What do we do with Rudy?

Sooner or later many families have a conversation that they have been avoiding for months, sometimes years. Rudy had always been described as strong and independent. A product of the depression, he was a member of that generation that had endured financial ruin, genocides and world wars with a mixture of stoicism and resolve – an inner strength that everyone looked up to. But lately things were different. Grandpa Rudy, as he was known to the youngest in the family, seemed more and more frail – not surprising for a man in his late eighties. But what really had the family concerned was his forgetfulness. Not just forgetting the occasional name, the date, or odd face, but forgetting to eat, to take his medicine, to dress himself or sometimes, even to bathe. Clearly, despite Rudy’s fierce sense of independence that defined him, he was no longer in a position to safely care for himself but what could the family do? What would the family be willing to do?

This is an all too common scenario in our aging population. Placing an elderly loved one in assisted living is never an easy decision but the deepening recession and the collapse of the housing market has exposed seniors to unprecedented risks and uncertainties that compromise more than their lifestyle and their quality of life... it compromises their safety.

Assisted living costs for elders are not insignificant; ranging from $2,000 to $8,000 per month. Typically, they have been financed by the equity in the elder’s home, either by the outright sale of the property or by the vehicle of the reverse mortgage. But things are different now.

Let’s take our narrative a little further.

The family agrees that Rudy needs to be placed in assisted living. Some careful investigation revealed that the best matched alternatives will cost around $4,000 per month, or at minimum $48,000 per year. Despite a lifetime of hard work, some financial reverses, including the recent tanking of the Dow, have left Rudy in a vulnerable financial position. His savings only amounts to a little more than fourteen months of assisted living costs. Assuming, as we all hope, that Rudy survives longer than fourteen months, he (we?) will need to dip into the equity of his home in order to fund his living expenses.

It’s then that the realization hits everyone gathered around the kitchen table… everyone except Rudy that is. Rudy’s home was valued at a little over $560,000 two years ago. Today, that same home would likely sell for about $320,000. That’s a drop of more than $240,000. The family doesn’t appear to be prepared to accept the reality that $320,000 is the value of the home and not yesterday’s $560,000. “The market will bounce back,” someone says. “Yes, this is a temporary setback,” another agrees. But on one thing there is unspoken unanimity. This is not the time to consider selling Rudy’s home. “After all,” they say, “it’s in Rudy’s best interests to wait until the time is right.” Right? But in the back of some of the minds there is that ugly fleeting notion, like a darting shadow in the corner of the mind’s eye, that the equity in Rudy’s home represents a portion of an assumed inheritance.

“No. This isn’t the time to sell. So, now what do we do with Rudy?”

The recession has many victims. Many are hidden and helpless. Many are as close to us as our own aging parents. Who speaks for them?