Caring for Aging Parents on a Budget: Tips for Family Caregivers

Adult daughter with aging mom

Getting old can be scary and can have a lot of implications for our financial wellbeing. Watching your parents age is no small task, either, and preparing for that transition into their Golden Years is important. Is it possible to set them up for care on a budget? Continue reading below for a list of tips on caring for aging parents on a budget.

Explore Government Assistance Programs

Some older adults may be eligible for government subsidy programs that will provide long-term care benefits. Medicare does not cover long-term care or assisted living, but Medicaid covers the cost of certain types of long-term care for those who meet certain financial criteria.

Additionally, some states in the U.S. offer the Program of All-Inclusive Care for the Elderly (PACE). This service combines Medicare and Medicaid programs to assist people who would otherwise need to live in a nursing home. Through this service, these people may continue living at home instead of moving into a long-term care facility through financial assistance with medical care, social services, and long-term care.

If your aging parent is a military veteran, consider checking with the Department of Veteran Affairs. They provide coverage for long-term care at a facility or in-home services for some veterans.

Alternatively, if your parent has a medical condition that qualifies them for disability, you may consider exploring the services of the Social Security Disability Insurance. This program provides financial assistance to people who meet certain financial eligibility criteria.

Certain states may offer additional programs. For example, some states like Michigan, California, and New York pay you to take care of a family member. The State Health Insurance Assistance Program is a national program with offices in all 50 states that aids in navigating, learning more about, and applying to government assistance programs like this.

Consider Privately Financed Options

Long-term care insurance is a type of insurance that provides health and personal care services for older adults. These services include but are not limited to a variety of health and personal care services for older adults that help them live safely and/or independently after they reach an age where they may not be able to otherwise.

Long-term care insurance pays for an assisted living facility, a nursing home, or in-home care. Home care or a group home is typically less expensive than a nursing home. People in nursing homes require round-the-clock care, while those at group homes are expected to manage their own care. Assisted living facilities provide care, but not as much as nursing homes.

To get the most out of long-term care insurance, AARP suggests shopping for a policy when your parent is between the ages of 60 and 65. Beyond that age, it is still possible but may prove more challenging as premiums and coverage may be impacted by factors that accompany getting older.

Alternatively, there is the option of asking your parent to pay into a life insurance policy or annuity. Life insurance policies act as a contract between an insurance company and a policy owner, where the insurance company guarantees to pay a set sum of money to one or more beneficiaries when the insured passes away. In exchange, you pay premiums while you’re alive. A specific type of life insurance, hybrid life insurance can be used to pay for long-term care expenses OR pays out to a beneficiary if long-term care isn’t needed.

Meanwhile, annuities are similar in the sense that a financial institution promises to pay out a fixed or variable income stream to the policyholder after a period of funding. However, you don’t have to pass away to start collecting annuity payouts.

If things are truly dire, you may consider taking out a loan with a financial institution or applying for a reverse mortgage on your home. Reverse mortgages are a type of home loan for homeowners 62 years of age or older. These types of loans allow homeowners to borrow money against their house, using it as security for the loan. The loan is repaid when you no longer live in the home. For more information, please contact a reverse mortgage loan broker.

Watching your parents getting old can be scary, both emotionally and financially. Being for this period of their lives can take preparation, budgeting, and diligence. For the best advice, consider seeking the services of a financial professional.

The opinions contained in this material are those of the author and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reputable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

[1] Esposito, Lisa and Sy, Payton. “How to Pay for a Nursing Home with No Money.” U.S. News, Mar 08, 2024. Accessed Apr 20, 2024.

[2] “Paying for Long-Term Care.” National Institute on Aging, n.d. Accessed Apr 20, 2024.

[3] “What states pay you to take care of a family member?” Senior Home Companions, n.d. Accessed Apr 20, 2024.

[4] Valorem Financial, “Understanding the Basics of Long-Term Care Insurance.” Valorem Financial, Nov 07 2023. Accessed Apr 20, 2024.

[5] Shell, Adam. “Buy Long-Term Care Insurance at the Right Age to Get the  Best Value.” AARP, May 01, 2020. Accessed Apr 20, 2024.

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