A reader wants to know if her husband's theory is accurate or crazy.
Question: My husband and I are lucky enough to have city pensions because he’s been a police officer and I’ve been a secretary in the same department. So unlike most 50-somethings, we’re not worried about retirement.
But I AM worried about growing old and going into a nursing home. We have a grown son, but he’s struggling to keep a job. My husband says our son will take care of us when we get old, because it won’t be that expensive to do so in a few years. But I think we need to do more. I just don’t know what “more” is. Can you help me?
— Lilly in Texas
Howard Dvorkin CPA answers…
Elsewhere in your letter, which I edited for brevity, you explained your husband’s fascinating theory…
“Since the entire country is growing older and there will be more senior citizens in a couple decades, it’ll become cheaper to get space in nursing homes — because more of them will open up, which will drive prices down. He thinks it’s like supermarkets that can sell food so cheap because they sell so much. The profit on each can of beans is only pennies, but if you sell billions of cans, you’ve made millions of dollars.”
I’m glad your husband is a police officer and not an economist. Needless to say, caring for the elderly is more complicated — and much more expensive — than selling cans of beans.
In fact, Care.com released a clever poll last month that asked Americans in their 40s and 50s how much they think a nursing home will cost when they need one.
More than a quarter said they “think it will cost $45,000 or less per year.” The actual number from trained economists? “It really costs $82,125 to $92,378 per year.”
Care.com did back up one part of your husband’s theory: There will indeed be a record number of elderly in this country. “By 2050, the amount of people over 65 is projected to be 83.7 million, nearly double the rate now,” the company said.
However, caring for more elderly won’t reduce the price because unlike grocery stores, there’s no economy of scale. More elderly requires more nurses and doctors, no matter how efficient they are.
So what can you do? You’re lucky, Lilly. It seems like your retirement savings are already going strong. You now need to save for your own senior care. Check out Care.com’s Senior Care Guide Index or call Debt.com at 800-810-0989 for a free debt analysis.
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Email your question to email@example.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.