Nearly six in 10 baby boomers find themselves helping their parents, either financially or with daily tasks like cooking, cleaning and transportation, according to Ameriprise Financial. Moreover, boomers' family financial support doesn't stop with parents. Over the last five years, people age 50 or older with less than $5 million in investable assets gave an average of $14,900 to family members of all ages, according to Merrill Lynch. So, it's no surprise that younger retirees and their spouses are scrambling to figure out the best combination of pitching in and tapping outside help.
The first step to consider is to assess the situation, say experts—ideally, before it becomes urgent. "You need first to have a family meeting," says Chad Terry, director of investment and retirement education at BlackRock. He suggests starting with the elder's housing situation. Is he or she able to live without help? If so, then perhaps you could consider downsizing. Often, elders own their homes outright, and can clear $300,000 to $500,000 from a home sale—enough to buy a condo and have money left over to provide supplemental care. Another option to consider is relocating to a state with lower taxes on retirement income.
An even more strategic step to think about: Looking for states with a lower cost of long-term care. Extreme? Consider that 70% of 65-year-olds can expect to use some form of long-term care during their lives, according to the U.S. Department of Health and Human Services (HHS). The nationwide median cost of a home health aide is $45,188, while adult day-care runs $16,900, according to Genworth Financial.
What if the elder can't live unassisted? The least expensive option may be in-home care. Nearly 60% of people will receive this kind of care unpaid from a friend of family member, and will use it for an average of a year, according to the U.S. Department of Health and Human Services. Family members pitching in can help ends meet, but such care has its own costs. "The caregiver loses money from time away from work," Terry says.
If these options don't provide enough care, the next levels available are generally assisted-living facilities or skilled-nursing facilities. The cost of assisted living facilities and nursing homes has climbed by 4%—much more sharply than the 1% hike in the cost of in-home care, according to Genworth Financial. Nationwide, the cost of a private room in a nursing home averages $87,600, while a one-bedroom, single occupancy in an assisted living facility costs $42,000.
These healthcare costs need not be out-of-pocket. There are a variety of long-term-care insurance programs, riders for life insurance and other financial vehicles to help offset the costs of health care not covered by an employer's healthcare plan or Medicare. "Most people pick this up when they're in their 50s, and hope they're not going to use them for a decade or two," Terry says. "You can't get them once you need them." Ideally, those kinds of conversations should also happen at the family meeting.
No comments:
Post a Comment