Affording Care for Aging Parents
Will you be among the 10 million-plus people caring for aging parents?
While parents talk about their grown children moving back home, another, quieter conversation is taking place, concerning caring for their mom and dad.
An estimated 10 million adult children, over the age of 50, were caring for their parents in 2011, according to MetLife's Mature Market Institute. That figure represents 17 percent of men and 28 percent of women assuming responsibility for their parents’ daily welfare.
In addition to the mental and physical toll of caring for another adult, who sometimes is suffering from chronic health conditions, the financial toll plays just as important a role. In taking the time to provide family care, working Americans lose an estimated $3 trillion in lifetime wages, with average losses of $324,044 for women and $283,716 for men, according to U.S. News & World Report.
Options for care include do-it-yourself and hiring help, but there are steps every person can take to better prepare for this special financial responsibility.
The cost of caring for parents at home
For some, to have others caring for their parent is not an option. If taking care of your aging mother or father at home is something you’re considering, know that, in addition to lost wages, the caregiver can also expect to earn a lower salary when they do return the workforce. The time away averages about five years, according to MetLife. Factor in forgone pension and Social Security benefits, and the out-of-pocket losses double.
A special NPR series on caring for aging parents reported that the number of caregivers has more than tripled over the past 15 years, which reflects medical advances and the resulting increase in human longevity. Simply put, mom and dad are living longer. As of 2012, about 6 million U.S. residents were 85 or over.
Subsequently, at-home care by children, grandchildren and extended family is taking on growing proportions. An Indiana University report stated, "Informal caregivers provide a service that would otherwise cost the Medicare system $375 billion a year."
The cost of getting professional help
Rather than quit work, other families opt for help from nursing homes, assisted living facilities, nursing aides and adult day cares. In Arizona, the cost for these services range from $150-$181 per day for a semi-private nursing home room to $65-120 per day for adult day care.
NPR created a cost comparison chart that outlines estimates nationally and by state, using data supplied by the MetLife 2011 Market Survey of Long-Term Care Costs. For Arizona, costs were separated out by the cities of Phoenix and Tucson and then by rest of the state. For example, the monthly cost of assisted living in Phoenix was $2,200-$4,173 with a city average of $3,170. The rest of the state averaged $3,066 for the same type of care.
Despite the scope of these figures, only 13 percent of some 4,000 U.S. workers surveyed for the Aflac WorkForces Report believe that the need for long-term care would affect their families. In reality, adult children are paying about $3,500 a month for their parent’s assisted-living care.
Steps to take now
Like with any other financial goal, caring for mom and dad begins with a plan. Experts suggest the following steps:
- Have a financial plan of your own. You have to know your own situation before you can see how and how much you can help your parents.
- Seek help. A family doctor, lawyer and financial advisor can assist with critical documentation and information. They are especially helpful in creating a durable power of attorney, a document that allows a proxy to make financial decisions for your parents in case they become incapacitated. A living trust allows a proxy to manage their estate under similar circumstances, and a will is necessary to dictate how their estate will be disposed of after they pass away.
- Simplify their financial life. Consolidating accounts, getting a proper account of their assets and insurance, and talking about their wishes should be done while they are of sound mind and engaged.
As the impact of caring for aging parents grows, so do the resources for help. AARP offers a comprehensive site for adult children, and there's even a Complete Idiot's Guide to Caring for Parents. Understanding the costs involved and initiating the conversations early will help you be ready when the roles are reversed, and they need you.