The Big Squeeze
SANDWICHED BETWEEN AGING PARENTS AND GROWING KIDS, ANNE LEGARE AND BILL HANRAHAN STRUGGLE WITH TOO LITTLE TIME AND TOO MANY TOUGH CHOICES
(MONEY Magazine) – Within seconds of waking to the phone ringing at 2 a.m. on a chilly night in late October, Bill Hanrahan knew what the call was about. It was the same call he'd received at least once a week for most of the past year: One of his elderly parents was having a medical emergency.
This time it was Bill's 83-year-old mother, who had an uncontrollable nosebleed and had to be rushed to the emergency room. "Basically, any time the phone rings after 6 p.m., I expect the worst," Bill says wearily the next day. "We are always on duty."
It's true: Bill, 46, and his wife Anne LeGare, 39, spend virtually every waking moment either working, tending to their three young children—Joe, 10, Daniel, 8, and Katie, 6—or providing care for Bill's octogenarian parents, Ken and Rose Clare Hanrahan, who live in an assisted-living facility five minutes from their Madison, Wis. home. Anyone who's raised children or cared for an aging parent knows how exhausting and frustrating (if rewarding) either can be. Doing both at once is vastly harder, and very often stretches your resources—emotional, financial and otherwise—to their limits and beyond. With the population living longer and couples delaying having children until later in life, however, the number of Americans in Bill and Anne's situation is expected to grow dramatically. Experts currently put this so-called sandwich generation at 16 million and expect it to double in the next 20 years.
Tough questions and tough decisions are falling to this group. Is time and money devoted to your parents shortchanging your kids? Is it wrong to let your parents accept government help intended for the poor when you're not poor? And what about you and your own financial security? Is it selfish to take money that could be spent on your parents' or kids' welfare and save it for your own retirement—let alone spend it on a romantic vacation?
There are no easy answers—and most workable ones involve sacrifice. That, though, is something Bill and Anne haven't shied away from. "I don't think Bill and I ever talked about whether we would do this—it was just something we knew we had to do," says Anne. "I remember seeing my mother taking care of her mother in the final stages of her life. We want our kids to see us doing this."
Harbor House, where Ken and Rose Clare live, is known as one of the better assisted-living facilities in the Madison area. The large common area is well lit, the linoleum floors are clean and, during one recent visit, the collection of worn, mismatched couches and love seats in the front of the room had been arranged in small circles, awaiting groups of visitors. Homemade fall-themed decorations hang from the ceiling, and an upright piano is tucked in the corner.
Bill's parents, it's clear, are doing reasonably well there, if not quite thriving. Rose Clare has maintained a sense of humor despite her deteriorating health. "I look like a giraffe," she jokes, noticing the bruises up and down her arms where the emergency room nurses had drawn blood earlier that week. Meanwhile Ken, 84, who suffers from Alzheimer's disease, is calm and friendly. He likes to play catch with a beach ball when his grandchildren visit, returning the ball with an athletic flick of the wrist that recalls his days as an amateur tennis champion in 1940s Milwaukee. He smiles when Bill pats his shoulder, and says he will eat only one of the doughnuts Bill brought for him, carefully wrapping the other in a paper napkin to save for later. "That's my dad," laughs Bill, "always thrifty."
Unfortunately, even good senior living facilities have problems, and Harbor House is no exception. Eight months after his parents moved in, Bill has a laundry list of complaints, many of which he attributes to short-staffing and high turnover. Some—like finding his parents dressed in someone else's clothes, or bottles of nutritional supplements gone missing—are annoying but inconsequential. Others are genuinely frightening, like errors in administering medications. And then there was the time last summer when someone neglected to set the alarm on a back door and Ken wandered a mile and a half away before anyone knew he was missing. ("We're not perfect," acknowledges Harbor House executive director Nancy Marshall, who says she is aware of the problems and has a plan to fix them.)
So Bill and Anne spend a lot of time checking in on Bill's folks: They're typically at Harbor House more than 15 times a week. On weekdays, Anne, a stay-at-home mom, usually stops by after dropping the kids at school to make sure Bill's parents are out of bed, washed and dressed properly. She often drops in for another visit in the afternoon between shuttling the kids to and from soccer practice and playdates. For his part, Bill, a lawyer for the state of Wisconsin, usually makes a quick visit to the facility on his way home from work each day. Then, after rushing through dinner and homework help, he heads back to calm his father, who like many people with Alzheimer's often grows confused and agitated at night.
Every Saturday begins with a careful assessment of the day's activities and errands with an eye toward squeezing in a visit from at least one grandchild. On Sunday mornings all three generations attend church together—a tradition Bill tries never to disrupt, in deference to Ken and Rose Clare's lifelong practice. And there's always paperwork to fit in, "an endless stream of correspondence and communications," Bill says.
But as tough as the time pressures are, financial ones may ultimately prove more intractable. Ken and Rose Clare have no pension income, and their Social Security benefits don't come near to covering the cost of their care (see "The Money Squeeze," left). The $4,500-plus monthly shortfall is now being paid for out of their modest savings—but that money is going fast. The mail brings almost daily invoices from the care facility, which, on top of monthly room and board, charges extra for everything from dispensing drugs to clipping toenails. There's also the cost of prescription drugs, plus medical treatments not covered by Medicare.
At the rate his parents are burning through their savings, Bill figures the money will be gone in about two years. And though their own budget has some slack in it, Bill and Anne won't be able to make up the shortfall. Hard decisions will have to be made. "I don't mean to sound crass or callous," says Bill, "but frankly, it's a race between their life expectancy and their bank account."
The $140,000 that remains in Ken and Rose Clare Hanrahan's bank accounts is, 16 years into their retirement, all that's left of a lifetime of thrift and saving. After both serving in World War II, the Hanrahans settled in Milwaukee, where they'd grown up, met and married, and began working at the downtown fish store that belonged to Rose Clare's father. In 1950, they took over the business. Keeping the store afloat meant rarely taking a vacation, but Ken didn't like to go far even when he could afford it. On Sundays, when the store was closed, he would drag the whole family there with him after church to make sure the refrigerator was still working. With six children—Bill is the second to youngest—money was never plentiful, but in 1965 the Hanrahans were able to purchase a small house for $20,000 in downtown Milwaukee, where they lived for the next 35 years.
It was shortly after they retired and sold the business in 1988 that Ken found he could no longer hold his own at the monthly poker games with his fellow fishmongers. It turned out to be the first sign of Alzheimer's. Over the next five years his dementia accelerated, and Rose Clare's health began to fail as well.
Initially, caring for their parents was a team effort for Bill and his five siblings. Given his legal knowledge, Bill was the natural choice to execute the sale of the family home when his parents moved into an independent-living facility in Milwaukee. He soon took charge of his parents' finances as well.
At first, he marveled at how much they'd been able to save out of their modest earnings: The elder Hanrahans had about $100,000 in cash, spread over at least nine accounts—some checking, several CDs, plus $17,000 in a money-losing annuity ("I think someone sold this to my father after his mind was already gone," Bill says bitterly). The home, in what had turned into an up-and-coming neighborhood for young families, brought in another $215,000.
As Ken and Rose Clare's health continued to decline, Bill would pack the kids into the car for the hour-and-a-half trip to Milwaukee nearly every weekend. Then, two years ago, Rose Clare had a stroke and had to be hospitalized for months—and several of Bill's siblings felt that their father would be best off in an Alzheimer's facility. Bill disagreed. "I couldn't imagine not being there for him," he says. For a few months, Ken lived with Bill and Anne. This past April, Bill decided to move both his parents to Madison and soon settled on Harbor House as the best option. From then on, the team effort largely became a solo act, with Bill as his parents' de facto guardian.
If and when the money runs out, Ken and Rose Claire would qualify for Medicaid, which would cover the cost of a nursing home. But because Harbor House is technically not a nursing home but an assisted-living facility (among the distinctions, the latter does not have doctors on staff), it's not eligible for Medicaid funds. And Bill is adamant about keeping his parents from moving again, even if he has to supplement his $94,000 salary to pay for Harbor House out of his own pocket. "If it comes to that," he insists, "I'll roll up my sleeves and get a part-time job."
It may be impossible to stop that day from coming, but there are ways to push it off. One option for Bill and Anne, or any family in their situation, is to enlist the services of a local geriatric-care manager, an adviser on a range of elder planning issues, from placement to government benefits advice. Some GCMs are former nurses; others have a background in social work or benefits administration. A good GCM will know about available state or county funds. (You can find a list of geriatric-care managers in your area at caremanager .org, but be aware that practitioners are unlicensed and unregulated. Interview several by phone, and carefully check references before deciding.)
Milwaukee geriatric-care manager Phyllis Brostoff suggested that Bill might be able to stretch his parent's savings by applying for Senior Care, Wisconsin's prescription-drug assistance program for low-income residents. With annual income from Social Security of $21,600, the Hanrahans will need to pay a $500 annual deductible apiece, but that's far lower than the $7,000 or so a year they now spend on prescription drugs. Brostoff also suggested that Bill look into applying for Wisconsin's Community Options Program, which would allow Ken and Rose Clare to receive state funds for home care or an assisted-living facility like Harbor House. There's currently a waiting list for funding.
Bill could also try stretching his parents' savings through conventional in- vesting or savings vehicles. With such a short time horizon, there aren't many ways to get extra yield without endangering the principal, says Madison financial planner Michael Dubis. Still, Bill ought to at least shop around for the highest-yielding money-market and short-term CD options. (See "Reaching for Higher Interest Rates," page 53, and "The Numbers," page 187.) And to reduce paperwork, he should consolidate the nine accounts into one or two. As for the annuity, it no longer has a surrender charge, so Bill could move the money into an equivalent (but better) product.
Could Ken and Rose Clare preserve their assets by giving them to their kids and qualifying immediately for Medicaid? Congress has placed limits on the move, so the Hanrahans would have had to give their money away or put it in a trust years ago. At this point it's largely too late. (See "What Every Family Needs to Know," page 116.)
Perhaps even more important, Dubis also encouraged Bill and Anne to stop neglecting their own financial planning—a common problem among the sandwich generation. Though Bill and Anne don't have any debt except for a 15-year mortgage on their home, they haven't put any money aside for college or—aside from Bill's state pension plan—for their own retirement. Until Bill paid off his student loans six years ago, they hadn't been able to save a significant amount of money each month; since then, they've accumulated $30,000 in a money-market account.
Dubis recommended that the Hanrahans pull $6,000 from the money-market account and each start a Roth IRA to supplement Bill's state pension. Next he suggested they put $3,000 for each child into Wisconsin's 529 plan, a move that will entitle them to a $9,000 deduction on their state taxes. They should also keep three months' living expenses, or about $10,000, in the money-market account as an emergency fund.
Back at Harbor House, Ken and Rose Clare are mostly oblivious to their financial status and to the profound impact they're having on Bill and Anne's lives. Before his parents became ill, Bill and Anne had been considering job opportunities elsewhere in the state, and Anne had been contemplating going to law school now that her kids are in school most days. "These things are just out of the question right now," says Bill.
Still, Bill and Anne are satisfied for now that they've made the right choices. Ken looks at the table and sees the doughnut he wrapped up just 10 minutes earlier. "Is this for me?" he asks with delight. Bill wheels Rose Clare out of her room, where she'd been resting. Six months ago she'd been deeply depressed. These days she's feeling better and talks enthusiastically about watching her grandchildren grow up. "To me, this time with my parents is a reward," Bill says. "My children have developed deep feelings for their grandparents. In my mind, that far outweighs the inconvenience and stress on my family."
THE MONEY SQUEEZE
Anne and Bill don't have enough slack in their household budget: Though nearly $10,000 a year is available, that's before putting aside retirement and college funds. And Bill's parents are running through their $140,000 in savings at a rate of about $52,000 a year.
Bill Hanrahan and Anne LeGare
Ken and Rose Clare Hanrahan