Aging parents: All the costs you need to know

Our once invincible parents may eventually need a little support, and there are costs in providing it. Understanding the cost of care and how personal and family dynamics are affected, can help you create a more informed and personalized financial plan. The right plan will allow your aging parents to live their retirement years with dignity and independence, give you peace of mind knowing they are okay, and give your family the power to choose the type of care they receive.

Here are the potential costs you need to be aware of and why a plan for your family’s health and well-being – physically, emotionally, and financially – are essential to knowing what is ahead. While a financial plan cannot eliminate all costs, it can help you make decisions with clarity and confidence and put you in control of the life you want for your loved ones.

The financial costs of eldercare

A couple that retires at the age of 65 will need $300,000, on average, to cover ordinary healthcare expenses. Ordinary expenses include Medicare premiums, hospital and doctor visits, co-pays, co-insurance, prescriptions, and more.

The surprising fact is that this figure does not include the costs associated with long-term care services. If your parents need assistance with routine daily tasks like bathing, dressing, eating or others – often called activities of daily living – the costs are not always covered by Medicare. The cost for long-term care can vary greatly, but they can easily hit $10,000 and even reach north of $100,000 per year. The reality is that 7 out of 10 retirees over 65 will need some form of long-term care during their lifetime.

The overlooked costs of caring for aging parents

Healthcare costs are well documented, but the true costs of caring for a loved one go beyond those that retirees face. Family caregivers can experience financial costs, emotional challenges, and even career setbacks. This is about more than money. It affects all areas of life for the caregiver.

The impact on your personal finances - According to AARP, family caregivers can expect to spend nearly 20% of their income on out-of-pocket costs when providing care. These costs including housing, medical, personal care, and travel can vary depending on family dynamics. Think about what 20% represents to you and the impact it could have on your financial plan, especially if it extends for several years.

The impact on your career - More than half of family caregivers have their work hours, income, and careers affected by their caregiving activities. The cost is hard to quantify but it can show up in many places including:

• Earnings and income over your career
• Retirement savings
• Access to workplace benefits
• Opportunities for career advancement
• Job security

The impact on your overall well-being - The stress of caring for a loved one, especially without a plan in place, can be overwhelming and have adverse emotional and physical effects on the caregiver. This may never show up as a dollar sign on a report, but the emotional impact, stress, and worry can affect your overall health and well-being for years to come.

Your costs are a very personal matter

There are big numbers associated with healthcare in retirement, and those numbers can vary greatly based on personal and family factors. Here are some factors that can impact the costs for your family:

• Cultural and family values
• Family health history
• The age of your parents
• Marital status
• The size of your family (siblings, etc)
• Lifestyle and housing choices
• Where family members are located
• Access to healthcare facilities
• Whether or not your parents have a financial plan

The bottom line is that averages only get you so far. You need a plan that is personalized to meet the needs of your parents and family.

Your best plan is to plan in advance

If aging is inevitable and needing care is likely, what can you do? You and your parents can be proactive in planning to make sure they have the retirement they deserve, and the financial ability to cover their costs. Here are a couple tips:

Create a financial plan for future care

The most important step is to make sure your parents have a plan of their own. You may or may not be involved in the process, but their financial independence is critical to their well-being, and yours. Paying for professional guidance is not a cost, it’s an investment in their independence and the well-being of your family.

Have a conversation as a family

It’s never easy but it’s important. We all have different relationships with our parents so there is no one way to discuss their financial health. The key is to make it about giving them the life they want and allowing you to take care of your family at the same time. You may want to consider professional guidance. A trusted 3rd party can help navigate emotions, guide the conversation, and share expert advice on how to plan.

The costs of caring for mom and dad later in life can feel overwhelming, but planning for them doesn’t have to be. Understanding the costs associated with care, knowing the range of choices they have, and developing a plan can put you in control of the decisions you make for your family for years to come.

A personalized plan for your family can shift the narrative from one of worry and fear of the unknown to one of clarity and confidence in your future. While a plan can’t eliminate all costs, it can give you peace of mind knowing that you and your family are protected should the unexpected occur.

Planning for the well-being of your parents and your entire family starts with being informed and taking action today.