Part 2: The Current Reality of Aging for Countless Families

Long-term care (LTC) costs are often avoided or neglected in family discussions due to cultural and social factors. Many of us prefer not to confront the reality of aging, associated medical needs, or the prospect of requiring daily care. There is a common belief that such needs are distant or unlikely, fostering denial and procrastination in planning. While 7 in 10 people turning 65 will need some form of long-term care, a study by the Center for a Secure Retirement found that fewer than 1 in 3 have planned for their LTC needs and costs with their families. This gap in awareness and planning leaves families vulnerable to emotional and financial stress when faced with sudden, significant care needs.

Lack of Integrated Solutions in Long-Term Care

Currently, planning for LTC costs is fragmented across multiple resources, each specializing in areas like LTC insurance, Medicaid planning, or personal savings. This siloed approach creates gaps in comprehensive planning and risk management. Many financial advisors focus on investment strategies or general retirement savings without fully addressing the potential costs and care needs associated with aging. For example, while LTC insurance is a crucial tool, it is only one piece of the puzzle. It must be considered alongside factors such as home equity, Social Security, Medicaid eligibility, and potential out-of-pocket expenses.

Without a holistic approach to planning, families miss opportunities for more strategic integration of these resources, resulting in unpreparedness when care needs arise.

Consequences of Fragmented Planning

• Increased Financial Risk: Without a unified plan, families might not have enough coverage or savings, leading to out-of-pocket expenses that deplete retirement funds.
• Missed Opportunities: Potential tax advantages, government benefits, or cost-sharing opportunities might be overlooked.
• Emotional and Relational Strain: Disjointed planning can lead to confusion and conflict among family members, especially when sudden decisions must be made without a clear, unified plan.

Escalating Costs of Long-Term Care

The cost of LTC is a significant and growing challenge for families and the healthcare system. With an aging population and increased life expectancy, the demand for LTC services is expected to rise sharply. The costs associated with various types of care settings are also projected to increase, further straining both individual and public resources.

• Home Care: According to Genworth’s Cost of Care Survey, the national median cost of a home health aide is around $4,500 per month, expected to grow by 3-4% annually.
• Assisted Living Facilities: The median monthly cost for an assisted living facility is approximately $4,300, but it varies widely depending on location and care level.
• Nursing Homes: Nursing home costs are substantially higher, averaging about $8,000 to $10,000 per month for a semi-private room, with private rooms costing even more. These figures are projected to escalate, reaching $15,000 to $20,000 per month in some areas within the next two decades.

Impact on Family Finances and Future Generations

The financial burden of LTC affects not only the immediate generation needing care but also future generations. When we face high out-of-pocket LTC costs, we often dip into retirement savings, liquidate assets, or rely on family members for support.

• Depletion of Retirement Savings: Many retirees allocate most of their savings towards daily living expenses and are unprepared for the high costs of care, affecting their financial security and ability to transfer wealth to the next generation.
• Increased Financial Responsibilities for Adult Children: Adult children often contribute financially or provide direct care for aging parents, which can lead to missed career opportunities, reduced work hours, or even leaving the workforce altogether, particularly for women.
• Impact on Generational Wealth Transfer: With retirement savings redirected toward care costs, less wealth is passed down to future generations, affecting their financial stability and ability to plan for their own aging needs.

Stay tuned for Part 3, where we’ll dive into Waterlily and CAN’s approach to addressing these financial and emotional challenges through comprehensive long-term care planning.

Next Steps:

• Be sure to read Part 1 of this series: Navigating Long-Term Care Costs and Part 3: Navigating Long-Term Care Costs
• Secure Your Spot: November’s special access to Waterlily’s innovative care planning tool saw strong community interest. While this offer has concluded, we’ll reopen free access sponsored by CAN again soon. To receive an invitation to use Waterlily’s AI-powered platform to predict your care needs, protect your family’s finances, and create a personalized care plan, sign up now.

By: Marvell Adams, CEO of Caregiver Action Network
Lily Vittayarukskul, Co-founder and CEO of Waterlily