A Crisis for the Ages

As parents age, the burden of long-term care often falls to their children. And it can be crushing.

Here’s a post-holiday heart-warmer to go along with those other financial worries: Count on retiring with more than $2 million, or not retiring at all.

Advances in medical science are allowing people to live longer lives. The problem is, by the time today’s younger generations stand to benefit from these improvements, they may not be able to afford them. A retirement nest egg like our parents (or grandparents) had—the kind many retirees lack even now—may no longer be enough.

I reached this realization as a result of caring for chronically ill parents who have been in and out of hospitals and nursing homes. I’m part of a growing community of skeptics with no illusions that Medicare, combined with Social Security and hard-earned retirement savings, will cover our health care needs when we are old.

Medicare doesn’t cover assisted living, home health care or even most nursing-home situations—all-too-common outcomes for those who have the mixed fortune of living into old age. For younger generations watching their parents age, the old fear of dying young has been replaced by a new one: the fear that they’ll outlive their money.

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As people live longer, they face several alternatives once they can no longer care for themselves. Each is costly, ranging from more than $1,000 to $10,000 per month for day care, assisted living or skilled nursing. A “retirement calculator”—one of many free planning tools available on the Web—told me a few years ago that I needed more than $1 million to retire comfortably. By my math, “comfortable” meant a modest living of eating out once in a while, occasional trips and a hobby or two after paying for noncovered medical expenses.

That may have been a lowball estimate. Despite all efforts at being upbeat and encouraging in difficult times, financial publications can’t help but be real downers these days. Close readers will notice that their estimates for what we need in retirement have been going up to keep pace with rising health care costs.

One recent article estimated that two-income households, factoring in the cost of health care, should retire with about $2 million in the bank. (The phrase “factoring in the cost of health care,” dashed off without much explanation, came off sounding like a sick joke. As if health care, like food and shelter, were optional.) Saving for health care expenses that are 40 years down the road is the answer, but it isn’t a discussion the country wants to have—especially when people in their middle years are often struggling to simultaneously support their own children and care for their aging parents.

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In October, after Republicans attacked the program as too costly and ultimately unsustainable, the Obama administration scrapped its plans to introduce the first government-run long-term-care insurance program. The demise of the program was a setback for those seeking a lower-cost alternative to private long-term care insurance—in other words, millions of middle-income Americans whose savings are not likely to cover their health care costs as they age.

Private long-term coverage is notoriously expensive and complex, and continues to diminish as insurance providers—anticipating diminishing profits amid a growing need for such services—get out of the business. MetLife announced last year it would no longer offer long-term care policies, citing research that the cost of a room in a private nursing home has risen twice as fast as the average cost of living in recent years. Genworth and John Hancock announced plans to raise premiums for holders of existing policies.

And without long-term insurance or a very large nest egg, the burden falls on the younger generation, which is also faced with stark choices: Either pay large sums for professional around-the-clock care (thus sacrificing one’s own potential nest egg) or commit to caring for loved ones with limited outside help (thus sacrificing one’s own family life and peak earning years).

Most Americans will become informal caregivers at some point in their lives, according to the U.S. Department of Health and Human Services Office on Women’s Health. During any given year, 21 percent of the country’s adult population will provide unpaid care to an elderly or disabled adult. While most caregivers are middle-aged women, many men—especially only sons—are forced to step into that difficult role.

In recent years, online forums for caregivers have offered a cheap and convenient alternative to support group sessions and professional therapy. Caregivers are often invisible members of a community who become socially isolated in caring for their loved ones, a 24/7 job from which a bit of online chatting can provide brief but valuable respite.

“I just want to go to sleep and not wake up,” a daughter writes about caring for a difficult mother.

A therapist commenting in an online forum recently extended the same advice to caregivers that is typically offered to soldiers who risk committing suicide after experiencing the horrors of war: Ask for help and maintain a social network. Ruminating, caregivers say, is a big no-no.

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It’s human nature to avoid the inevitability of decline and death. Or maybe it’s just the American Way. South Korea, for example, is preparing for an aging population by training young people to be caregivers for the old. The country’s “war on dementia” includes a crash course in what it means to lose one’s memory and sanity—a frightening concept at any age, not just for school-age kids.

Although slower to act, the United States took a big step forward with last year’s passage of the National Alzheimer’s Project Act—an action plan that will include research and care for people with a disease that’s projected to afflict more than 13 million Americans by 2050.

As the child of parents who had children later in life, I’ve seen out-of-pocket expenses for health care that make college loans and wedding expenses look like loose change.

My mother’s brain surgery a few years ago cost more than $200,000. Insurance paid most, but not all of that and other related expenses for medicine and therapy. A few months in an assisted living facility cost more than $20,000, while professional, round-the-clock caregiving at home has cost us more than $8,000 per month—neither of which are covered by insurance. A platinum benefits plan with the California State Teachers’ Retirement System—a plan that is billions of dollars short of what it needs to pay future generations of retirees—has so far kept my parents off the welfare rolls. But the safety net is fraying, and it’s a long way down—that’s a tragic realization for the daughter of frugal, Depression-era parents who saved what seemed like more than enough money for retirement.

It’s only when families throw in the towel that Medicare steps in, covering 100 percent of end-of-life care—including specialists and therapists. Although hospice care is traditionally reserved for people who have a few months to live, elders living longer with chronic dementia are using hospice benefits to a greater degree than ever before, according to the Alzheimer’s Association.

Jane Gross, the author of A Bittersweet Season: Caring for Our Aging Parents—and Ourselves (Knopf, 2011), recently wrote in The New York Times that the “dirty little secret” of health care in America is that Medicare doesn’t cover growing necessities such as assisted living and home health care for people who are living many years with chronic but manageable illnesses, but it does cover costly and sometimes unnecessary end-of-life procedures for dying patients.

“This mismatch between what is covered and what is actually useful is the central flaw in Medicare today,” Gross writes. “[It’s] a shock to families who have no clue, until they’re smack in the middle of it, about how this system works.”