As the oldest members of the Baby Boom generation reach their 80s in the next few years, the number of Americans needing assistance with the challenges of aging is, not surprisingly, on the increase. Many people have not considered an important corollary, however: those providing much of that assistance–Boomers’ children and, in some cases, grandchildren–lack adequate preparation for the emotional and financial costs of providing care for aging family members.
Recently, Merrill Lynch, in partnership with Age Wave, published a study noting that 40 million Americans are already acting as caregivers for a friend or family member. But as more and more of the postwar generation reaches advanced age and begins to experience serious health setbacks, we are likely to see a “caregiving crunch”–increasing numbers of older Americans will require some sort of assistance, placing a tremendous strain on those attempting to meet their needs. Additionally, increasing lifespans are adding to the problem; as people live longer, they are more likely to encounter medical and lifestyle challenges that require a caregiver.
According to the report, many caregivers are providing some sort of financial assistance for older persons. In the study, 92 percent of the respondents mentioned helping in this area, second only to emotional/social support (98 percent). An overwhelming majority (88 percent) of the 2,010 individuals involved in the study, all of whom had served as nonprofessional caregivers for an adult within the previous three years, said that they had served as a “financial coordinator”–paying bills, filing taxes, or managing investments. A sizeable 68 percent reported acting as “financial contributors”–using their own funds to pay at least some of the expenses for those they cared for. On average, “financial contributors” paid out around $7,000 per year for the personal and medical needs of their charges. Those looking after older adults with more complex medical needs–Alzheimer’s patients, for example–disbursed some $10,800, on average. Collectively, caregivers could expect to spend some $190 billion out-of-pocket in order to provide for the needs of a loved one.
Lack of financial preparation on the part of the elderly persons needing care is a principal factor contributing to this “caregiver crunch,” combined with the soaring costs of professional assistance. The cost of a home health aide can easily top $46,000 per year, and the median nursing home semi-private room runs around $82,000 annually. Nevertheless, only about a third of those age 40 and older have funds allocated for long-term care, and a mere 11 percent have long-term care insurance. Lacking other alternatives, they are typically forced to rely on loved ones for assistance with their daily needs.
Neither Medicare nor Medicare supplemental insurance will fully cover long-term care. The takeaway is that adults should begin planning financially for their long-term care well in advance of when it is likely to be needed. Such advance planning can greatly reduce the otherwise high emotional and financial cost of giving and receiving care.