With the oldest Baby Boomers reaching their 80s in the next few years, it might not surprise you to learn that the number of Americans needing assistance with the challenges of aging is on the upswing. What you might not realize, however, is that those providing much of that aid—the Boomers’ children and, in some cases, grandchildren—may be unprepared for the emotional and financial costs of assuming the role of caregiver.
A recent study by Merrill Lynch, in partnership with Age Wave, finds that 40 million Americans are already acting as caregivers for a friend or family member. But in the years ahead, as more and more of the postwar generation reaches advanced age and begins to experience more complicated health challenges, the report warns of a “caregiving crunch”; more and more older Americans will require some sort of assistance, placing a tremendous strain on those attempting to meet their needs. Another trend exacerbating the problem is that of increasing lifespans; as people live longer, they are more likely to encounter medical and lifestyle problems that require a caregiver.
One of the most frequent needs expressed by caregivers is financial assistance. In the study, this was mentioned by 92 percent of the respondents, 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”: paying expenses of those they cared for out of their own funds. On average, “financial contributors” paid out around $7,000 per year for the personal and medical needs of their charges. Naturally, those looking after adults with more complex medical needs—Alzheimer’s patients, for example—disbursed some $10,800, on average. Collectively, caregivers could expect to spend a whopping $190 billion out-of-pocket in order to provide for the needs of a loved one.
A principal factor contributing to this dilemma is a lack of financial preparation on the part of the elderly persons needing care, combined with the soaring costs of professional assistance with caregiving. Home health aides can easily cost $46,000 per year, and the median nursing home semi-private room runs around $82,000 annually. Despite this, 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.
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