From Fortune Magazine:

A retirement affordability crisis is escalating in the U.S., with three out of four middle-income older Americans not having enough to pay for assisted living services without selling their homes within a decade. Racial disparities compound this situation, with people of color experiencing more financial hardship as they age. Baby boomers are moving into older adulthood, compounding the situation further.

The average amount spent by adults over 65 has increased by more than 20% since 2002, with the current average rent and medical costs for those in assisted living standing at $65,000 per year. Most people want to see their parents stay in their own homes, yet more than half of all Americans feel they are not on pace to retire comfortably. Younger generations, unsure about funding their own retirement, are woefully unprepared to support their parents as well. A financial advice suggests that people should calculate their own savings and also plan their savings around that number.

Many middle-income older adults might actually benefit from spending down their savings to qualify for Medicaid, which would enable them to receive government support for assisted living and healthcare. Caregivers should plan and establish a rainy-day fund for their parents’ retirement to avoid being caught off-guard by towering monthly expenses. It’s important to have hard conversations with parents as soon as possible, and to support policies that aid caregivers on a macro level as well.

A bipartisan Credit for Caring Act, introduced in 2021, would mark a significant step in alleviating the burden on caregivers, offering a tax credit for qualified caregiving expenses. In addition, more states are enacting mandatory paid family leave laws for private employers. Small steps and courageous changes among influential institutions can help ensure our parents have what they need to age gracefully.



Read more: Millennials could soon see their parents become their biggest expense–and American families are woefully unprepared