Generally speaking, if you have kids, you have someone to watch over you beyond your golden years. Not everyone has children, though, and if you don't, it's up to you to prepare for your own senior care. And it's important to plan now. Illustration by Sam Woolley.
It's not like having a child automatically guarantees you'll be taken care of in your old age, but it's common for adult children to take care of elderly parents. If you don't have children, you have to be more prepared to figure it out on your own, and here are the basics of what you should have in place.
Find Someone You Trust to Oversee Your Health
More than money, you're probably concerned with health care as you age. Who will make sure you're taken care of? Who will make medical decisions for you when you can't make them on your own?
Health care directives make sure you have clear answers to those questions, and they're important to set up now, even if you're young and healthy. They consist of two basic things: A living will and a health care proxy.
A living will establishes what kind of medical care you want to receive under certain conditions. It includes requests to withdraw life-support and any other care that's only serving to prolong the process of your dying. FindLaw has an example of a living will that gives an idea of what it includes.
Your living will also includes a health care proxy, or a medical power of attorney. This is someone who will make decisions about your medical care that aren't covered in your living will. They also have to keep tabs on your mental and physical health, and they're the ones who decide when it's time for you to change living arrangements and move into an aged care home. If you don't have kids, you might consider a spouse or a partner, but things don't always work out so neatly. You may be divorced in your senior years, or you may outlive your spouse. So it's important to designate a backup just in case, and you want to update your directives accordingly.
When you don't have children, it can be tough to find someone to fill that role. Ideally, you have a trusted friend or relative you can enlist, but if you don't, there are options. For example, if you set up a trust with an institution for your finances, you could write it so that they monitor your physical and mental health, too. It sounds kind of iffy, but Kiplinger explains how the process works:
The document, for instance, could advise the trust company to hire a geriatric care manager to conduct periodic evaluations in the future, and to send a copy of the assessment to the person you choose as your health care agent.
A big plus for going the bank route: "The chances of elder abuse are reduced if you name an institutional trustee," Shenkman says. "The vast majority of elder abuse is committed by family members."
Or you might appoint an attorney to act as your health care proxy. US News suggests:
If no one comes to mind, hire an attorney who specialises in elder care law by asking around for recommendations or searching online for highly rated professionals. Unlike your friends, they have a licence to defend and are well-versed in elder care issues. Most of the time, Rahl's found, "they're trustworthy and will do a good job for you."
Again, when you go through an institution or a lawyer, you want to make sure you find a reputable one. You may also want to look for lawyers who specialise in elder law and special needs law.
Figure Out Who Will Handle Your Finances
A power of attorney is a crucial part of estate planning. Most people think estate planning is reserved for the elderly, but as we've told you before, it's never too soon to get started. A power of attorney is the person who will manage your finances, including any legal issues, bills or taxes, once you're unable to deal with these on your own. Obviously, this should be someone you trust. If you don't have kids, you might appoint another close family member or friend — perhaps a spouse, niece, nephew, cousin or sibling. If that's not an option, here's what Kiplinger suggests:
If you do not have someone reliable...you could set up a revocable trust and assign a bank or trust company as trustee, says Martin Shenkman, an estate-planning lawyer in Paramus, N.J. You would move your assets to the trust, and the company would eventually take on financial tasks you assign to it, including paying bills and caregivers, processing medical claims, and overseeing your home if you're hospitalized or in a nursing facility.
They add that it's important to come up with a system for checks and balances, whether you assign a person or a bank to take care of your finances. This might mean asking your power of attorney to send monthly statements to an accountant, for example. The idea is simply to ensure there's transparency so everyone involved in handling your finances knows what's going on and acts in your best interest.
There are a handful of different types of power of attorney, but most experts recommend an "enduring" power of attorney. It's valid from the time you sign the documents until you die. You spell out specific details about when this person has control over your finances, too. If you plan to designate an institution to take care of your finances, you should consult with an estate or trust attorney in those situations.
You can change your power of attorney, too, as your life goes on. Maybe you do end up having kids — you can always revoke your old document and create a new one.
Write a Will to Protect Your Assets and Last Wishes
If you don't have kids and you don't have much money, you might not think you need a will and testament. But a will doesn't just establish who gets your stuff when you die. It also designates who will carry out your last wishes, become guardian of any pets and generally deal with all the stuff you leave behind.
If you don't have a lot of assets or property, you probably just need a simple will, and you can draft a basic one using tools like Slater and Gordon Online (though note there is a $200 fee), or by referring to templates. You'll detail your wishes, name any beneficiaries (the people who get your stuff) and designate an executor (the person who carries out your will). If you don't have children, this should be someone you trust or, again, a third-party institution, like a bank. If you have a partner or you're married, you might create a will with your spouse that basically leaves everything to each other, but then also outlines what happens to your property and assets after both of you pass.
You'll print out your will, get a couple of witnesses to sign it, then keep it somewhere safe (and tell your executor where it is). According to Slater and Gordon, the requirements for a legally binding will are that "you must be over 18 years old, ensure your specific wishes are in writing and have it signed in the presence of two witnesses". Though optional, it's a good idea to register your will as well.
Prepare for the Massive Cost of Long-Term Care
When most people think about saving for retirement, they think relaxation. You save to buy a beach house or fund your leisurely lunches. In reality, you'll use your retirement savings to pay for less attractive things like health care costs.
And aged care (also known as long-term care) is expensive. You can see an explanation of the costs here, but in general, you can expect to pay hundreds per month. The maximum you will have to pay is 85 per cent of the basic Age Pension for a single person. This means that currently the maximum that you may be charged is $675.50 per fortnight, or $48.25 per day. Even if you're not in a facility, the average costs for aged care can add up. These may include the cost of a home health aide, homemaker services and services in an adult day health care centre.
An adult child might have the resources to help out an ageing parent with these costs. When you don't have children, that's one less safety net. Though the government subsidises the cost of aged care, you still have to contribute. Further, if you want a higher standard of care, accommodation and services (and who doesn't want to be as comfortable as possible in their twilight years?), you will have to shell out for the cost of that yourself.
Your options will vary, but the bottom line is: The earlier you factor this cost into your retirement plan, the better. This goes for all of us, but it's especially crucial if you don't have children because you have fewer options to rely on.
Find a Convenient Place to Live and Establish a Support System
You also want to consider your geographic location. For example, the New York Times profiled one single woman preparing for her own senior years without children:
So she has planned, meticulously. A federal retiree now in state government, she moved to New York specifically because it offered good public transit, inexpensive cultural activities and good health care. "I wouldn't want to be in the suburbs or out in the country if I couldn't drive," she explained.
Over Sixty lists 11 of the best places to retire to in Australia, taking into account factors such as good transport, affordable housing and weather. Finder has a similar list as well, so you can compare and weigh your options depending upon what matters most to you.
Wherever you live, you'll want to ensure you have a solid support team of friends, neighbours and loved ones to help you out as you age. That takes time, of course, but logistically, you at least want to have a group of people in place to handle your finances and health care directives. Specifically, experts suggest at least having an accountant, a financial planner and an estate-planning (or elder law) lawyer working for you.
You also want your support team to know when it's time for you to hire a healthcare worker or move into an assisted living community. Sadly, sometimes these things happen on their own — an elderly person gets lost or has an accident at home and a loved one realises it's time to establish more hands-on care. It's important to communicate with your support system at what point you want to take on that level of care as you age.
When you're young, none of this seems like a priority. Even if you have adult children, it helps to prepare for these years as much as possible, though, because it can be a heavy burden to bear. When you don't have kids, it's even more crucial to understand exactly what should be in place to prepare for your senior years.