Planning for the unexpected
With so many unknowns about potential care needs in the future, it can be easy to backburner planning. This can be a costly mistake, as proactive choices now can protect your health and finances in the future.
Understanding the progression and funding of care as you age is an important component of a plan for the future. While it may be disconcerting to consider a care event, a failure to do so can be exponentially worse, placing assets at risk and an unfair burden upon heirs and loved ones.
Often in-home care is the first option. Today about 80% of this care is delivered by family members or nonprofits. This model may bring added flexibility and help managing expenses, especially early on in a progression of care.
A 2015 study reports that over 43 million Americans served as unpaid family caregivers in the preceding 12 months. Statistics show that 60 percent of these caregivers were women with a median age of 49.1
While more cost-effective than institutional care, home health care can raise further concerns. In addition to limitations in medical training, providing care can present family dynamic challenges, impact careers, stress relationships and lay an emotional burden on caregivers.
There are also impacts on the care receiver. For many, the thought of becoming a burden on family in their later years is unsettling.
Of 65-year-olds will need some form of long-term care2
National annual median cost for a private room in a nursing home3
Length of average nursing home stay4
Several alternatives have emerged, offering hybrid services that blur the lines between home care and nursing homes. These include a flexible array of offerings like skilled nursing visits, short-term nursing home stays for acute care, independent living and assisted living.
The key with a hybrid plan is active case management, including understanding the needs of the care receiver and finding a cost-effective method for delivering their care.
Nursing home care
For many, the thought of a long-term care event brings to mind a prolonged stay in a skilled nursing facility. This residential option offers patients health and personal care delivered in a medical setting by licensed nurses and support staff. This high-touch model comes at a significant expense, however, and long-term stays are not funded by Medicare.
Self-funding: Self-funding long-term care may be an option. The crucial component with this option is to fully understand the potential costs, the potential risks to your other goals and the impact on your family. Estate planning solutions can help mitigate some of the risks, but the time to address issues is long before a care event arises.
Traditional or hybrid insurance: Another option may be to purchase an insurance policy or annuity rider. These can help fund your care and protect assets, but costs vary and this may represent an expensive choice depending on your age and health.
Medicaid: The federal government offers Medicaid as a safety net for those with fewer assets and few other options, making Medicaid a last resort for most individuals.
Another proactive step is to determine your advanced care wishes. This includes identifying who should make medical and financial decisions for you when you are no longer able to do so. This requires legally establishing a health care directive and a power of attorney. These documents provide direction on who will make these decisions, in addition to when and under what circumstances these decisions will be made. Ensure these documents are reviewed on a regular basis and kept current.
Where you spend your golden years is likely to change as you age, moving along a continuum of care options. Finding the right fit at each stage requires understanding the choices and their impact on your quality of life and care.
Aging in place
Even as independent and senior living facilities are booming, more and more people are choosing to stay in their homes and “age in place” for as long as possible.
Most seniors prefer to stay in their homes5
if they could no longer live on their own
While costs are certainly a consideration for many, others who choose to age in place may be simply taking advantage of flexible care and service options. Increasingly our service economy has scaled to meet the needs of our nation’s aging population.
Health care, dining and transportation services, along with innovations in technology and safety, have increased independence and offer options to keep seniors living active and healthy lives in their homes.
While your retirement journey often begins in your current home, your evolving needs are likely to drive change over time.
Today’s seniors have a variety of choices when exploring new options, from independent senior living, shared living and assisted living all the way to skilled nursing facilities.
Identifying the right option at each stage requires recognizing how your needs are changing and balancing considerations like level of care, personal preference and costs.
Staying in a single-family dwelling can be a fit for seniors in good health who are still independent and seek a cost-effective solution. However, even a plan to stay in a home or townhome may require some accommodations. A few of the more popular items include:
- Singe-level living
- Safety amenities like a walk-in bathtub, handrails or larger doorways
- Home maintenance services such as lawn/snow service or meal service
- A shift in geography closer to family and friends or better health systems
Independent or assisted living community
As you age you may find that you prefer help with day-to-day tasks like preparing meals, laundry or housekeeping. Eventually, you may even require personal services like help with bathing and dressing.
Today’s senior living communities offer options that can adapt as your needs change, as well as deliver social outlets and structure to keep you active and engaged.
Costs are largely impacted by the size of residence and assistance required, but typical expenses are $1,500 to $4,000 per month, with dementia or Alzheimer’s care offered at a significant premium above these rates.6
Long-term care facility or nursing home
A nursing home offers the highest level of care – and with it, the largest price tag.
Stays at a nursing home can involve short-term issues like rehabilitation following a fall, or treatment for chronic and complex conditions, memory care, or end-of-life services.
Care is delivered by licensed nurses available around the clock, with most facilities offering special memory care units for those with dementia and Alzheimer’s. Costs range from around $4,000 to $8,000 per month.6
- Understand your options, and build a care plan before an event occurs
- Carefully consider the impacts of your decision beyond finances, to include family dynamics level of care and quality of life
- Be proactive in addressing financial risks and your potential incapacitation
Read more from our RBC Wealth Insights report Taking control of health care in retirement
1. Caregiver Statistics: Demographics, Family Caregivers Alliance & AARP, 2015.
2. Longtermcare.gov, U.S. Department of Health & Human Services, 2017.
3. Cost of Care Study, Genworth, 2016.
4. Cost of Care Study, Genworth, 2015.
5. Smaller Share of Women Ages 65 and Older Are Living Alone, Pew Research, 2014.
6. Senior Housing 101: Senior Care Types Explained, A Place for Mom, 2015.