she came back around someday, she was going to ask me for receipts and where all the money went. But there was a lot of money going in and out. Her care costs about $12,000 a month out of pocket. She had her mortgage and her electric bill and all her other regular household bills at the same time.
And then I had travel costs. My mom was in Florida, and I was in New York. There was just a lot of money flying out the door very fast. Plus, my mom's budget with those caregivers was like so far beyond what we normally spend in a month, that it was just hard to fathom some of those costs.
ALLY: I mean, it is. Bring me through that a little bit more, Sangeeta. How do you balance the very high cost of care and making sure you have the money.
SANGEETA: Yeah. I mean, they've got to think about every aspect of how much is long-term care? How much is that going to cover? What are the other insurance mechanisms that your parent has? Because it's really important to document this and say, OK, for every payment, what is the source?
You can't keep your fingers crossed and hope and pray that it will happen. You've got to really make sure that you're not, as a caregiver, you're not draining your personal finances, your retirement accounts, taking loans to give that care. Because at the end of the day, you've got to go to the sources that are available, and you're not taking on that cost yourself.
ALLY: Yeah. What's your point of view there, Beth?
BETH: We had a plan for spending my mom's money, like, really down to zero. And my mom would get very nervous about this. She just saw all this money going out the door and thought that we were headed for disaster.
And I had done the math, like you have to do. And I had figured out that we had three years of money. If we spent her money at the rate we were spending it, it would last us for three years before we had to make any other decisions.
And the next decision to make wouldn't it be to go on Medicaid. It would be to sell her apartment and then live off that money, which would probably be another three years. And then we could talk about seeing if Medicaid would pick up the cost of a nursing home.
So I knew that we had a good bit of time before we had to make any really huge decisions, and that she had the money, and that that's what the money was for.
ALLY: You can't talk about caregiving without talking about the money, and you can't talk about the money without talking about the emotional side of caregiving. I want to quote some stats from Fidelity's American Caregiver Study. It found that 79% of caregivers say the decision set them back on a variety of fronts-- their financial goals, their career, and mental health.
More than a quarter of caregivers for adults, 28%, left a job, took a leave of absence, or shifted to part-time work to provide care. Even for caregivers who took short-term leave or didn't leave work, 20% say they turn down or didn't pursue career opportunities at work because it would have interfered with their caregiving responsibilities, which, of course, can be a financial hit. Sangeeta, what do you say to folks about taking care of their financial but their mental well-being as well?
SANGEETA: Caregiving is such a privilege. And people who do it, I give them so much credit. It's a very tough decision. It's a very personal decision. But again, know what you're getting into.
When you are stepping away from a job to give care, it's not just a simple decision of leaving my job and not having a salary come in. It's actually not having a salary coming. It's not making a contribution to my retirement savings.
It is making sure I have health coverage, if I was getting that from my employer, from another source, or if I have a partner or someone else that can provide for it. It means if I'm not going to work, let's say, for three to five years, it means I'm stepping back from a promotional opportunity.
So its current cost, but it's also future cost. And it's really important. When people sit down-- I've talked to so many people. When they sit down and do the math, sometimes they say, oh my god. Actually hiring a caregiver may not be as expensive as I thought when I think about the cost of me giving care.
But if you choose to do that, I think it's really important to understand, again, the options. A lot of employers will have FMLA, family medical leave. They may have a concierge service that can sit down with you and help you think about the options.
Yeah.
Often, employers will give you a certain amount of time to step back and do take care of child care or elder care to understand your options. And that's what it is. Go in with your eyes wide open. And then there isn't the guilt or the pressure or the mental stress that you're taking on of caregiving because you've gone through the optionality to say, yeah, this is right for my circumstance, for my family, and what I want to do.
ALLY: And we know that the majority of caregivers are women who are already making so many tough choices from day to day.
SANGEETA: Absolutely. And I think when they're stepping away from their job, they've got to understand, who's going to take care of me? Because I am going to live longer. Women are the ones who tend to be caretakers. And it's so important to think about all of those consequences and options.
ALLY: Yeah. Yeah. Beth, you said there were times when you were filling out paperwork for your mom and just broke down crying. How did you take care of yourself?
BETH: I ate a lot of junk food. I had a lot of very supportive family and friends. I also-- I had a therapist and all sorts of structure I had built up in my life to help me handle tough moments like that. But I also had my mom, and she was a driving force in keeping me centered.
Because when I understood that I was acting on her behalf, it made me stronger. But it was still a big juggle. I was still sitting at her bedside with my laptop open, trying to get work done while all this stuff was swirling around me, and I was managing everything back home.
ALLY: I don't know why they call it the sandwich generation. I always think of sandwiches, like fluffy bread. And it is much more the wedge or smash. You're being pushed from every side.
BETH: I will say, though, when the time comes though, when you have to stop juggling-- I reached that moment when my mom went home on hospice, and it was the last days. And I just didn't want to focus on anything else. I just wanted to be present for that and not have anything else weighing on me because this is the most important thing. Everything else can wait a little bit.
ALLY: Yeah, yeah. Sangeeta and Beth, this has been such a terrific conversation. If people are walking away with something you said, what would you hope that to be?
BETH: I would say, first of all, that it's all about love. This is my core message, is that you want to make it as easy as possible for somebody to take care of you, and you want it to be as easy as possible to take care of somebody else.
That means getting your legal documents in place. That means you want your power of attorney, your health care proxy, and something for after death, a will or a trust or whatever it might be, beneficiary designations. But those things make it possible for you to help somebody and for them to help you.
ALLY: That act of love you talked about. Sangeeta, what would you add?
SANGEETA: I would say two things. Number one, start early. Start those conversations as a family early because it can take several tries. The second thing, give yourself grace. This is a tough road to walk on if you're a caregiver. Take care of yourself. You can only give from a cup that's filled itself. And so those are the two things I would say.
ALLY: Filling your own cup. That's a lovely way to end it. Thank you both so much.
BETH: Thank you.
SANGEETA: Awesome. Thank you.
ALLY: If you want to dig deeper into some of the things we've talked about, we have those links on our website, Fidelity.com/MoneyUnscripted, and in our show notes. It can help you with everything from signs your aging loved one might need help, to the do's and don'ts of taking over their finances.
Be sure to like, follow, and share the podcast, and we'll see you next time on Money Unscripted. It's your life. Get your money's worth.
