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Facing fiscal reality when dementia strikes

Chuck McClatchey had a sound retirement plan.

Already retired with pensions from two jobs – one as a U.S. Air Force master sergeant and the other as an electrical operations superintendent for 20 years with the Arizona Department of Transportation – he landed another job with the state of Texas working on traffic signals and traffic intel systems.

He moved to Fort Worth at age 61 with his partner Bobbie Duncan, and they spent $25,000 in savings on a fixer-upper house. His plan was to work until he was 70.

But then things got strange. “I was having trouble understanding new technologies and things that I should have known off the top of my head” and having trouble using Word and Excel and PowerPoint, “things I had known for years.”

He left that job but had problems in another, simpler job at Lowe’s.

Then one day, amid growing confusion, came clarity.

“I brought home a little desk for me to put together,” he said. “I love to put things together, the more complicated the better.” It should have taken about half an hour. Instead, two hours later, “the pieces just weren’t going together like I thought they should.”

Duncan finally said what they both knew. He needed to see a doctor about what was going on in his brain.

The diagnosis was Alzheimer’s, the most common cause of dementia, which can wreak havoc on even the best financial planning for retirement. McClatchey, now living in Albuquerque, considers himself lucky that he was diagnosed in the disease’s early stages, just eight months after his move to Texas. “Some people founder for years and years because the doctors themselves are afraid to give the diagnosis of early onset Alzheimer’s because of what the disease is.”

Alzheimer’s is incurable, and about 5.4 million people in the United States are now living with it, according to the Alzheimer’s Association. With the oldest of the baby boomers turning 70 this year, the number of people with dementia is expected to soar.

“I think it’s important for people to have some awareness that financial problems can be some of the most notable symptoms” of dementia, said Nina Silverberg, program director of the National Institute on Aging’s Alzheimer’s Disease Centers Program.

Dementia can manifest itself in unpaid bills, giving away money needed for living expenses to charities or to the phone and Internet scams or other poor financial decisions. One financial planner said he walked in to find a client with dementia sitting at his computer day-trading stocks.

Dementia can hurt retirement finances by knocking people out of the workplace early. Instead of continuing to work until 70, which would have increased his Social Security payments, McClatchey qualified for Social Security disability at age 61, losing not just the income he would have earned from working longer but also increased benefits.

The best way to avoid problems is to take steps when your mental abilities are sound to protect yourself if they fail in the future.

It’s hard to contemplate. But here’s a statistic that should help. According to unpublished Medicare data reviewed by the Alzheimer’s Association, 1 in 3 people 65 or older who die in any given year have been diagnosed with Alzheimer’s or another type of dementia, including those related to strokes or diseases such as Parkinson’s or caused by brain injuries or conditions such as alcoholism that damage brain or nerve cells.

Even if you dodge that bullet, you can benefit from the recommended actions. They include having a health-care power of attorney or living will naming someone you trust to make health-care decisions if you are incapable, designating someone to take care of your finances and having a regular will to distribute your assets when you die. The National Institute on Aging has a very good fact sheet on legal and financial planning.

McClatchey, who since July 1 has been a National Early-stage Advisor for the Alzheimer’s Association, acted quickly after he was diagnosed. “I wanted to make those decisions as to what was to happen so, when the time comes, those decisions won’t have to be made by someone else.”

Catherine Seal, a certified elder law attorney in Colorado Springs, recommended making sure the person designated to take over your finances understands your assets, even sitting down with your financial planner, if you have one. “You really need to spend some time educating that person,” she said.

“Most people turn to family members” to handle their money, she said, but it’s important to choose based on ability. “You need to really look at your children and nieces and nephews and grandchildren. The oldest child may not be the best with money.”

Being good with money isn’t the only skill required to help dementia sufferers. Corey Purkat, an Oakdale, Minnesota, financial planner, found himself unable to help a couple in their 80s who hired him to help sort things out in the early stages of the wife’s dementia. She had been a financial professional whose memory issues rapidly worsened. As they did, “she got defensive that someone would have to help her with something she had done for a living.” That put more stress on her husband, who decided “he wasn’t up to making the hard decisions.”

“I did what I could, and I did the best I could,” he said of their amicable parting. But if a similar case comes up in the future, he said, “my goal is to refer them to someone with more experience” with dementia.

“The biggest problems are when people have done no planning at all,” said Hyman Darling, an attorney in Springfield, Massachusetts. In those cases, the decision will be made in the courts, which is “emotional, expensive and takes a lot of time” if family members disagree whom it should be. In the meantime, “the bills aren’t getting paid, and you can’t sign them into any facility because they don’t have a proxy.”

One of Darling’s cases was a battle between siblings of a divorced man and his children. The children institutionalized their father against his will, Darling said, and the siblings were fighting to get him back in his house with full-time care. They had to drop the fight when they ran out of money. In the institution “his will to live went down quickly, and his mental capacity went down quickly,” he said. “It broke his siblings’ hearts and ours, too.”

Patients with late stage Alzheimer’s and dementia of other types often need nursing home care, which is staggeringly expensive. A 2016 survey by insurance company Genworth Financial found the nationwide median costs for a nursing home to be $82,125 for a semi-private room and $92,378 for a private room.

In many cases patients and their families believe that costs are covered, when they’re not, said Ruth Drew, director of family and information services for the Alzheimer’s Association. About 2 in 3 people incorrectly believe that Medicare helps pay for nursing home care or were unsure whether it did, she said. Another 30 percent believe they have long-term care insurance, when national statistics show less than 10 percent actually do. In some cases Medicaid will cover costs, but in others families will need to go down the complicated path of “spending down” assets to qualify.

The costs of caring for a family member with dementia often outlives the patient. Family care givers may have to give up their jobs or reduce work hours. They may spend their own retirement funds or be unable to save for retirement or their children’s college. “For 1 in 3 families, an annual income loss of $15,000 is not unusual,” she said. “It’s never easy in the best of times.”


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