First the good news: Americans are living longer than ever — women to an average age of 80.8 and men to an average age of 75.7, according to U.S. Census Bureau data. By 2020, those averages are projected to increase to 81.9 for women and 77.1 for men.
Now for the sobering news from the other side of the age coin. Many aging adults — 70percent by U.S. government estimates — will eventually need some form of long-term care. And with longer lifespans, people likely will need that care, whether at home, in an assisted living facility or at a nursing home, for longer.
What’s more, the cost of care is increasing fast, at a rate of more than 4percent per year for nursing homes and assisted living facilities, according to Genworth’s 2013 Cost of Care Survey. Assisted living facilities now carry a median national cost of $3,450 per month and $41,400 per year; for a private room in a nursing home, it’s $230 per day and $83,950 per year, according to Genworth data. The average nursing home stay is 2.6 years for women, 2.3 years for men, according to the American Association for Long Term Care Insurance. Meanwhile, in-home care costs hover in the $18-$21 per hour range nationally.
Covering the cost of caring for an aging parent is an issue most American families must eventually confront but one that relatively few address until it’s too late, according to certified financial planner Chris Chen of Insight Financial Strategists in Arlington, Mass. “Older parents often haven’t done the planning they should have done, so their adult children end up having to figure it out,” said Chen, who speaks from personal experience, having handled care situations for clients and recently, for his own father.
The combination of longer lifespans and rising care costs puts added financial pressure on aging parents and their families, even those who have proactively planned in case they need care. And government aid programs such as Medicare don’t cover the lion’s share of in-home care services, nor all the healthcare costs an aging parent might incur.
There are ways to minimize the financial burden while protecting your parent’s (and your) hard-earned money, easing the stress that tends to accompany care situations involving aging parents, and providing them with the quality care they deserve. Here are a few suggestions:
- Plan ahead! “The earlier you start having frank discussions with your parents and other family members about these issues, and the sooner you start tallying what their care might cost, the better chance you’ll have to plan for it,” said Chen.
- Do your research. The cost of certain kinds of care can differ vastly by state, for example. Information like that can help inform and guide care decisions. Find it at sites such as www.longtermcare.gov.
- Discuss long term care insurance (LTCI) with your parents. LTCI can be an affordable way to at least partially defray the cost of long term care. Can your parent(s) qualify for a policy? Can they afford it? Will you help them pay for it? What kind of policy is best for your situation? What about the state LTCI partnership program (most states have them)? The AALTCI website (www.aaltci.org) is a good starting point for getting answers to these kinds of questions, and for finding LTCI experts in your area.
- Consult elder care experts — a certified financial planner and elder care nursing specialist, for example — for guidance and insight. To find an elder care specialist in your area, visit, www.nursenavigator.com.
This column is provided by the Financial Planning Association® (FPA®), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.
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