Guidance

RESOURCES TO HELP SHAPE YOUR FINANCIAL FUTURE

Many millions of families are facing the new reality of taking care of parents in their eighth and ninth decades.

For many families, one route to caring for parents who choose not to live independently—or who cannot—is to have them move in with you. According to the AARP, 4.6 million parents have moved in with their adult children, a trend that is on the rise as the population ages and overall health costs climb.

One of the key drivers behind multigenerational housing is the increasing share of out-of-pocket healthcare costs that retirees are paying. At present, retirees spend about 40% of their average Social Security income on out-of-pocket health expenses, according a report from Medicare. That is expected to climb to 50% by 2030. When you are on a fixed income and paying for perennial items like home maintenance, taxes, and often long-term debts, that is a hard pill to swallow.

Becoming disabled is another factor driving the co-housing trend. More than 53 million adults have a disability, reports the Centers for Disease Control. A multigenerational household may offer a better way to monitor care and well-being of older, disabled adults. That is why “moving in with the kids” may make sense for some retirees. Costs can be shared in one household. Elder relatives may save thousands of dollars by not having to own and maintain a single-family home or townhouse, while younger generations may also gain some help with paying monthly bills. If everything clicks, it is a win-win for adult children and their parents alike.

What should you do if you are thinking about sharing your home with an aging parent? Here are some key questions to ask.

Is it a Good Fit?
This is always a difficult question, because it involves so many moving parts. Parents who have been estranged from adult children for years—or who perennially posed conflicts—may be a bad fit. And you also have to consider that you may need to deal with ongoing physical and mental challenges. Do your older relatives have chronic diseases, disabilities, dementia or Alzheimer’s disease, or other health issues that require daily attention? If so, you will need to discuss additional in-home care and how to arrange for outside medical appointments and treatments.

A basic question for those considering taking in an elderly parent, according to Janet Kim, a spokesperson for the nonprofit group Caring Across Generations, is “how can we support the dignity of a person while providing care?” In your family discussions, she recommends that you map out what you need to do to make your home more livable for an aging parent. Does the home need to be modified for access (wheelchair ramps, handrails)? Will stairs be an issue? Not only do you need to focus on present needs and limitations, but future ones, as well.

How Will Health Needs Be Met?
This is among one of the most complex questions to answer, since a parent’s health can decline in any number of ways over both a short or extended timeframe.
Healthcare can be provided in a home setting, but you have to monitor that care and often upgrade it over time. Someone in the family needs to be in charge of overseeing it, which is not always feasible in two-income households.

How Much Will Additional Services Cost?
You have to plan ahead for elder care. It may involve an entirely new spate of family expenses. Although this subject is difficult to discuss, you will need to explore a number of scenarios. What if Mom or Dad moves in and needs additional services? Generally focus on basic activities of daily living such as bathing, eating, getting dressed, and so on. If you—or someone else in your household—cannot assume the role of caregiver, then you will have to seek outside help, such as home care professionals.

According to the Genworth Cost of Care survey, a home healthcare aide or homemaker service averages around $4,000 a month. If you just need somewhere for a parent to go for daytime activities, adult day care averages around $1,500 monthly. What if the level of disability is beyond your ability to provide competent, often around-the-clock caregiving (think severe dementia)? Then you could be paying around $8,000 a month for skilled care outside the home.

You may have to look for a new house that will accommodate multiple generations. Homebuilders are now offering homes that either offer floor plans for older residents or adjacent “apartments” that are separate spaces on the same lot. Some 44% of home shoppers in one survey hoped to accommodate their parents in their new home. Even some older city housing may feature “granny flats,” which were often above-the-garage apartments behind the main home.

Should the Aging Parent Contribute Monetarily?
A pressing question for most families is how would you pay for these care situations or additional housing costs? Would Mom or Dad contribute? Would they qualify for Medicaid? These subjects should be part of the family conversation.

Who pays what largely depends on their financial resources and yours. Some families do not mind covering all out-of-pocket costs for additional care and home modification (some of which may be covered by Medicare or Medicaid). But many families are not able to handle the additional financial burden.

“If the family member is in a position to contribute to household expenses, they should,” advises Kim. “But you need to discuss what’s possible economically.” Run through a list of possibilities. Maybe the elder relative can cover a portion of the food bill, utilities, or even home modifications. If they are receiving a decent pension or have ample financial resources, it is not out of bounds to ask for help footing monthly bills.

Much of the discussion on whether or not an elder parent moves in with you involves your household’s day-to-day lifestyle. Will you have the time and patience to manage often unpredictable crises? Do you want to live with them? Will you be able to get a break, such as going on vacations or business trips?

Although you want to deal with a multigenerational situation with compassion and competency, it may consume a good deal of your time, and you will have to manage multiple schedules.

“Expect the unexpected, but try to be flexible,” says Kim. “If you can’t manage ongoing problems, be prepared to involve a third party to play a role.”

 

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