Increased longevity without a plan

As we prepare to turn the page on another year, we are reminded we are a year older. One of the largest issues we will face in 2024 and beyond is an aging population. Our state demographer says that by 2028, one in five North Carolinians will be 65 or over. By 2031 there will be more adults 65 and older than children 17 or younger. North Carolina, like most states, is unprepared to deal with these numbers or their needs.

Baby Boomers, who have impacted every decade since their birth, are the group entering the over-65 demographic. Most never thought they would get old. Data suggests they fear dying broke. Even with a 401(k), IRA, some type of pension or Social Security, they worry about how they can afford to live into their 80s or 90s. And rightly so.

A century or so ago, it was common to find multi-generations living in the same house, but those days are long gone. Children moved away from their homeplace to different cities. Even those who stayed nearby consist of two-income adults, so they cannot or will not be able to house and care for parents, especially since they are living longer than previous generations.

The options for care falls into four categories or levels of care: in-home care, adult daycare, assisted living and nursing homes. Let's examine them.

Most people hate having to leave the familiar surroundings of their own home. Depending on medical and mental conditions, they choose to remain. Care is most often provided by spouse/partners, family and daughters. Adult daycare is a respite often sought to give the caregiver some relief and is the least expensive. According to a study by Genworth Insurance and their subsidiary CareScout, the average cost of adult daycare (5 days a week) is $14,000 a year in North Carolina.

The next level is often hiring a home health aide, someone with training, who might live in the home or be there a prescribed number of hours per day. This typically costs $53,000 per year, according to Genworth.

If the older person requires even greater care, an assisted living facility, which provides housing and minimum assistance with things like dressing, bathing, eating and medications might be necessary. Costs average $48,000 per year or more, depending on amenities provided by the facility and assistance necessary. Currently, there are 580 assisted facilities in our state with 37,150 beds. More are being built but we are told the supply isn't meeting demand.

Nursing homes are the highest level and most expensive option for care. Genworth says that in North Carolina, the average cost is $99,000. In our state there are staff-to-resident ratios required and workers must have 80 hours of training if they provide direct care to patients. In memory units, they must receive an initial 6 hours and another 20 hours in the next six months. Surveys show most families were satisfied with the quality of care, but about half were not satisfied with the costs, reporting unexpected charges.

There are three big issues facing eldercare: The need for recreational and other services, caregivers and financial demands. We won't deal with the recreational and other services here, but a growing population will demand more of them. There is a shortage of caregivers, perhaps because the median salary for healthcare support occupations in our state is below the median for all occupations of $46,310. Look for caregiver pay to increase as demand rises.

National studies indicate only 3 to 4% of Americans over 50 have purchased long term healthcare insurance. The long-term health insurance industry severely underestimated how many policyholders would use their coverage, how long they would live and how much their care would cost. As a result, policy premiums are rising dramatically each year for those who have policies. Affordability is a big concern.

Federal estimates are that 70% of us will require critical services before we die. A New York Times/KFF study shows about 1 in 5 need long-term care for more than 5 years … 1 in 10 a decade or longer.

Medicare won't pay for day-to-day help for those who can't take care of themselves. Medicaid will pay for some services, but not until the person has depleted savings, income, and assets.

How will our aging population meet the financial needs they face? The Federal Reserve Survey of Consumer Finances data indicated the median net worth of US households is $192,000, most of that is in their home equity. For those 65-74 the median is $409,000, yet those 75 and older have only $335,000. Even factoring in Social Security benefits, you can easily see the worry over living 10, 15 or 20 years over age 65.

We have increased longevity without a plan to pay for it. We need some earnest, compassionate and realistic conversations about our aging population.