College and Long Term Care – ??? #LongTermCare
I was reading the most recent Consumer Reports magazine cover story on the cost of college and how it is impoverishing young people who are borrowing huge amounts to pay exorbitant tuition bills and graduating with debt into six figures that they can’t pay on the salaries they are earning in their new careers. The rising cost of college has certainly affected the types of cases that we see in our office. You might think that’s strange because our clients’ college years are simply a fond memory at this point. We’re focused on how to help them pay for long term care if they need it.
Actually, the rising cost of higher education is having an increasing impact on the planning and guidance we provide to our clients. When I discuss with a prospective client his/her estate and long term care plan, we review that person’s income and asset balance sheet. We also talk about expenses. If the client is in declining health we expect to see some long term care expenses. If the client is healthy we should see a financial picture in which income from Social Security, pension and investments is more than enough to meet the person’s expenses.
What we are seeing at a greater rate, however, is clients who are assisting their children financially. A common way they are doing this is by paying college tuition directly for a grandchild or setting aside money, such as in a 529 college investment plan, for future college expenses. Grandparents are also paying for other “lump sum” expenses such as summer camp and preschool daycare programs, often necessary while both of the grandchild’s parents are working.
For some of our clients, who have enough of a nest egg and a plan in place to cover a six figure long term care expense, the ability to assist their children and help provide a future for their grandchildren brings them great joy without affecting their own financial security.
There are others, however, who are not as financially well off but who don’t recognize the danger and could be headed for financial ruin. Next week I’ll share with you exactly what I mean.