The cost long-term care is rising faster than the rate of inflation
Paying more for gas, groceries, housing – everything is rising. What’s more staggering: the cost of long-term care is rising faster than the rate of inflation. The increase is so alarming that senior living experts warn adult children it’s time to plan ahead even when mom and dad are doing well.
The cost of long-term care in 2021 outpaced the U.S. inflation rate by more than double. This was before recent inflation of 2022. Check out this comparison by Glenworth’s Cost of Care survey released in March:
- Private room in a nursing home in 2004 was around $65,000 annually. In 2020, seniors paid over $105,000, an increase of over 62%.
- Assisted living facility cost in 2004 was just under $29,000. Six years later, the cost was closer to $60,000, a staggering increase of nearly 80%.
- Home Care Home Health Aid in 2004 cost about $42,000 a year. Now that number is up to about $55,000, a 30% increase.
Factor in today’s rising inflation, a plunging stock and recession fears, financial advisors urge adult children to plan now, while their parents are still healthy, before a major life-changing event which can take a financial – and emotional – toll on decision making. Genworth’s survey found 10,000 baby boomers turn 65 every day until 2030, and 7 out of 10 will require long-term care in their lifetime. This sharp increase in demand, coupled with rising healthcare costs, and a staffing shortage is forecasted to be the perfect storm to easily destroy one’s hard-earned lifetime of savings.
In a recent poll by Edward Jones/Age Wave Four Pillars, 72 percent of retirees surveyed stated their “biggest fear” is becoming a burden on their families. By planning now, adult children set up their parents for a future not dependent on the global economy and reassurance that their nest egg is safe.
How is that possible?
Continuing care retirement communities (CCRCs) are the only senior living option that offers active, independent baby boomers access to future healthcare with predictable rates and a monthly cost that will not increase solely based on levels of care. For adult children, it’s smart to research all senior living options with the future in mind.
“You always have to look at the types of care provided, some retirement communities provide very little, while continuing care retirement communities provide the whole spectrum,” said Brad Breeding, a senior living expert and personal financial advisor for more than 15 years.
“Life care contracts, like those offered at Acts, mean you basically pay the same monthly rate no matter whether you’re living independently or receiving care. Other types of communities, you’ll pay the full market cost of care when you need it,” Breeding said.
For Andy Ross, who lives in Manhattan, NY, knowing his mother is living comfortably at Edgewater at Boca Pointe, an Acts community in Boca Raton, Florida, has been a reassurance that goes beyond financial advantages.
“My mom is very happy and it’s opened up a whole world for her. She’s very involved in activities and social,” Ross said, “Truth is, if later she needs assisted living, or nursing care, it’s just an automatic progression to another part of the community. Everything is already set up. In my mind, you plan for it, God-willing you don’t need it at all.”
“Knowing she’s taken care of and there is medical staff at the community if anything should happen. Living in New York, 1,500 miles away, I was constantly worrying if she was okay. This gives me the best peace of mind,” he added.
Financial advisors urge adult children to consider CCRCs as a way to pay today’s dollars upfront for future healthcare costs, particularly in this volatile economic landscape. Another incentive is that a large portion of a resident’s monthly fees (about 40 percent) are tax deductible, which saves money in the long run.
Residents with long term care insurance often can use both benefits.
“If you’re looking to move into a CCRC, make sure you ask a representative of that retirement community what portion of that month’s payment can be considered a reimbursable expense for long term care insurance once you begin receiving services,” Breeding said.
Andy Ross’ mother also has long term care insurance.
“If she needed someone to later come to her apartment, if she had a bad fall and needed rehab, it can be used as part of her long-term care,” he said.
“From my perspective as an adult child, the benefits of my mother living in an Acts community is much more than long-term care. It’s knowing she will be adding years to her life because she’s very happy where she is.”