Financial Fundamentals Blog

How to Navigate Senior Living Care Costs

Start planning your senior loved one's care today with our practical tips for efficiently managing senior living costs.


When we’re children, we depend on our parents to provide everything we need — from food and shelter to emotional support. Then, as we grow up and our parents age, the tables start to turn. The parents we used to depend on start to grow old and require new kinds of care to maintain their health and quality of life.


If you’re the child of a parent now faced with rising health care and living costs, the financial stress of covering these expenses may be falling on your shoulders as well as the shoulders of your parents. 


As you seek solutions to pay for these costs, here’s an overview of the financial options you might consider and some tips to make those costs more affordable.


The Rising Cost of Elder Care

It’s not just college tuition that’s rising rapidly from one year to the next. A study of assisted living costs in 2020 found that the annual cost of elder care increased by more than 6% in a one-year span, with a national median cost of more than $50,000 a year.


For seniors in need of more intensive care, the cost can be even higher. Unfortunately, safety nets such as Medicaid only cover a portion of those costs and only if individuals qualify under the income restrictions. 


This can leave many seniors — and, more and more often, their children — left to foot the bill. And as the national population of U.S. adults ages, record-setting numbers of elderly individuals means the financial strain of elder care will be affecting a record number of families.


Financial Options for Covering Senior Living Costs

While the cost of senior living and elder care can be intimidating and overwhelming for both aging individuals and their family members, there are a number of options you should pursue when seeking out financial assistance and reduced living costs. 


In many cases, a combination of financial assistance and cost reduction options may be relied upon to cover these costs. As you work toward a solution, consider the following options:


Serving As Their Caregiver

In some cases, the assistance required by seniors can be afforded by having a family member serve as a part-time or full-time caregiver. While this may represent an emotional and economic burden to the caregiver and may only be useful in cases where that individual is able to meet the care needs of the elderly loved one, it also represents the most effective way to reduce costs.


Hiring Part-Time Help

If the senior’s assistance needs are minor, part-time assistance during the day — or when other individuals are away from the home — may be a scalable, affordable option.


Determining Support From Medicare and Medicaid

While financial support from both Medicare and Medicaid can be subject to frustrating restrictions, you should always find out if your senior loved one is eligible.


Paying for Senior Living Costs Out of Pocket

While this is the most expensive option, it could be the easiest way to alleviate the burdens of sorting out care for both the senior and their loved ones — as long as the senior and/or the family can afford it.

Tips for Children Tasked With Caring for Their Parents

Children of aging parents often experience a lot of stress as they navigate senior living and other elder care decisions. In addition to financial strain, children also worry about the quality of life and quality of care their parents are able to enjoy — especially as those aging individuals become more dependent on others.


Here are some ways to plan for this inevitable process and to manage both your own stress and the outcomes enjoyed by your parents:

  • Sit down with your parents and make a plan as soon as possible. The more your parents can be involved in this decision-making process, the less responsibility children will feel — and the more time everyone will have to make the necessary preparations.
  • Find a financial planner specializing in elder care and living costs. Different financial planners offer different specialties. Seek out someone with experience in these complex financial matters.
  • Consider taking out a life insurance policy on yourself. If you pass away unexpectedly, the money from your life insurance payout could be used to ensure quality care for your parents.
  • Claim your parent as a dependent. This will make it possible to use FSA money to cover their care costs.
  • Find out if your employer offers assistance for caregivers. Additional financial support or other benefits may be available, and it never hurts to ask.
  • Deduct medical expenses on your tax return. If medical expenses exceed 7.5% of your adjusted gross income, you can claim this expense as a deduction on your tax return.
  • Don’t mortgage your own future to pay for your parents’ living costs. While it’s often tempting to pay for care costs now and figure out your own retirement later, doing so could create even more financial complications for you to deal with later in life.

The financial cost of aging can be complex and destabilizing, but early planning and thorough research into your options can help you improve the financial outlook for this phase of your life and your parents’ lives. 

The financial resources and in-house experts at your local credit union may be able to help plan out your finances and account for these future costs. Become a member by opening a checking account today.

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