Rising Assisted Living Costs Leave Many Retirees Unprepared for the Future

(WCTU) — A new report from Senior Resource highlights a growing crisis in retirement savings, revealing that the average retiree is unprepared to cover the rising costs of assisted living. With the average annual cost of assisted living in Ohio now at $63,531 and climbing, many seniors face financial shortfalls that could leave their families scrambling to fill the gap.

"About 70% of people will require assisted living at some point in their lives, yet most won’t have the financial resources needed to cover the expense," the report states. The findings emphasize a stark contrast between the median retirement savings of Baby Boomers; $289,000, and the increasing price of long-term care. While some retirees have significantly more saved, with the average savings of investors aged 65 to 74 at $609,230, the median savings for this group is just $200,000.

The gap between savings and care costs is particularly evident in states where assisted living expenses far exceed the national average. In Hawaii, for instance, the annual cost is $112,083, while in New Jersey, it reaches $88,800. Even in lower-cost states such as Alabama or Arkansas, where yearly costs hover around $49,700, savings may not be sufficient for long-term care, especially if additional medical expenses arise.

The root of the issue lies in a combination of factors. The American retirement system heavily relies on personal savings, yet many individuals fail to start saving early enough or contribute sufficiently. At the same time, the cost of care continues to rise due to increasing labor expenses, regulatory requirements, and real estate prices. As life expectancy grows, more Americans risk outliving their retirement funds.

For adult children of aging parents, this creates a dual challenge; supporting parents who may not have enough saved while also planning for their own financial security. Experts recommend starting with open discussions about finances. "Have the money talk today," the report advises, urging families to address savings, debts, and expectations for future care before a crisis arises.

Understanding local costs is another critical step, as assisted living prices vary widely by state. In Alaska, for example, annual costs reach $87,000, whereas in Mississippi, they are significantly lower at $45,600. Financial advisors suggest exploring alternative funding options, such as long-term care insurance, veterans benefits, and Medicaid programs. In some cases, reverse mortgages can provide additional support, though they should be considered carefully.

The report also highlights the importance of financial planning for future generations. With assisted living costs rising from an average of $4,500 per month in 2022 to $5,530 per month today, the burden on retirees and their families is expected to grow. By 2030, all Baby Boomers will be 65 or older, further straining the senior care industry.

"The time to act is now," the report concludes. It urges individuals to start conversations with their parents about financial planning, research available care options, and take proactive steps to strengthen their own retirement savings. Without early intervention, many families may find themselves unprepared for the financial demands of long-term care.