How To Afford The Costly Care Of Your Aging Parents

Life happens, your parents age and, often, caretaker roles reverse. As people grow older, many require more assistance. And, while accepting help can be difficult for elders who spent the bulk of their lives as the ones providing it, giving help is becoming ever more challenging for generations as the cost of care is silently stifling them.  

One report shows that at least 17.7 million Americans are family caregivers of someone who is at least 65 years old and needs help due to limitations in their physical, mental or cognitive functioning. More 2020 data from the American Association of Retired Persons (AARP), estimates that 41.8 million people currently provide care for adults over 50. 

By 2030, the same report suggests that 72.8 million people in the United States, or more than one in five residents, will be 65 or older. But not nearly that many people are ready to care for them. And that’s thanks to the complicated costs of caretaking. In fact, two-thirds of the United States population expects to become caregivers in the future, and most of those who do are also aging adults, averaging 63 years old and in fair to poor health themselves, according to the American Psychological Association.

On average, assisted living costs $48,000 a year, according to Paying for Senior Care. A home health aide or a home care aide (non-medical) cost $44,000 or $42,000 a year, respectively. Adult daycare costs an average of $18,000 per year. Meanwhile,  the average cost of just a shared room in a nursing home is $245 a day, with different state averages ranging from $153 all the way up to $963 per day. Another option is a Continuing Care Retirement Community (CCRC), which is a residence that offers a range of care from independent to assisted living, with or without skilled nursing. Monthly maintenance fees aside (which are well into the thousands), a one-time entrance fee can cost hundreds of thousands. They average $80,000 to $750,000.

Sure, while some older adults had prepared for their future—purchasing long-term care insurance and paying the rising premiums each month—this is far from the norm. Many aging adults have no plans for their futures. Many more assume that Medicare will cover their healthcare costs, but it does not cover long-term daily care. You have to pay 100 percent of whatever is not included, like long-term care. For those who qualify for Medicaid—which provides care, including home health care, for more than 75 million low-income Americans—the crippling waitlist crisis has them hanging on without home care for years.

So, the onus falls on most people to become financially responsible for their aging parents. But, of today’s caregivers, according to the aforementioned AARP report, 28 percent have stopped saving altogether, another 23 percent have buried themselves in even more debilitating debt, 22 percent have totally depleted their personal short-term savings, and 11 percent report being unable to cover their own basic needs like food due to the complex caretaking costs that eat every last penny.

Never mind that about one in seven caretakers is financially supporting both an aging parent and a child, according to the Pew Research Center. Or that caregiving, which is all-too-often overlooked and underappreciated, can contribute to burnout and take a toll on caretakers’ careers, which further exacerbates their financial situations. And lest we forget that women make up the majority of caretakers, it’s worth a reminder that the gender pay gap is still painfully pervasive.

Some states actually require financially able children to care for their elderly or impoverished parents with “filial responsibility” laws. But whether or not your state mandates that you care for your folks, many people feel morally obligated to do so. And if you’re someone who faces legal or moral responsibilities, you might be wondering how exactly you’re going to keep afloat.

Investing is one way to help you prepare for your financial future and take care of your aging parents who, perhaps, didn’t necessarily save up enough for their own retirement or healthcare costs. After all, investing typically sees returns of about 10 percent annually.

Depending on how old your parents are and how immediate their care is, you have various investment options to explore. Other factors that may affect your investment decisions include how much in liquid assets you currently hold, your own immediate and anticipated expenses (including any children or other family responsibilities), your investment timeline, and more.

Talk to your parents about what investments they do have, if any, and where those investments are held. They may have retirement accounts, bank savings accounts, insurance policies, or some money in other places to start. From there, you can start investing for your (and their) financial future. 

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