Question: My parents are in their late 60’s, in relatively good health, and retired. My father worked for state government; my mother worked as a church secretary part-time. I have two siblings who live in other states and who visit every six months or so.

My folks never confided in any of us about their finances until just recently when they asked me to come over to visit. I was shocked to learn they were having problems making ends meet. Because of rising living costs, health insurance, gasoline, etc, when large payments became due – such as automobile and homeowner’s insurance, property taxes, life insurance premiums, etc. -- they have been taking cash advances on their credit cards to pay these amounts. And, because they were making only minimum payments each month, their credit card debt now exceeds $40,000.
They live in a home they purchased on a nearby lake 35 years ago that the county has assessed at more than $750,000, which means high property taxes.

They are also concerned that if one of them gets sick, the other will not have enough money to keep their home, and they will die paupers or dependent on their children.

After our talk, I spoke with my siblings about what we could do to help. Since both of my siblings have children in college, they are strapped, and my wife and I don’t really have any extra. But we all want to help Mom and Dad get over this crisis. Could you give us some guidance to lead us in the right direction?

Answer: The issues your family is facing are not uncommon in middle-class America today. Increased living expenses, health insurance premiums, and gasoline costs play havoc with folks who are living on fixed incomes. Add to this burden increased property taxes generated by reassessed property values, and you find people like your folks who can no longer afford to pay the taxes on their homes they have owned for decades. Not the American Dream by a long shot.
And your folks are correct to be concerned about the effect that long-term care could have on their lives.

According to the recent “2007 Cost of Care Survey” by Genworth Financial, three-fourths of Americans have not planned for long-term care even though the cost of long-term care in a nursing facility has increased by 15% between 2004 and 2007 to almost $75,000 annually. That’s right: more than $6,000 per month.

The expenses associated with assisted living facilities have increased by more than 13 percent to an annual average cost of more than $32,500 for a one-bedroom unit – more than $2,500 monthly. While three-fourths of those polled would prefer care at home, the Genworth study tells us that the average cost to hire a 40-hour-per-week home health aide is nearly $53,000 per year – $6,000 more than the median household income in the United States, which is pegged at $46,272.

Too rich for most folks’ blood, we assure you. But, unfortunately, despite the size of the potential expense, the Genworth study tells us that nearly half of those polled incorrectly believe that Medicare or private health insurance will pay for their long-term care needs.

Taking the NextStep: First, we suggest that you read the Genworth Financial Study by clicking on the link at www.nextsteps.net. ONLINE READERS SCROLL UP TO "USEFUL LINKS" FOR THE STUDY Second, we believe that your folks should look at long-term care insurance. How are they going to pay for it, you ask? We’ll tell you next week.