There is some bad news for Boomers. As they age, they will have fewer potential caregivers on whom they can rely, according to research from the AARP Public Policy Institute.
It's people in the 80+ crowd that are most likely to need long-term services and support. In just 13 years, when the oldest Boomers start turning 80, the decline in caregivers shift from a slow decline to a free fall. "The supply of family caregivers will not keep up with the future demand for care," says Amy Goyer, AARP's family, multigenerational and caregiving expert.
The pool of caregivers to care for aging 80+ Boomers will decline sharply by 2030 and be less than half what it is today by 2050. Those are sobering statistics with plenty of significance for Boomers.
Because of societal and technological advances, people today are very mobile. They relocate for various reasons, such as a job or career change, or to follow a spouse to another part of the country or world. "Because we don't stay in one place too long, the odds of maintaining earlier friendships diminish. Also, we begin to lose connections with loved ones as geographical distance increases," says John Piershale, a wealth advisor at Piershale Financial Group. For a variety of reasons, many Boomers will find they will have to mostly take care of themselves.
What does all this mean?
"There is uncertainty," says Goyer. As Boomers age out of peak caregiving years and into peak care receiving years, there won't be as many family and friends to rely on. "Who will provide the care?" she asks.
Most likely the answer to that question is someone that will need to be paid. Without an army of friends and family nearby, Boomers will become increasingly reliant on services such as at-home care or potentially retirement/nursing facilities. "These all will most likely significantly increase the amount of financial resources people will need later in life," says Grant Moore, a financial advisor at Savant Capital Management.
Anticipate the possibilities
"Don't assume you won't need help. Many Boomers make the mistake of thinking that because they are in good health now, they don't need to worry about things like long-term care. But the key is to be ready before a crisis hits," says Marion Somers, PhD., author of Elder Care Made Easier.
Start thinking about what type of care you would prefer later in life. Somers says to research costs – of an in-home aide, assisted living and nursing homes. Find local resources. "Local and community resources may be available to provide services and abate some of the perceived costs of care," says Somers.
Realize too, that you may need help on a smaller scale too. "Little things around the house may require the strength and effort of two people and a friend or family member is often free help. You may have to hire help for little things like basic repairs and maintenance. Consider the increased costs of paying for more personal services during your retirement," says Anthony Criscuolo, a certified financial planner with Palisades Hudson Financial Group.
You might want to explore the option of moving closer to family. Not only would you have their support, but it could be that the cost of care is cheaper where they live. Somers likes the state-by-state calculator at www.3in4NeedMore.com.
Come up with a game plan
Your research should at least give you some clues as to what long-term care could cost you. Next is the biggie, how to pay for it? "It's imperative to see a good financial planner who should prepare a comprehensive financial plan that will indicate if you have saved enough to retire and live the lifestyle of your choice. The plan should also indicate how much of a reserve would be available for unexpected costs, including uninsured medical and or other long-term care costs," says Ronald Fatoullah, an estate planning and elder law attorney with Ronald Fatoullah & Associates.
The ideal and simplest way to pay for care is with long-term care insurance, says Christine Fahlund, a senior financial planner with T. Rowe Price. It's least expensive to buy when you're in your late 50s. Although policies aren't as easy to find as some insurers have stopped offering them, they are still around. The reality is, "Most people can't self insure for long-term care," says Fahlund.
There is a way to get long-term care coverage that is likely less expensive – a life insurance policy with a long-term care rider. "Many people have life insurance policies that don't represent what their needs are today. You can do a 1035 exchange and update your life insurance policy to one that has a long term care rider on it, it costs less to do this option," explains Julie Murphy Casserly, president of JMC Wealth Management.
One of the biggest mistakes people make is not planning at all. "So many people sweep this under the carpet. Be proactive," says Murphy Casserly.
Get real. Says Goyer, "Baby Boomers need to plan both financially and practically for their long-term care needs and be realistic about who will be able to help, support and care for them. They should have their legal affairs in order as well, indicating their wishes for care."