The financial reality check after a major diagnosis
Once you have received and processed your doctor’s diagnosis, take stock of the situation, because this will determine how you respond and what resources you have available to support you going forward.
Who received the diagnosis – you or your spouse (if you have one)? Is it a terminal illness, chronic condition or treatable setback?
If you are not yet retired, will you be able to keep working, need a period off work or will this bring forward your retirement? If leaving work temporarily, what are your prospects for re-entering the workforce? Will your partner need to leave their work to care for you (or vice versa)?
Once you have clarified and considered this, spring into action as soon as possible.
Revisit your spending
Healthcare is expensive by any measure.
Pensioners and healthcare card holders may get much or all of your treatment covered, but waiting times in the public system can be lengthy. For self-funded retirees, even with private health insurance, there can be considerable out-of-pocket costs: specialist visits, diagnostics, symptom management, physiotherapy and so on.
Depending on the type of diagnosis, you may also need to modify your home (install ramps, railings etc.) and/or obtain specialist furniture and equipment. Then comes care requirements – private nurses, retirement living, hospice or palliative care.
Your lifestyle may also change, and quickly. Your clothes and shoes may no longer fit if you lose weight rapidly. You may no longer be able to drive. You may need help with household chores – cleaning, cooking, gardening. Covering these requires money if you don’t have family and friends able to lend a helping hand.
Carefully look at what supports your new reality demands and whether they will be one-off or ongoing expenses. Some things will need to be purchased, others could be hired to split the cost over the longer term.
Secure your income
Once you’ve established the impact on your ability to work and your spending needs, determine how you will pay for everything going forward.
Your emergency fund can provide short-term cash if you need to stop working suddenly or fork out for large, unexpected bills.
Depending on your age and circumstances, it may be worth bringing forward your retirement – allowing you to draw income from superannuation and focus more on your (or your partner’s) health.
Check your insurances to see what claims you could make – having paid the premiums, now is the time make use of them. Relevant insurances include total permanent disability, income protection, trauma or critical illness cover. Meanwhile some life insurance policies may pay out based on a specialist’s diagnosis, unlocking much-needed funds sooner. Depending on your diagnosis, policy and the type of insurance, payouts may be a lump sum or smaller payments spaced out over time.
Update your estate plans
A major diagnosis typically elicits thoughts about mortality, legacy and how you want your loved ones to be provided for.
Crucially, it may also influence factors such as guardianship of minors and pets while you are unwell/in hospital, Power of Attorney to cover important legal and financial decisions if you are incapacitated, and palliative care arrangements if required.
Before heavy medications, surgeries or further deterioration of your health cloud your judgement, ensure your will and estate plans are updated to fully reflect your current needs and wishes.
Look after yourself
Stress, shock, anger and despair are common emotions to feel when faced with a major diagnosis. As such, it’s important you look after your mental and emotional wellbeing too.
It needn’t cost a cent – you could look to free counselling services available such as Lifeline and Beyond Blue; a daily walk by the beach or through the local park; catching up with loved ones for support and companionship.
Keeping your spirits up, as much as you can under the circumstances, can improve your quality of life while also helping you make clearer decisions about your health, finances and relationships – making it arguably the best investment of all.
Back that up with sound legal, tax and financial advice. There is much to consider where insurance, superannuation, inheritances, Centrelink and more are involved, and you can’t know everything – especially when your focus is rightly elsewhere!
Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
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