Understand the financial aspects of caring for senior parents. Learn how to navigate expenses while ensuring their well-being.
Our parents clothe us, feed us, house us, and raise us. Eventually, the time may come that we must offer care in return. As the American population gets older and more adults require live-in, long-term care, the yoke of responsibility falls on the shoulders of younger generations. In 2020, more than 1 in 5 Americans identified as caregivers –– over 53 million people –– compared to 43 million just five years prior.1 While some of these respondents are full-time caregivers by trade, many are working adults simply trying to provide comfort and stability to someone who once did the same for them.
As any caretaker knows, this is a rewarding but emotionally (and financially) taxing endeavor. And the cost of caring for older parents or family members can be overwhelming for some. Because of this cost, nearly two-thirds of family caregivers reported continuing to work while providing unpaid care to a loved one, according to information gathered by AARP. If you’re caring for a senior parent or expect to assume this responsibility soon, discover advice on how to manage these costs –– while cultivating the most comfortable environment possible.
Caring for aging parents is a noble undertaking, but it can come with a substantial financial burden. To effectively manage the cost of caring for a loved one, the first step should be to assess and understand the full extent of the expenses involved.
In doing so, you will want to decide whether your older parent will receive adequate companion care in the comfort of their home (or yours) or if they might need a higher degree of care –– the kind that might require an assisted living facility or nursing home. Particularly when family members are the ones providing it, the costs of in-home care can be marginally lower than those found at an assisted living facility. Although in-home care can allow for personalized, one-on-one attention at a reduced rate, caregiver costs, medical equipment, and aging-in-place home modifications can quickly erode any potential savings. However, assisted living facilities carry an average monthly cost of $4,500 compared to in-home care’s $3,800, making in-home care a less costly option.2
Medical expenses are another substantial piece of the senior care picture, as the healthcare needs of senior parents can be substantial –– though they might not start out that way. Over time, however, our health needs change, and aging parents may require more frequent doctor visits, increased dosages of medications, and specialized health care. This can turn an otherwise manageable cost into a true financial burden, and when managing the cost of caring for elderly parents, you should factor this likely change into your budget.
Should you decide to provide care to a senior parent, family member, or loved one yourself, you’ll need to consider the ramifications of this responsibility on your work life. The job of a caregiver is a demanding one, and caring for a senior parent may mean taking time off work, limiting your working hours, or potentially leaving your job altogether to become a full-time caregiver. Carefully consider the impact this decision may have on your income and long-term financial stability, but also the costs that aren’t necessarily financial –– like your friendships and personal relationships.
Weigh these costs against the benefits, such as purposeful time spent caring for your loved one. Living with senior parents allows you to spend some invaluable one-on-one time with them, something that you’ll look back on and wish you had more of.
To help prepare, you’ll want to assess the costs associated with planning for senior care. This process can involve legal aspects and may require you to analyze your parent’s insurance policies. Whether you’re creating or updating a will or exploring long-term care insurance, you’ll want to invest in the support of a financial expert to ensure your parent’s (and your) best interests are protected.
Given the extensive costs associated with caring for senior parents, you may be feeling the financial pressure. Luckily, there are numerous options for ongoing support and financial assistance that can help you alleviate the pressure –– from federal programs to nonprofits.
There are various federal and state government-sponsored programs designed to provide and support senior care. If you provide care services to an senior parent directly, state Medicaid can help you get paid to be a caregiver, offsetting some of your costs.3 The Older Americans Act, too, provides services like meals, transportation, and even mental health support to enhance the well-being of seniors.
If the parent under your care is a veteran, or is the spouse of a veteran, they may qualify for Veteran Affairs (VA) benefits. These are federal benefits designed to improve the quality of care given to aging veterans, including caregiver education, financial assistance when traveling to receive care, a monthly stipend, and 30+ days/year of respite care –– providing temporary relief to dedicated caregivers.4
Long-term care insurance is a paid program, much like auto or home insurance, and if your parents have these policies in place, you may find the cost of caring for senior parents to be greatly reduced. Policies vary, however, so be sure to investigate the terms of your parent’s policy to understand the full financial impact this care insurance will have.
Under the Family Medical Leave Act (FMLA), most employers must provide 12 weeks of unpaid leave to care for a loved one –– but depending on your employer and benefits package, you may receive pay for this time (or be eligible for even greater flexibility.) Check with your employer to see if your company offers any caregiving-related benefits or programs, be they as simple as a more flexible work arrangement or as involved as an employee assistance program.
Depending on where your aging parent lives, countless nonprofits are geared toward elder care. The Ohio-based Elderly Advocates is “dedicated to seeing our aging population thrive to the best of their ability,” relying on volunteers to help caregivers and families carry the load. And in Missouri, the St. Louis Area Agency on Aging (SLAA) has compiled a comprehensive list of community-based services geared toward older adults. These nonprofits are just two examples of many; explore options in your area, and you’ll likely find someone is providing the support you need.
Many of the above options are designed to lessen the financial cost of caring for elderly parents, but a support group can help you mitigate the emotional cost. In a community of like-minded caregivers in situations like yours, you’ll find solace, support, camaraderie, and hope –– valuable tools as you look to provide your loved one with the best care possible while caring for yourself.
Through monthly stipends and caregiver support, state, federal, non-profit, and community programs can help you manage the cost of caring for aging parents. When embarking on this journey, explore the options in your area to ensure you are supported in the best way possible.
Understanding the costs involved in caring for senior parents and some of the resources available to you, you can begin developing a thought-out plan for long-term care with your parent. This thorough process will help you ensure your parent’s needs are being met, and that your financial limitations are established, allowing you to make any necessary adjustments before embarking on your caregiving journey.
Although your parent may not require immediate long-term care, you’ll find that the sooner you begin planning for this care, the more resources, options, and support you will have available. This early planning will also allow you to have open and honest discussions with your loved one(s) about their housing, care preferences, and finances. Talking about aging ensures you honor their wishes while building out the remainder of your plan together.
With a clear idea of your parent’s preferences and a composite of their finances, you should develop a detailed budget outlining all potential costs. This will include things like daily professional care, routine medical expenses, expected home modifications, factoring in additional expenses as your parent ages. Having this budget in hand, you can go confidently into your exploration of your various care options.
We’ve discussed assisted living and in-home care, but there are a number of other ways to ensure your parent is properly cared for. Consider if living with elderly parents is a viable option, or if you want to seek an assisted living facility. During your planning, you’ll want to understand the available home care options (and their associated costs) and whittle down the list according to your established financial limitations. Ultimately, you can discuss this refined list of options with your parent, considering their needs and preferences.
Legal and financial planning are each valuable components of a long-term care plan, and it’s essential to consult with elder care experts to ensure there will be no hitches on this journey. In more complex cases, you may also want to consult with care professionals –– as they can help you navigate complicated senior healthcare systems with poise.
Your completed caregiving plan will act as your roadmap, helping you manage the cost of caring for senior parents, but it’s not set in stone. As your parent’s condition changes or your own financial situation evolves, you may need to modify your budget and explore alternative care arrangements, such as elderly parents moving in.
To the uninitiated, caring for senior parents can be a daunting undertaking. It’s expensive, emotionally taxing, and rife with uncertainty –– a recipe for elevated anxiety levels. However, there are countless resources and strategies at your disposal, all designed to help you effectively manage the cost of caring for senior parents. For good measure, we’d like to tell you about one more.
Truehold’s sale-leaseback allows homeowners to tap into valuable home equity, using this resource however they see fit. And for aging adults, it can be a great way to cover an ever-expanding list of care costs while continuing to live in a comfortable environment. Through our sale-leaseback, your parent can sell their home in exchange for home equity, then continue to live in their cherished home while paying rent. This frees up potentially hundreds of thousands of dollars to be applied toward the best possible care for your parent, empowering you to care for and spend quality time with them.
When looking for ways to manage the cost of caring for senior parents, Truehold’s sale-leaseback may be the solution you’ve been searching for. Learn about our sale-leaseback, then see if it’s the right fit by reaching out to one of our trusted advisors.
1. AARP. Caregiving in the United States 2020. https://www.aarp.org/ppi/info-2020/caregiving-in-the-united-states.html
2. SeniorLiving.org. Assisted Living vs Home Care. https://www.seniorliving.org/compare/assisted-living-vs-home-care/#compare
3. USAGov. Get paid as a caregiver for a family member. https://www.usa.gov/disability-caregiver
4. U.S. Department of Veteran Affairs. The Program of Comprehensive Assistance for Family Caregivers. https://www.va.gov/family-member-benefits/comprehensive-assistance-for-family-caregivers/
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