How Long-Term Care is Changing

Over the last several years, one of the most surprising demographic shifts witnessed in America involves major financial implications for families. According to a recent study from Pew Research Center, more young adults age 18-34 now live with their parents than with a spouse or on their own. At the same time, the American population is trending older. Taking care of the fast-growing segment of retirees, who often have special health needs, must now be balanced with the financial obligations of children who remain dependent on parents well into their 20s.

“More young adults, as well as retirees, are living with family members.”

The segment of adults caught in the middle of this conundrum has become colloquially known as the “sandwich generation.” These parents must juggle the needs of their kids and their aging family members as well. A 2015 survey from LIMRA of 847 heads of household found that 44 percent included adult children. Another 17 percent of these households were financially supporting kids who did not live at home. These same households were often taking care of older parents or family members as well. Almost 30 percent reported providing regular assistance to parents or in-laws, while 8 percent include these family members in their household.

This living arrangement can put a strain on finances, even for wealthy individuals. LIMRA’s study found that a significant portion of household expenses goes toward paying for retired parents and adult children. Almost 60 percent of the food and grocery spending might go to family members or in-laws, while 71 percent might go to children age 18-22. Health care and insurance spending can also prove costly. LIMRA found that 25 percent of the total of these expenses went to elderly parents or in-laws. Thirty-four percent told LIMRA that supporting adult family members impedes other savings goals, and a nearly equal amount said it can have a negative impact on the “sandwich” parents’ retirement plans.

ParentsAs households grow larger, families need to ensure they have sound saving strategies in place.

Saving for long-term care

Older parents or children living at home can take a personal toll as well. At least 30 percent reported that they felt frustrated at having to care for older children or family members. Only two percent less said that these duties take up time at work, and a quarter said they proved a distraction from life.

We all have obligations to family members, but the financial and logistical realities make these duties hard to manage. That’s why many have found it prudent to invest in long-term care for senior parents. These special insurance plans will help offset the costs of having family members live on their own or with a caretaker.

For older children, an intelligently structured life insurance plan could prove a wise option. These plans can provide a sustained amount of income to help adult kids with their expenses. These plans may also confer tax advantages in estate planning.

Everyone’s financial picture is different. With the help of a trusted advisor, families can get back on track and achieve the goals they’ve been planning for.

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