Costs of Growing Old – Will Seniors’ Financial Planning Cover Them All?

Now is the time to review your senior’s financial plan for what is yet to come in terms of health and aging needs.

With increasing longevity, their financial plan may need adjustment to meet future needs.

Seniors, no matter their ability or wellness, are likely to need some form of care as they age, which will cost them money.

Most seniors don’t sufficiently plan for the costs of care as they age and will need some support financially to get what they need.

Currently, about 13 million American seniors need long term care services and supports.

Most Seniors will Need Long Term Care Services

Statistically, 70% of seniors 65 and older will need some form of long term care services and supports during their lifetime.

Women will need care longer than men, 3.7 years versus 2.2 years.

The average senior will need some type of care for 3 years.

80% of long term care services and supports will be provided in the home rather than in institutions.

“Not my senior, he isn’t going to a nursing home if I can help it!” you may be saying. But long term care for aging is not just about placement in a facility.

Needing help from paid and unpaid sources for a multitude of reasons comprises long term care options for services and support as we age.

What Is Included in Long Term Care Services and Support?

When we think about long term care services and support, our minds often jump directly to nursing home care.

The truth is that long term care services and supports includes a little bit of everything. Most seniors will need something, even if it is unpaid care from family members like you.

Long term care services and supports can include:

  • Unpaid care
  • Paid care
  • Home care
  • Nursing facility
  • Assisted living facility
  • Adult or senior day care facility/program

These services might include support seniors receive to complete tasks of daily living (often referred to as ADLs) such as bathing, dressing, grooming, toileting, eating, transferring from one place to another, incontinence care and ambulation.

Other services that support a senior especially when living at home are called instrumental activities of daily living or IADLs, and are everyday tasks that need to be completed.

These jobs include even more tasks: housework, laundry, shopping for groceries, caring for pets, managing money and paying bills, making/serving/cleaning meals, using telephone, and taking medications properly.

When we stop to think of some of these items, it becomes clearer that our senior loved one will need long term care services as they age and family caregivers will be major players in getting these tasks accomplished for our seniors.

Naturally, we need to encourage and facilitate them doing as many of these things for themselves as long as possible to maintain their independence and mobility, but eventually they are likely to need assistance.

Paying for Help

Seniors usually pay for almost half of their care out of pocket, since many don’t have long term health insurance due to the high cost of premiums.

What will happen if you can’t provide all the long term care they require and they haven’t saved enough money?

Perhaps you won’t have time or personal finances to support them while meeting all their needs. Maybe you have illnesses or mobility impairments that will prevent you from assisting. Maybe it is your spouse and you are also aging and unable to complete all the IADLs for yourself.

What if you require help too? Will they go without care?

Has your senior planned financially to pay for the things they will need to age in place successfully?

A recent report has spelled out what we should all be thinking about to plan for our financial aging future. Seniors should be planning for paid care, since the number of family caregivers is expected to decline by one third by 2050.

SCAN Foundation Report

Recently, the SCAN Foundation released a report on the cost of long term care services and supports entitled Financing Options for Long-Term Care: Who Benefits and at What Cost? This report was completed in collaboration with LeadingAge and AARP and completed by both the Urban Institute and Milliman, Inc.

“This Long-Term Care Financing Initiative provides updated information to help policymakers and stakeholders create a viable set of policy solutions that will meet the needs of individuals, families, state and federal governments, and society at large.”

They found:

  • 52% of seniors over 65 will need a high level of help with everyday activities
  • Typical costs for care average $91,000 for men and $182,000 for women; this cost will increase with additional time or level of care needed

Consequences of Financial Insufficiency

Our older adults who do not plan accordingly for their future needs will face a financial burden. Family caregivers may be asked to help out with the cost of aging so their loved ones will get the care they need.

Many seniors will not be able to afford care, which will result in inadequate care and potential facility placement.

Many families will go bankrupt trying to meet the costs of healthcare and long term care services.

Family caregivers who try to fill the gaps in their senior’s financial plan will often face paying themselves for their senior’s long term care needs, which could impact their own retirement plan.

Caregivers who can’t afford to pay for care for their family members find themselves in the precarious position of providing that care themselves. Family caregiving can take a toll on their employment and many face leaving careers to become caregivers. This impacts their own financial well-being, both now and in the future.

Much Long Term Care Cost Paid by Families

It has been estimated families pay as much as 50% of the out-of-pocket expenses for long term care services for their seniors. Many seniors do not have long term care insurance, which could help with these costs of care.

Genworth Financial Cost of Care survey estimates that the cost of a year of paid long term care services and support will conservatively be between $17,000 and $87,000. One year in a nursing home will cost 2-3 times the annual household income of those over 65.

Government healthcare and insurance will be unable to provide necessary resources for many of our aging Americans who haven’t set aside enough money to fully meet their needs.

We can begin to open the dialogue about finances with our senior loved ones and discuss the plan for the future so that strategies can be put into place to meet the coming need.

They will need it so now is a good time to decide what can be done to make paying for the care they will need a reality.