The Dallas Morning News recently published an article which stated most Americans are not saving for elder care. The article listed several interesting statistics and common misconceptions worth reviewing, and which should serve as motivation for all adults to develop and include in a financial action plan.
Sandwich Generation: 10% of all adults, age 40 and older, are sandwiched between caring for kids and aging parents. In many cases, these sandwich parents are launching kids off to college and wrestling with how to pay for that. They may also be faced with having adult kids boomerang and return home having to decide whether or not to help them financially while their adult kids determine how to launch out on their own.
Adding to the financial stress, may include caring for an older parent. This may be in the form of providing financial assistance to their parent or acting as a manager or health care advocate either with physicians or with caregivers. Over the next 5 years, the percentage of sandwiched parents is expected to grow to 18% as their parents require more medical care or enter assisted living.
Savings: 66% of all sandwich parents are not saving anything for their own elder care. Nearly 70% of all American adults will require some type of elder care, according to government statistics. Mix these two statistics together, and most people who’ll need elder care have not developed a financial plan to pay for it or will be unable to pay for their own care.
The cost isn’t going to get any cheaper either. The current annual median of nursing home care is $91,250. If you’re lucky enough to be cared for in your own home, that will currently set you back about $45,760 a year (current annual median cost). The current annual median income of people 65 and older is $19,604 which means most aren’t able to cash flow their own care whether in their home or in a nursing home.
Common Misconceptions: One of the biggest misconceptions is that Medicare or private health insurance will pay for nursing home care. They don’t. They may pay for in home medical care following a medical procedure, but not nursing or elder care. Long term care insurance, however will provide for both.
Adults, age 40 and older, should include elder care in their financial planning. Some may be able to cash flow this care with retirement accounts or investments if they have time and the financial resources to put toward that. Others are running out of time to save an adequate amount for this care. For those who find themselves running out of runway, long term care insurance may be the best way to go.
If you’re unable to pay for LTC insurance you still need to have a plan for your long term care. This may include being cared for by friends, siblings, or adult children in either your home or theirs. Assets such as your home or vehicles may need to be sold to help pay for this care. Family members may need to contribute financially to your care needs, but in these cases, it’s best to have these discussions before everyone is forced to make them.
Whatever your current situation is, it’s time to become informed and create a plan for your future care. What questions do you have? Share them, along with your comments and strategies with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!