The Cost of Aging: Retirement and Long Term Care Planning
Most of us start planning for our retirement the day we enter the workforce. Many of us can remember attending that HR onboarding meeting where they handed us a folder with all sorts of information about different plans we could participate in that would lead us to the idyllic life in retirement. All of those silver-haired people pictured in the glossies looked so happy and healthy. And they should have. They were 65 years old. Of course, we really couldn’t comprehend what 65 years old and retirement really meant, so we checked the obligatory boxes. Someone probably said it makes the most sense to contribute to our 401K at least the amount that corporate would match, so we did it. But then what?
Baby Boomers and the Greatest Generation: the Graying of Our Population
We frequently hear about the Baby Boomers and that there are 15,000 people turning 65 every day. Back in the ‘90’s, Tom Brokaw coined the phrase, “The Graying of our Population.” However, back then, our population wasn’t really that gray, and even 20 years ago, people weren’t living as long as they are today. We all can see it with our own eyes, especially as we get older ourselves. 65 is young! People don’t die as a result of their first heart attack or their first bout with cancer. We live well into our 80’s and beyond. That is what so many people did not factor into their retirement planning. We have all heard about the Baby Boomers, and we surely know who the Greatest Generation is. However, not everyone has heard the term the Silent Generation. The Silent Generation are those people born between the Greatest Generation and the Boomers, and many are in their ‘80’s now. This group of people is growing at a rate where we will have 3 million octogenarians by 2020, and those are the folks that need long term care services: home care, assisted living, skilled nursing or rehab, and hospice.
- Baby Boomers: 15,000 Americans turn 65 every day.
- The Silent Generation: 3 million Americans will turn 80 by 2020.
- The Greatest Generation: over 3 million members of this generation are still living worldwide.
The challenge that we see too frequently is that people planned for 65, but not for 85 when we may need some care. In the golden years of retirement, we are likely to be healthy enough to travel, enjoy time with our grandkids, and maybe escape the long cold winters in Wisconsin. Some folks even move to a better climate permanently. But what happens when health begins to decline? When an illness happens “all of a sudden,” which it so often does, we find ourselves in a crisis. At Vesta, we have helped numerous adult children move a parent back to Wisconsin once he or she begins to decline physically or mentally. Having Dad or Mom far away as he or she begins to need care creates its own set of challenges and concerns around long term care.
Retirement Planning v. Long Term Care Planning
We really need to look at retirement planning in two phases. The first is the phase that we’ve always thought about: the healthy years. The second phase of retirement planning is planning for long term care. The fact is 75% of us will need some sort of care as we age. That long-term care plan will look different from one person to the next. Maybe Mom will only require a little bit of occasional in-home care to keep her safe. She will have someone come in to help her with laundry so that she isn’t going down the basement stairs with a laundry basket. Maybe she’ll have someone who takes her to the grocery store because she is no longer safe to drive. Dad, however, may have dementia, and he no longer sleeps through the night, and Mom just can’t take care of him anymore, so now we are looking at assisted living or memory care for him.
How Much Does Assisted Living Cost?
The difference in the cost for Mom’s occasional home care and Dad’s memory care is staggering. Many folks are able to stay in their homes, as so many hope and plan to, with that occasional home care. For many, that is an affordable option and can help someone stay safe at home for an extended period of time. In today’s dollars, this may only cost $1,000/month. However, when it’s no longer safe for Dad to be at home and the time comes for him to move to assisted living or even memory care, the costs may be more in the range of $6,000-8,000/month.
How Can We Afford Assisted Living?
How do we save for long term care? How much is enough? We all think we would like to stay in our homes with a little bit of care if needed, but many of us will need the care provided by an assisted living community. If that is the case, we want to have the power of choice and be able to choose a place that will truly provide good care and that will suit our needs. In order to have that type of choice, in WI we should minimally save enough to have 2 years of private pay per individual. In broad brush strokes, the average cost of assisted living care today is about $6000/month. Two years at the rate is $120,000. We should have that money put away in a savings account earmarked for long term care or a similarly valued LTC insurance policy of some sort. There are many options out there now and consulting your financial planner to discuss your best option is wise…sooner than later. The good news is that many Wisconsinites are homeowners and many have this sort of equity in their homes. In that case, they are able to leverage the value of the home they’ve lived in for years to provide their new home where they can receive the care they need.
Elder Care Consultants
In our lives as adult children, we may likely be faced with the question regarding long term care 4 times in our lives…as a married person, we may need to consider options for our own parents and our spouse’s parents. As we know, no two people decline in the exact same way, so the knowledge gained the first time we go through the process may not be applicable the second time, or third, or fourth. The important thing to know is that you don’t have to do it alone. There are people who are experts in long term care, and they can help you navigate the process. Maybe it’s bringing in a little bit of care for a little while, maybe it’s a crisis, and now the only option is finding a new home where Dad can get the care he needs. Either way, there are people to help and it’s important that you seek them out when faced with this immensely emotional and important decision.