5 Tips to Help You Plan and Finance Your Aging Parents' Elder Care Costs
The “Silver Tsunami” is leaving many families unprepared for the financial burden of financing their parents’ senior living and care, according to NPR. With a depressed economy in tandem with aging baby boomers and expensive elder care costs, the nation needs to start planning.
NPR is profiling multigenerational households this spring in their series, Family Matters. They have discovered that many households “face difficult financial decisions surrounding elder care, paying for college and retirement,” which brings to light the fact that America needs to start planning for aging parents’ elder care costs.
Why Is Financial Planning Different These Days?
Americans are living longer these days and the cost of senior care is expensive. Not to mention, many seniors’ retirement stocks and nest eggs were lost in the recent stock market crash and recession. Long-term planning not only has a new meaning because people are living 3 to 5 years longer, on average, but also because long-term planning was, in many instances, affected by the depressed economy. And the children of the aging are the ones who have to float the bill.
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“The percentage of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years,” Aflac WorkForces report. To make matters worse, fewer than one person in five takes even the first steps needed to “prepare legally and financially for taking care of an incapacitated parent,” according to Jack Hetherington, a certified elder-law attorney in Philadelphia. Expectations have changed. Most people don’t even think about—let alone want to discuss—such an unpleasant topic as the financial burden of caring for aging parents. It’s when the actual moment of crisis hits that families become blindsided.
“People dread talking about it because we don’t like to face our mortality,” says Hetherington. He estimates that fewer than 1 person in 5 takes even the first steps needed to prepare legally and financially for taking care of an incapacitated parent.
This is why preparation is so important.
What Can Your Family Do To Prepare for Aging Parents?
MetLife estimates that the average cost of parent’s assisted living care is $3,500 a month. And this doesn’t account for more expensive senior care services, such as memory and Alzheimer’s care, which can cost $5,000 to $7,000 a month. With Americans living so much longer these days and with the record number of aging baby boomers reaching retirement age, the younger generations have to do more thinking about how they might care for parents who have either exhausted or lost their savings. The aging workforce is also straining Social Security and Medicare benefits, according to the Congressional Budget Office, leaving more of the financial burden on the individual families. So planning for your family and being cognizant of elder care costs is crucial.
Here are some tips to help your family prepare:
- Start planning for caring for aging parents. Create a legal document designating someone as having “power of attorney” to grant decision-making authority in case illness or memory loss occurs.
- Get advice on increasing savings. Many workplaces offer free financial planning for your family. If your workplace doesn’t, contact a credit union or financial planner. It’s never too early to get expert investment and financial saving advice.
- Get advice on appropriate insurance. Insurance goes a long way when it comes time to finance senior care and senior living. Again, contact your work place or research which insurance plan might be right for your family through an insurance provider.
- Do your own research! Public libraries and websites (they don’t call this the Information Age for nothing!) are great resources. A Place for Mom offers many free financial and care resources, as well as, expert Senior Living Advisors to help families. HellowWallet and Mint.com are also helpful financial planning sites.
- If you need a professional referral, contact the National Association of Personal Financial Advisors.
So begin your planning today. You’ll be glad you did. You have your own retirement planning to think of, let alone worrying about financing your parents’ care.
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