Long Term Care Insurance and the Sandwich Generation
Many people who get around to exploring long-term care planning and long-term care insurance find themselves in the unenviable group known as “The Sandwich Generation“. That is: The group that finds themselves trying to keep their lives running while paying for all the needs in their lives – mortgage, car payments, all the expenses for raising children, vacations, all the different types of insurance that any prudent couple or person needs to protect all these things – and then out of left field caring for 1 or 2 aging parents!
They become caught in the middle between taking care of their kids and now helping out their parents. It is not a tasty sandwich.
The impacts of being in The Sandwich Generation are real and measurable. There is financial impact and familial impact. In this article we are going to address some of the financial impacts of long-term care needs for aging parents. So, yes a lot to numbers and statistics, but try not to let your eyes roll back in your head as you read this. The odds that these facts are going to affect you are in the range of “probability” not “possibility”.
As a primary statistic you can find many sources state that once a person in the United States attains the age of 65, the probability that person will need some form of long-term care before the end of their days is 70%. In actually the probability is a bit higher than that for women and a bit lower for men. Look at it this way, if someone had a plane on a runway with room for 100 people and they said to you, “oh, by the way, if you get on that plane it will crash land but 70 out the 100 people on the plane won’t make.” Would you get on that plane?
Now let’s get back to how your parents long-term care needs are going to affect you and your kids. Here’s the not-so-tasty sandwich part:
- According to data collected by the National Alliance for Caregiving, there are over 66 million family caregivers in the United States. That translates to nearly 40 percent of the U.S. adult population…a stunning statistic. This number includes people who are caring for the sick or disabled, but the majority of these caregivers are assisting an elderly family member. Other than a spouse, the most common people to be tasked with caring for an elderly loved one are adult children.
- Caregiving for a parent(s) often means reducing hours at work or even quitting a job. The result, of course, means a greatly reduced income base and future income potential. This will affect retirement income and Social Security benefits.
One study estimates that adult-child family caregivers in the U.S.A. have a cumulative loss of nearly $3 trillion in earnings. For sons, the average in total lost income (including wages, pension and Social Security) is $283,716 per person. Since more women are caregivers than men, daughters are in an even worse spot. They lose an average of $324,000 in total earnings as a result of their caregiving.
- Yet there’s more! On average, family members serving as caregivers are spending nearly $7,000 of their own money each year on their loved one’s expenses–helping cover the cost of things like medical bills, utilities, and food.
- Getting back to the retirement picture for adult children caring for elderly parents – the average age for an adult child caring for a parent(s) is 49.2. This is just when people are looking to up their 401K savings. If that person is working less, and spending money to help out their parents plus maybe putting kids through college, there is less to go around and the picture gets darker for potential retirement savings. And if you are making less, your employer is kicking in less. So being in your late 40’s and 50’s is just plain bad timing to have to care for a parent.
- It’s hard to estimate the effect caregiving parents has on your health, but the stress is high and there is a higher likelihood of medical issues for the caregiver. Depression, back problems, and a whole slue of stress related medical problems are common.
These are just a sampling of problems related to caring for elderly loved ones. It might be too late to get insurance for your parents to cover long-term care needs, but ask yourself this: Do you want to lay these types of financial problems at your children’s doorsteps? Look into long-term care planning solutions so your children don’t become the next generation biting into that sandwich.
Seth C. Walsh
SCW Insurance Services
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