Every day, so the demographers tell us, an average of 10,000 baby boomers turn 65. The oldest members of this huge group, born between 1945 and 1965, are now well into their 70s, with the very oldest only a few years away from their 80th birthdays. As these men and women age, more and more of them will be in need of elder care, for themselves, their spouses, or their siblings. What will they find when they start searching for qualified care?
As we recently discovered in reading this thought-provoking article from The Hill, a challenging picture of the future of caregiving in America is emerging, as costs rise and availability of care decreases. Whether the need is for in-home care or institutional care, American families are, as reporter Alejandra O’Connell-Domenech wrote, in for “a rude awakening.” Even those who choose to serve as family caregivers are experiencing a severe financial pinch.
Let’s take a look at a problem which appears to have no societal solution in sight. The only answer, as Rajiv Nagaich explains, is for families to do some comprehensive planning for themselves. More on that in a moment.
Cost of Elder Care Creates a “Rude Awakening”
The rising costs of caregiving for aging family members is going to be a rude awakening for many Americans as the baby boomer generation ages.
In her article for The Hill, O’Connell-Domenech writes, “The price of nursing home care increased by an average of 2.4 percent each year between 2012 and 2019, for a cumulative increase of 20.7 percent, according to data from the health research group Altarum Institute.”
But more recently, costs have risen even faster. One recent article in Kiplinger said rates rose 2.4 percent in July 2023 alone! Kiplinger called rising care costs “extremely volatile.”
Between personnel costs and the price of adhering to facility regulations, nursing homes, adult day cares, and assisted living facilities are raising their price-tags to stay in the black. But mostly, the increased cost reflects a drastic increase in demand for these facilities.
Familiar Tale as Health Crisis Becomes Overwhelming
O’Connell-Domenech tells us the story of Jean Spera, 67, who has been a full-time caretaker for her husband, John, since his unclear deterioration in health since 2011. “For years,” O’Connell-Domenech writes, “she managed to take care of John in their Holliston, Massachusetts, home without any outside help, even as he became more fragile and confused. But everything changed when John had a seizure in the middle of their kitchen. After a three-day hospital stay, John’s doctors recommended that he go to a rehab center housed in a nursing home.”
Spera says, “I was overwhelmed, I wasn’t able to bring him home because I didn’t know how I was physically going to take care of someone who was twice my size and on our limited income.”
The financial cost was significant. Spera quit her job at a nursing home to care for John shortly after he got sick, and eventually she had to take a part-time job to cover smaller costs, like groceries. She even had to dip into their $235,000 retirement savings to make ends meet. Those funds disappeared quickly, with nothing else coming in.
“It took us 15 years to save that, and it was gone in six,” Spera says. She brought John home after five months in rehab, mainly for financial reasons.
O’Connell-Domenech writes, “Luckily, the couple’s primary and supplemental health insurance, MassHealth and Tufts Health Plan, covered some of John’s stay, but not all of it. And paying out of pocket for more time in the rehab center was not something they could afford.” She adds, “In the end, the pair was slapped with a $10,000 bill for John’s five-month stay.”
Annual Cost of Institutional Care Tops $100K
Nursing home costs can be a tricky thing to research and can vary widely by state and between different facilities. O’Connell-Domenech writes, “The median cost to stay in a private room in a nursing home in the U.S. is $9,034 a month, according to 2021 data from life insurance company Genworth Financial. That same year the median cost to stay in a semi-private room in a nursing home was $7,908 a month and the price to stay in an assisted living facility was $4,500 per month, according to the company. But, of course, those prices vary by state.”
You can use the AARP long-term care cost calculator to check the costs in your area. We checked the costs for Seattle, near the headquarters of AgingOptions and Life Point Law, and found that most care costs are about one-third above the national average.
O’Connell-Domenech continues, “There were roughly 1.3 million people living in a nursing home in 2017, according to the U.S. Centers for Disease Control and Prevention. Another 251,000 people were enrolled in an adult day care program in 2018, and 918,700 people lived in a residential community that year as well, according to a 2022 report from the National Center for Health Statistics.”
Most Seniors Living at Home Require Some Level of Care
This need for care is more common and diverse than you might think. One analysis by Boston College from 2021 found that a full 83 percent of households with a retiree needed some level of care. Of these households, about 22 percent needed “minimal levels of care” such as help with groceries, cooking, or finances. Roughly 38 percent had moderate needs, and another 24 percent had severe care needs, which essentially boils down to care that offers around-the-clock attention for multiple years.
“Even for the quarter of adults who require round-the-clock care, half of those care hours are provided by family members,” a spokesperson for the Center for Retirement Research at Boston College clarifies.
These numbers become even more stark when you consider that many baby boomers don’t have the retirement savings to cover the cost of living in good health, let alone poor. O’Connell-Domenech writes, “More than two-fifths of baby boomers don’t have any retirement savings, according to a survey of 2020 Census data. Without savings, most retired adults will need to rely solely on income they receive through Social Security because Medicare, the federal health insurance policy for adults 65 and older, does not cover nursing home or assisted living facility stays.”
She adds, “The average retired worker receives a monthly Social Security check of $1,782 per month upon retirement at age 65, according to the Center on Budget and Policy Priorities.” That’s hardly sufficient to live on, much less to cover any sort of caregiving costs.
Americans Struggle to Save for Long-Term Care
Angie Chen from the Center for Retirement Research at Boston College recommends that working-age adults of means set aside a portion of their retirement savings for long-term care costs, as a matter of good practice. That said, however, Chen understands that most Americans aren’t able to set aside hundreds of thousands of dollars for potential long-term care. Instead, she advocates for better programs available to help cover the costs of nursing homes or assisted living facilities.
One state that has already implemented a program to address this is the home state of the Blog, the State of Washington. Under the Washington Cares payroll tax, which took effect this summer, qualifying residents can receive up to $36,500 to help cover the cost of long-term care services and support.
But while that legislation is a big help for older Washingtonians who need some care, it won’t provide nearly enough financial support for those that need years’ worth of around-the-clock care, Chen says.
Experts Too Quick to Dismiss Medicaid?
At the conclusion of the article in The Hill, Chen added that some older adults could turn to Medicaid as a last resort, but – in his terms – that isn’t really a viable option. “We don’t really have a great solution,” Chen said.
We ran that statement by Rajiv Nagaich, and he was surprised. “I don’t understand why the article is so quick to dismiss Medicaid,” Rajiv responded. “Yes, the program has its challenges, and there are important strategies to know in order to qualify for care. But the Medicaid program can be the best option for many to pay for long-term care, and in spite of what you might have heard, qualifying for Medicaid coverage is definitely possible with careful planning.”
Medicaid provides care to a growing number of seniors, with total enrollment projected to reach 8 million seniors by 2027. It could be right for you. We urge you to attend a seminar with Rajiv Nagaich or with Life Point Law’s Aaron Paker and find out for yourself.
(For more on the topic of caregiving resources, you might want to check out the 2022 National Strategy to Support Family Caregivers. But be careful before you hit “print” – the document is 102 pages long!)
Breaking News: Rajiv’s New Book is Here!
We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.
You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.
Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.
Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.
Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!
(originally reported at www.thehill.com)