3 trends in aging to watch in 2024

"Aging with grace" is an age-old phrase that has new meaning. To age with grace now, people must face not only typical aging challenges, but a new set of factors that have changed how we age.

There are many potential pitfalls, but the biggest mistake is avoiding the issue altogether. The good news is that people are thinking ahead about aging, and that’s especially true for those who have become caregivers themselves. 2023 New York Life data found Sandwich Generation members (those caring for aging parents and children) are setting aside money for their children to take care of them (42%), saving for retirement (38%) and purchasing long-term care financial products or insurance (37%).

If your clients feel unprepared to take control of their aging journeys, the first step is helping them become aware of the challenges at hand.

An aging population continues to change the patchwork of care options

Americans traditionally could count on federal support to supplement their needs in retirement. Today's retirees can’t be too sure.

Federal programs are already stressed. For example, according to the Social Security Administration, 90% of retirees receive Social Security benefits today, compared to only 69% in 1962.

That stress will only increase. According to population projections by the U.S. Census Bureau, 4.4 million Americans are turning 65 in 2024, about 12,000 people per day. Someone age 65 or older has an almost 70% chance of needing some type of long-term care support, according to 2020 figures from the Administration for Community Living.

To many folks' surprise, Medicare does not cover long-term care. Medicaid covers a limited amount, but services must be performed in approved facilities, limiting the control you have over your aging. In addition, you must spend down much of the assets you worked so hard to accumulate over your working years to qualify for coverage.

State-led long-term care funding programs made headlines in 2023, as Washington state launched a first-of-its kind public program. But with a maximum per-person benefit of $36,500, the program will likely not be sufficient to cover most people’s long-term care needs, as the average cost of long-term care for one person is $180,000 according to PWC research, and can become much higher. What’s more, public programs will likely take years to get off the ground. Even if a long-term care program is on the ballot in your clients’ state in 2024, there is no guarantee that funds will be available as your clients age.

Alongside wavering federal options, many private insurance carriers have exited the long-term care space, leaving consumers with fewer options. But private insurance is only part of the solution.

The landscape can seem daunting, but options do exist, and with professional guidance, those options become much clearer. As trusted financial professionals, you have a critical role to play to support clients’ lifestyle goals as they age, including helping them design a robust financial strategy to support their long-term care needs.

We expect pandemic-era trends to continue, including high costs of facility care and in-home care

 

According to New York Life’s Cost of Care Calculator:

• In-home care costs an average of $60,570 a year for 40 hours of help per week.
• It costs an average of $63,337 to spend a year in a one-bedroom assisted living apartment.
• The average cost of a year’s care in a private Medicare-certified long-term nursing home room is $116,577.

 

At-home care became the widely preferred option during the pandemic, and that trend continues. According to 2021 data from NORC at the University of Chicago, 88% of Americans would prefer to receive any ongoing living assistance they need as they age at home or with loved ones. According to AARP, as of 2019, 90% of those receiving long-term care assistance are living at home or in a community setting, not a nursing home.

This means continued stress on caregivers. According to 2023 data from New York Life, 95% of Sandwich Generation adults say that caregiving has impacted an area of their life including personal finances (47%), mental health/stress (44%) and their social life (44%). More than half agree caregiving is emotionally, socially, physically and financially harder than expected. Women feel these impacts even more deeply, as they are more likely to spend more hours per week caring for their aging relative (24 hours) in comparison to men (20 hours).

Support systems will become more critical than ever before

As more people want to age at home and costs of care increase, caregivers' physical and mental health will continue to come under strain, making support networks more critical than ever. Our data show that caregivers are already reaching out for help: While 90% of Sandwich Generation adults report making a lifestyle change or financial decision because of caregiving, 82% say they receive additional help with caregiving – with family members (49%) and friends (32%) being the most common sources.

Caregivers must focus on their mental health now, but this is a critical piece of helping clients plan for their own long-term care down the road. Planning for a robust network of support that includes paid and unpaid caregivers will increase their control over their care situation and reduce the strain on each individual caregiver.

Too often, the weakest link in people’s support systems is their own finances. Advise your clients to plan early for their long-term care needs, check in often and adjust. Support from a trusted financial professional can be the difference between uncertainty and worry, and confidence and peace of mind.

 

Jeff Beligotti is vice president, head of long-term care solutions at New York Life. Contact him at [email protected].

 

 

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