Retirement Calculator Doesn't Count Aged Parents
Adult Children Risk Financial Security to Cover Elderly Expenses
Sep 17, 2009
The cost of supporting an aging parent is more than some adult children can reasonably manage. But it's not the occasional help with paying a utility bill or buying groceries that's draining family budgets and causing many workers to give up successful futures. Middle-aged Americans are digging deep into employee retirement accounts and bank savings to help pay for an elderly parent's care.
Today's Elderly People Can't Afford the Cost of Aging
Elderly parents – including baby boomers – who accrued only modest savings during their working years are discovering they don't have enough money to last through old age. Of the millions of older people that did invest in a retirement plan at work years ago, the carefully calculated retirement sum isn't going to be enough to survive two decades of inflated living costs. It's a fact that elderly retirees are heading back to work because they have no choice; but some older workers still can't make ends meet without help from grown children.
Many seniors who were once "well-off" lost savings and investments during the recession of 2009; in fact, many of these aging folks are now in dire circumstances and will probably remain in that position for the rest of their lives.
Finally, there are the many frail and very old individuals that get only Social Security and Medicare. Elderly persons diagnosed with Alzheimer's disease and other age-related chronic health problems need more services than government funding and most eldercare programs allow.
The Price of Caring for an Elderly Parent
Retirement calculators don't include the cost of caring for an aging parent. But the risk of losing financial security is just the beginning for adult children that find themselves reducing contributions to IRAs and 401(k)s in order to help care for an aging loved one.
Martha M. Hamilton of the American Association of Retired Persons (AARP) explains in detail what adult children are sacrificing in an article, "Your Financial Future: Are You Risking Your Own Retirement to Care for a Parent?" (Sept. 2008). The article can be found on the AARP web page, AARPBulletinToday. Hamilton states, "According to a study last year by the health care coordinator Evercare and the Maryland-based nonprofit National Alliance for Caregiving (NAC), about half of all those caring for someone older were helping them out financially – at an estimated average level of $5,531 a year."
Employers suffer losses too, from employees that serve as caregivers to aging parents. Workers run out of paid leave time and use up vacation time to care for an aging family member. What's worse is many adult children end up leaving successful careers. Workers lose out on job promotions and benefits – including health insurance – to stay home and care for a parent that cannot afford any other means of support. The financial drain doesn't stop there. Many couples are dipping into children's college funds to pay for Grandma and/or Grandpa's needs.
What Does the Future Hold for Caregiver Children Supporting Parents?
Thanks to medical advances, better dietary choices, and eldercare programs, people are living longer. The job of caregiver is going to hit millions of households in the near future. More and more adult children will find themselves supporting or helping out grandparents and great-grandparents.
Employers are encouraged to offer eldercare benefits programs to help employees pay for the care of aging parents. However, it is obvious that employee benefits, daycare programs, and tax breaks fall short of what is needed. Eldercare programs are not getting sufficient attention considering how many families are already on the brink of financial disaster.
Hamilton informs readers in the AARP Bulletin: "Fidelity Investments estimates that a couple age 65 today will need at least $225,000 to cover their future medical costs. And that doesn’t include the cost of long-term care, over-the-counter medications and most dental care."
The estimation above doesn't include transportation to medical appointments, recreation and trips, and other travel expenses. It doesn't include respite care, special diet foods, and many of the personal expenses that are absorbed by the caregiver (family) budget. And there is still more to consider: A great many elderly people today are active and involved in the community, doing volunteer work, going to school, or working. These activities may involve additional expenses, time, and transportation provided by a caregiver who is likely to be emotionally stressed and financially drained.
Should adult children creating a retirement planner consider the cost of caring for an aging parent? It's not a bad idea. Older parents without life insurance or who can no longer afford to pay the monthly premiums have no means of replacing what is being taken from their adult children and their grandchildren. Without active intervention, the problem is only going to get worse.
Families face more than financial disaster when elderly expenses drain savings and college funds; dreams and goals are lost for adult children and grandchildren. The elderly care expense problem must be addressed soon, or no amount of bailout money is going to be enough to repair the emotional damage and financial ruin many families are facing.
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