How to Estimate the Cost of Aging

Most people are able to make preparations for the future. Planning to take a summer vacation to Malta? You know you need to set aside some money for travel expenses, and to ensure you have enough time off work. However, planning becomes much more difficult when you’re trying to plan for an entire life shift. Aging is a continuous process that we think we are ready to handle because we have been dealing with it for our entire lives. But, as we get older, the aging process rapidly speeds up and comes with many necessary adjustments that will seem overwhelming to the unprepared. 

A study in 2013 revealed that 38% of baby boomers (an age cohort that includes people born between 1946-1964) have no current plans to pay for long-term care services. This is a significant amount of people (the youngest of whom are currently 52) that do not know how they will cover new and substantial expenses as they continue to age. Fortunately, you won’t be one of them, as this blog post will help you start on the path to developing your own personalized plan. 

A starting point for your calculations is to use Metlife’s life expectancy calculator to estimate the likelihood of living to certain ages. As morbid as this may appear, it is useful to know how long you need your savings to last. The calculator works by having you input values for indicators such as: age, gender, weight, blood pressure, exercise level, and if you smoke. Using the calculator may even motivate you to finally quit smoking, as you see how many additional years you are expected to live when changing the smoking indicator. Remember to only use your result as a minimum age to plan for, as many people defy expectations and live longer than average, and there’s no reason to think that won’t be you. 

Health Care

The first additional expense that you need to take into account is health care. As you get older, this expense will steadily increase, even if you have no additional health conditions. The more health conditions you have, and the more serious those conditions are, the higher you can expect your costs to be. AARP has a very useful calculator that you can use to estimate your costs after you retire. 

A nonsmoking, relatively fit male can expect to have about $2,500 of medical expenses not covered by Medicare when he is 66 years old. This figure rises to $4,000 at the age of 80. Your expected cost will rise further when you add health conditions. For example, having nasal allergies raises your estimated cost $500 per year. The more serious the condition, the higher your expected cost will rise. Bone cancer comes with an estimated cost of $33,000 not covered by Medicare when you are 80 years old. Please see the image below for a glimpse into how the calculator works.


The cost of residence during your retirement will vary considerably depending on your particular circumstances. By the time you retire, if you own a house you will have hopefully already paid off your mortgage, which cuts a big expense from your budget. However, even choosing to stay in a fully paid home carries additional expenses. It is likely that you will need to outfit your home with improvements designed to make your living situation more comfortable. On the high end of improvements, you’ll need to pay $30,000 if you decide to install an elevator, or alternatively, at least $3,500 for a stair lift. A disability ramp typically ranges between $1,500 and $2,000. Many also choose to purchase a walk-in tub, as taking a bath is one of the most dangerous activities for the elderly. This will cost at least $2,500 plus installation fees. Then there are minor repairs, such as grab bars for the bathroom ($20), and lever-style doorknobs ($10-$20 per handle), that can add up

Once you have taken care of the necessary renovations to your home, it is likely that a time will come where you will also require home health care. An annual report released by Genworth, the Genworth Cost of Care Survey, found that in 2016 the average home care costs for those living in the state of New York were $4,385 per month. This is about $500 higher than the national average. The report is very extensive and you can even limit your search to specific areas of the state such as Ithaca and Manhattan. One of the most useful features of the tool is that it allows you to calculate your likely costs up to 30 years in the future. Genworth allows for a 3% annual inflation in their calculations to try to make the future cost accurate. This 3% value does accurately reflect the annual cost increase that has occurred in New York nursing homes over the last five years.

Unfortunately, we will not all have the luxury of living in our own homes as we age, so it is important to understand these costs as well. Even those of us who plan ahead may find that we develop a health condition that requires us to live at a facility. These costs are significant. The Genworth survey found that in 2016 an assisted living facility cost an average of $3,628 per month. If nursing home care is required, then a semi-private room will cost you $6,844, while a private room costs an average of $7,698. An assisted living facility is designed for those who are fairly independent and only require minimal supervision. In contrast, a nursing home provides 24-hour care to those who have extensive health needs. 

You may not have to pay all of these costs out-of-pocket, as there are circumstances where Medicare and Medicaid will help. But be advised that both programs are fairly restrictive in their stipulations for access. Medicare requires that you have stayed in a hospital for at least three days within the 30 days prior to attending a nursing home, and that you require skilled care. If you satisfy these conditions, you will have your first 20 days full covered, and any costs beyond $140 per day between days 21-100. So Medicare would cover $221 per day of the average $361 per day cost at a nursing home in the state of New York. Any days beyond the first 100 days will not be covered. Medicaid will fully cover nursing home services, but only if you meet certain income and asset limits. The 2016 maximums for the state of New York can be found here.

There are also insurance options to help protect you from high long-term care costs. The New York State Partnership for Long-Term care combines private insurance and Medicaid. This plan allows you to protect some or all of your assets in the event that you exceed policy coverage. You pay an annual premium for this coverage, which varies depending on your age when you enroll. You can go here for a list of the average annual premium ordered by plan type. An additional benefit of this option is that there is a 20% tax credit for the state of New York.

The costs of aging are substantial, even for the healthiest among us. That is why it is so important to plan ahead and understand these costs before they become a reality. You can get started by using the calculators we’ve discussed in this post. To benefit the most from your planning, you need to understand both your current health conditions, and your risks of developing further ones. How you want to live in your retirement years should also be carefully weighed. Do not discount the extent of potential care needs you may have as well. These costs can be the most overwhelming; so a little planning will go a long way.


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