Retirement Planning Consideration: Eldercare Costs


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Healthcare costs can potentially have a tremendous impact on retirement planning.

Although life expectancy has slightly declined in recent years, the long-term trend is still ticking up. Because Medicare spending tends to be at its highest during the last year of life, people are living longer, and healthcare costs are seemingly always on the rise, these developments can have massive implications for your own retirement—and your parents’ retirement, too, if you’re a member of the sandwich generation.

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To increase the chances that your family can absorb these increased healthcare costs, you may want to first get a better understanding of what the options are, the costs you might incur, and the resources that can help you figure it all out.

A Brief Primer on Medicare

First things first: Seniors who meet certain criteria qualify for Medicare, which can help offset the costs of healthcare. Contrary to what many think, though, Medicare is not the same thing as “free insurance”—enrollees need to pay a premium, there’s a deductible, and there are other costs, too.

These expenses lead 34 percent of Medicare beneficiaries—some 22 million people—to also obtain Medicare Advantage coverage, which is private insurance that covers things Medicare won’t. And there’s Medigap as well, which also offsets healthcare costs that Medicare doesn’t cover.

Eldercare Options

There are many different stages and types of eldercare, and each stage may require different levels of care, depending on the specific situation.

Whether you’re planning for your own future or thinking about your parents, here are some of the most popular eldercare options that are available. By understanding each of them and having an idea of what they cost, you may be able to develop a retirement plan that helps you meet your unique goals.

1. Family-provided in-home care

This option won’t cost you anything other than your time and your spare room, if we’re talking about your parents, or your family’s time or spare room, if we’re talking about you.

At this stage, most folks decide the individual doesn’t need their own place and would be better off living with family. Of course, you can also hire a medical professional to take care of you in your own home (or take care of your parents in their home), which often comes with a hefty price tag.

2. Independent living facilities

Think of it like a college campus of sorts, but for folks 55 and up. Independent living facilities are great for couples or single people who are perfectly able to live on their own and are downsizing but don’t want to give up on a social life.

3. Assisted living facilities

Once someone outgrows in-home care or an independent living facility, the next step is often an assisted living facility. At this stage, the individual can operate on their own, to a degree, but needs a certain amount of personal or medical care—which the assisted living facility provides.

4. Nursing homes

When individuals need more assistance and can’t function on their own, they may move to nursing homes, which have staff on hand 24/7 to assist with medical and personal needs.

5. Adult day programs

Maybe an elderly family member lives at home, but the homeowners work and can’t take care of the individual during the day. In such an instance, they might enroll the person in an adult day program, which is a nonmedical program for disabled and cognitively impaired elderly individuals.

How Much Does Eldercare Cost?

Everyone’s circumstances are different. We all have different needs and different preferences, so a retirement plan that works perfectly for someone might not work for another person at all.

That being the case, it’s important to begin researching your options, trying to get an idea of what the future might look like, and developing a plan that supports your long-term financial and healthcare goals.

While you’re at it, consider looking into your options for aid and support. Depending on your situation, you may be able to get grants or other resources. At the same time, you can contact long-term care planning experts who can help you develop a retirement plan that works for you.

What might your total costs look like in the future? They’re the sum of your mortgage or rent payments; utility bills; homeowners insurance; property tax; and grocery, entertainment, maintenance (e.g., landscaper and electrician), transportation, and healthcare expenses. Check out this calculator to get a better idea of the expenses you may need to cover each month.


Eldercare Costs Are a Key Component of

Retirement Planning

The last thing you want is to be a burden on your kids, be unable to afford the quality of care that you want as you enter your golden years because you’re relying on Social Security alone, or be incapable of providing for your parents.

This is why it’s important to keep eldercare costs top of mind as you develop your long-term financial planning strategy. With so many different variables to consider—particularly if you need to look after your own parents—figuring out your best way forward can be a tricky undertaking.

A financial advisor can help you navigate this complex maze and work to create a plan that aligns with your financial situation and your personal goals.

Schedule a consultation today to learn more about how EP Wealth can help you develop a strategy that includes long-term care insurance, cost evaluations, details about how to disburse assets to cover costs in a tax-effective way, and even trust reviews to make sure your estate is in order.





  • EP Wealth Advisors, LLC (“EP Wealth”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EP Wealth has used its best efforts to verify the data included here. The information presented was obtained from sources deemed to be reliable. However, EP Wealth cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are subject to change without notice.

  • The need and type of care required to care for elders and seniors will vary. In many instances, many will not need elder care and it is not required or mandatory. Independent evaluation of your own unique circumstances will need to be examined to determine whether the elder care, including the options referenced here, is suitable or desirable. This is not a comprehensive assessment of all elder care options. There are other options that have not been considered here that could be more suitable for your individual needs. Please consult a professional prior to enacting anything referenced directly or indirectly here.

  • The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.

  • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice. All questions about and/or explanations regarding the content of this presentation should be directed to EP Wealth. Please consult a professional Financial Advisor before applying any of the approaches or strategies made referenced directly or indirectly in this report.

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  • EP Wealth Advisors, LLC is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not constitute an endorsement by the SEC, nor does it imply that EP Wealth has attained a certain level of skill or ability.


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