Wednesday Feature: Dying Broke

Happy First Hump Day of 2024! Short weeks aren’t really deserving of a Hump Day, but it is officially a Wednesday that is not a holiday in a workweek (though I’m sure many are still off from the Christmas/New Year’s season). Thus, no matter deserved or not, it is my first Wednesday Feature and therefore, Happy Hump Day!

This week is interesting as I am catching up on all kinds of reports and data dumps that occurred during or proximal to the Thanksgiving/Christmas holiday season. While not a lot of new policy news came forth or even, much news on the economic front (I’ll round on some econ stuff soon), a number of new or interesting reports dropped. The title for today I borrowed from one of those reports. The report and article feature are from the Kaiser Family Foundation (KFF) and the New York Times about the cost of long-term care in the United States. The data follows similar parallel reports that I’ve reviewed regarding senior housing costs, income and estate disparities. A Harvard study that I covered in early-December is an example and the post pertinent, is here:

The KFF data is a combination of public data and survey data.  The survey data comes directly from seniors interviewed and it is frankly, enlightening, though not surprising.  The KFF article on the survey results is available here:

According to the Congressional Budget Office, about 6 million people use paid long-term service and support and another 2 million receive care and support in a nursing home.  With demographic expansion propelled by Baby Boomers now reaching retirement age and beyond, the number needing and receiving support, will accelerate by as soon as 2030 (Boomers reaching 80s).

A person turning 65 in 2023 has an approximate risk of 70% of needing some long-term care services and support in his/her lifetime.  And while nursing home long stays as a percentage of the older adult population are down, home health demand and assisted living demand is steadily increasing.  Both home health and assisted living have no government support (payments) for services that support primarily, activities of daily living assistance.  Medicaid may provide some coverage for these services when an individual reaches a low-income threshold but the waiting list for eligibility determination in most states is long:

According to the long-term care insurer Genworth Financial in their 2021 Cost of Care report, the driver of cost care increases is supply and demand.  Every day, 10,00 baby boomers turn 65.  This trend will continue to 2030. As noted, 7 out of 10 will require some long-term care at some point and the risk of need increases with age.  Longevity opportunity continues to grow in the U.S. but unfortunately, so does the risk of older age with disability, much attributable to lifestyle diseases such as diabetes and cardiac disease. The Genworth Cost of Care (2021) report is available here: Genworth Cost of Care 2021

The services with the highest cost increases continue to be those that require private or insured resources for payment, namely home health (non-licensed, non-medical), adult day care, and assisted living and memory care.  Aside from demand, the largest driver today of cost increases is labor – the lack of sufficient staff in number and qualification. Demand continues to grow yet, the availability of caregivers is not keeping pace.

Some important data points about care costs are as follows (data is from Genworth).

  • Median cost of Assisted Living in 2021 is $54,000.  In 2023 dollars, that amount is approximately $60,00.  Memory Care is higher by 15% and location (urban vs. suburban vs. exurban vs. rural) impacts cost positively or negatively.
  • Home care assistance via an aid or caregiver cost approximately $27 and hour in 2021.  That number today is closer to $35 per hour and availability is scarce.  Assuming a senior requiring 4 to 5 hours of assistance per day, the cost could easily amount to $60,00 per year.

The common caregiver remains, family.  Yet, this source is changing rapidly as birthrates have diminished and families are more regionally and socially disjointed.  Women are the predominant caregiver, primarily as wives and daughters.  With professional, paid caregivers scarce and yet in high demand, the likelihood is that family caregiving will rise in importance and in some cases, include multi-generational relationships.

According to data from the Motley Fool (investment website),

  • The average income for U.S. adults 65 and older is $75,254.
  • The median income for U.S. adults 65 and older is $47,620.
  • Average annual expenses for adults 65 and older are $48,872.
  • The average monthly Social Security benefit for retired workers is $1,681 and is set to rise to $1,827 in 2023.

Vanguard Investments (mutual funds) tracks savings data by age.  According to Vanguard, the average savings value for people 65+ in 2030 (not including home equity) is $232, 710. 

Simple math suggests that all but the wealthiest would have the resource levels it may take in the next 20 or so years, to cover the cost of their long-term care if extensive services were required.  The KKF article that I borrowed for today’s title is available here:






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