What Happens When You Aren’t in Control Anymore?

This is a guest post from Sheryl in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.

** I know that living in Ontario, we are very lucky to have the health care we do, but the system is not perfect.  It is easy to take the system for granted and believe that all our health care will be “free” for our entire lives.  I’m not writing this to complain about paying for health care, but rather to perhaps give the young(ish) crowd around here something to think about when doing their own planning. After all, forewarned is forearmed.**

Around here, financial independence is the common goal, and from reading this, and other PF blogs (and associated comments) most of us seem to be an independent bunch in the rest of our lives as well. My parents have always valued being able to take care of themselves and their family, and have instilled their fierce sense of self reliance in their children.  Their own parents lived in their own homes far into old age, and either passed away in their home or in hospital after being admitted for a few days.

My parents have always been hard working physical people. The home they currently own is a bungalow. They originally bought a small house on a decent size lot with plans of building another house on it, but then they found another house for sale that was going to be demolished by a developer if it wasn’t sold, so they purchased it, had it moved, and then my father built the basement up underneath it, lowered the house onto the block walls, and moved in shortly there after. (Welcome to my childhood, I knew how to mix concrete and mortar, and how to lay cinder blocks when I was 9 years old).

They have some money saved, a small pension coming in (we moved countries in 1976 so my father only had about 18 years to contribute to it), and they have enough money for what they need, a fairly frugal lifestyle with a few luxuries like going out for seniors lunch once a week.

Now everything has changed. My father’s health has declined significantly in the last few months, to the point now where he can no longer roll himself over in bed, let alone stand or walk. The hospital will only release him to one of two options, either to a nursing home, or to his own home providing there is 24 hour nursing care (cost of that is $400 per day). As much as my mother wants him home and to look after him, she is not physically able to pick him up etc,.
In Ontario, nursing homes are either public or private. Private ones can charge whatever they want, public ones are controlled by the government, and they all must charge the same. Ward beds are $1620/ month, semi private are $1,863 and private are $2,167. Financial assistance is available, based on income, for ward rooms only.  Additionally, once a hospital declares you are medically stable, they charge the patient the same rate that would be charged in a nursing home, until the patient is released.

As I’ve been going through the limited options for my fathers care, I couldn’t help but think about how we all talk about frugal living, keeping our costs low, etc.. What happens if we are faced with not being able to look after ourselves, either through an accident when we are younger, or later on as a result of age? Even if we have set up our budgets to live on $1000 or $1500 per month in (early) retirement, our choices for our own care are drastically reduced, especially if you live as a couple, and one person still has to live at home from the money saved.

My parents never thought they would have to face this, so much so that they wrote into their wills that any offspring that “put them in a home” would forfeit any inheritance.  I have always respected their opinions about this, but now feel it has been irresponsible of them to not plan for if there came a time when they could not look after themselves.

I must admit, this experience is making me re-think how much I will need before I feel I have enough.  Perhaps I will work a few more years to ensure I have enough to fund a private room if needed (I don’t play well with others), or maybe a series of part time jobs so as not to touch my nest egg as much.  I know how much I need to live on now, and now know how much I might need to live later.

If I don’t end up needing it, I’m sure I can think of some way to use the extra money before I die.

In the FI/RE community, I haven’t read where anyone has approached this subject, and I’m interested to find out how others are planning for any kind of large expenses that could change your plans.

9 thoughts on “What Happens When You Aren’t in Control Anymore?”

  1. Oh, you reminded me of a book I have in my library that touches on this fact. Get a copy of ‘New Rules of Retirement’ by Warren MacKenzie and Ken Hawkins and check out chapter 4.

    Overall about 6 to 7% of senior between the ages of 65 and 84 can’t live independently. At age 85 and over that jumps up to 20%. So it is possible to live a long time independently but yes as you hit those last few decades and the odds start dropping. The key is looking after your health as much as possible starting RIGHT NOW!

    Oh, the other thing to keep in mind is the level of care required and how long you need it for. Often some seniors only need some assistance before they hit the highest level which your Dad is at.

    Other than that you are playing the odds, will you need care or not and it is your choice about risk management. I tend to keep my house equity as the emergency fund of last resort, based on the rates you posted it could fund 8 years of that level of care in a semi-private for BOTH my wife and I. Is that enough? Depends on what you are comfortable with.

    Great post, we often don’t talk about this, but is important.

    Tim

  2. Like Tim, my home ownership is the plan for funding elder care. My wife and I are fully expecting to need “the institution”. So… we’ll sell the house when the time comes and use the proceeds to fund the need.

  3. This post resonated with me as my father recently was diagnosed with prostate cancer. Not only do I now have the worry about testing for myself and planning for the future, but in those plans for saving money and early retirement I need to make sure that I can help take care of my dad. The realization that I may have to help my parents financialy as they get older never really occured to me and was not anything that I planned on, but now I do.

  4. My father is going through issues right now with his mobility…has just recently moved into a retirement residence and HATES it..sigh. Luckily he was a member of the armed forces and has a pension that will cover what he may need in the future.
    My in-laws, well, that is a different story. Although they live together it is not pleasant. She is very frail and has a very small amount of savings and little in the way of pensions….she will soon need to be in a home. He doesn’t seem to want to help…it is nothing short of a horrible situation and one that we will try to deal with this coming week….wish us luck.

    As far as hubby and I go the house will be the backup in case we do need help. But after watching the mistakes made by both my parents and my inlaws I am very well aware of taking care of my health now, and hopefully that care will pay off in the future–I know, it’s not a given for sure but it sure doesn’t hurt. Poor hubby, the house has been banished of sugar and other white stuff. His beloved cookies are gone, replaced with homemade protein bars and fresh fruit (he really is getting used to it….but I do wonder what he eats when he is away for work…the devil!!)

    The yoga, the gym, the good food and a great doctor…they are my insurance policies against the dreaded aging process….but it still scares me, a lot.

  5. A word of caution to those of you who are planning on using your house to fund your elder care. Friends of mine suddenly found themselves in a position where they had to move out of their home and into an assisted living facility, as the husband could no longer live in the house due to mobility issues.

    They were fortunate to find someplace to move into. Thier house, however, has been on the market for two years now, and barely a sniff at a showing, let alone an offer to purchase it.

    I’m sure if they could do it over again, they would have sold the house a few years ago, and moved into an apartment. But, their house was a trophy to them. That trophy has turned into an albatross!

  6. That certainly is something to consider Katie…hoping I am keen enough to know when it’s time to sell when that time does arrive. Worst case senario would be a reverse mortgage..that is if only one person needs the care…..and the other could stay in the house. Pensions would cover the care facility and the reverse mortgage would cover the other to live in the house…a sad thought.

  7. I have seen so many people talking about early retirement yet failed to consider the many life circumstance they might facing, for examples, kids expense, health care expense, expense to support elderly parents, etc. The whole retirement planning requires a holistic view of the life rather than a tunnel vision of a happy path. But I have to agree. Health care would be one of the largest expense that is unpredictable.

  8. I’ve got an idea of what it would cost for a cheap early retirement but know that circumstances could drastically change those plans. For instance, I know of a couple whose kids have moved out of country. One to China and one to Australia. They now have grandkids in both countries too. If you actually want to see your kids/grandkids in person then living off a couple thousand a month may no longer be realistic.

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