When we were 18, our parents couldn’t wait to get us out of the house. But at 81, those same parents are needing us to move back in. For more and more mid-career adults, the retirement picture is starting to include care for one or more aging parents. And very few people are planning for this when they envision their own retirement.
According to the US Department of Agriculture (not sure why THEY were doing this survey, but so be it) it costs the average household approximately $15,000 per year to house, feed and clothe a healthy, active 17-year-old. So imagine what the cost might be to house, feed, clothe, bathe, drive, and medicate a frail parent. Are you adding at least $15,000 a year to your projected annual expenses in retirement?
What Exactly Are the Costs You Need to Consider?
1. Basic living expenses
Food and Shelter are the minimums, but think of all the other incidental increases in cost that happen when another body lives in your house, eats your food, and uses your utilities. For example’s sake, let’s use that $15,000 per year. If you need to move your parent to an assisted living facility, the costs go up exponentially. Check out the various types of housing available for seniors at the AARP.org website: Housing Options.
2. Health care
Routine visits to the doctor are probably covered by Medicare, but who takes care of grandma when she’s got the flu or a broken leg? What about the non-prescription extras she may need every week? Does she have private medical insurance to cover the gap with Medicare coverage? Even seniors with Medicare and private health insurance may not have all their medications covered on an annual basis. The cost of your time aside, let’s add another $2,000 per year for incidental medical expenses not covered by insurance. For more on Medicare coverage and out-of-pocket costs, visit Medicare’s website, www.medicare.gov.
Most elderly lose their ability to drive at some point. So who’s going to get them to all those doctor appointments or the Senior Center? Do you need a third car, a car service, or just some extra gas? Add another $1,000 for help with transport. For senior transportation services in your area, check out the National Association of Area Agencies on Aging website.
For some, the financial matters of aging parents are pretty simple. They may have a couple of sources of income and minimal expenses, but I’ve yet to meet an older person who doesn’t feel overwhelmed by the amount of paperwork they have to complete on a regular basis. Again, just paying the bills and filing a tax return takes time. Do you hire someone or take the time to do it yourself? Cost of tax preparation/bookkeeping= $500 per year. Many local senior centers offer simple tax filings for minimal or no charge, but if you need more help consider a Daily Money Manager. Find one at www.aadmm.com.
5. Accessibility of Your Home
Many elderly become unsteady on their feet as they age. Do you need to build a ramp or grab bars in the bathroom? Will you need a Personal Emergency Response System (pull cords in case they fall)? These costs range from a few hundred dollars to six figures for a complete renovation. Let’s budget $500/year for renovations, security systems and routine maintenance. Everything you need to know about modifying your home for an elderly parent can be found at www.homemods.org.
Ah. The hardest to quantify. Many of the items mentioned above may not require cash out-of-pocket, but will require someone’s dedicated time. Is that going to be you? Do you have the flexibility in your workplace to take off for all these activities? If you are already retired, how does this responsibility fit in with your long-awaited travel plans? If you do plan to travel, you’ll need some coverage – add another $500/year. A great service I have used with my own aging mother is Right At Home, located in most states. You can contract for a few hours a day, a weekend, overnight care, or round the clock supervision.
Total Potential Costs? An extra $20,000 per year is not unreasonable when your parent moves in with you.
Wait, you say! But my mom can pay her own way. Yes, your parent’s Social Security and Investment Income may cover all or most of the incremental costs, but many parents who move back in with their children are doing so because they may not be able to afford all the help they need living independently or in a managed care facility. Make sure you really understand your parent’s finances before you are faced with this decision on the eve of your own retirement.
In the meantime, run those retirement projections with an extra $20,000 or so in additional living expenses in mind!
Photo by: Quinn Dombrowski