Forty-year-old Lindsay Madison worries about who will check in on her when she’s 80. It’s one reason she sends her friends’ kids $20 on their birthdays.
“I want them to remember me when I’m old,” she said with a laugh, before turning serious. “I’m hoping they will come and keep an eye on things.”
Having people — or the means to hire people — to care for you later in life is top of mind for Madison, who doesn’t have kids, but cares for her 98-year-old grandmother. Her uncle, a Vietnam War veteran, also lives with her.
Madison moved her grandmom, Geraldine Madison, into her Detroit Tudor last year after costs at her assisted-living facility kept climbing by $100 a month.
“Since the pandemic, the cost has increased, and the level of services has decreased,” said Madison, who often visits assisted-living facilities as a yoga instructor specialized in teaching older adults.
Madison said her grandmother was paying $4,300 a month by April 2023 “for the bare bones” of rent and food. Medical care would have increased the bill.
“It just made more sense for my grandma to be with me, so that there could be a higher level of care, and the money she was spending would be going toward something like an investment for our family versus just burning money,” Madison said.
While many millennials are focused on saving for retirement, college tuition for kids or even vacations, the cost of caregiving — and what it could rise to decades from now — is constantly on Madison’s mind.
“The cost is bananas,” she said. “I don’t think people realize it, [and] people need to know what’s coming. The cost is literally one of my biggest fears.”
According to 2023 data from insurer Genworth, the average monthly cost of assisted living is about $5,900 in metro Detroit. A private room in a nursing home is about $13,600 a month. Factoring in 3% for inflation, millennials (who are currently in their late 20s to early 40s) are looking at a monthly bill of $19,400 for assisted living or $44,550 for nursing home care 40 years from now.
Daniel Milan, a managing partner at Cornerstone Financial Services in Southfield, said, “inflation is the biggest risk or greatest enemy to any financial plan.”
When planning for clients, he said he approaches caregiving costs from a risk management standpoint “because it’s an unknown whether you’re going to need it.” And the difference between assisted-living and nursing home costs presents “a significant risk,” he said.
“There’s no way to know what type of care anybody would need,” Milan said. “And when you have that big of a gap — talking almost $20,000 to $45,000 — that would create a significant amount of anxiety for anybody.”
Elizabeth Foley, a certified financial planner and private wealth adviser at Hilltop Wealth and Tax Solutions in Royal Oak, crunches caregiving costs another way: $150,000 a year for caregiving now is going to look more like $400,000 to $500,000 — at the 3% inflation rate — 40 years from now.
“That would mean accumulating another $300,000 you set aside in your retirement portfolio and say, ‘I can’t touch this,’” she said. “…That’s pretty hard to do by just setting dollars aside.”
Too many people stop at retirement and don’t contemplate the potential for a significant increase in cost of living when, or if, you need assisted living or nursing care, Milan said. “Traditionally throughout the financial industry, it’s not a hot-button topic, where I think that it should be,” he added.
The best time to start planning, he said, is in your early to mid 40s. If you wait too long, “you’re either not going to be able to save enough, or on the insurance side, your premiums are going to be extraordinarily high because you’re older,” he said.
Steve Azoury, owner of Azoury Financial in Troy, said millennials should be building caregiving costs into their estate plan.
“You don’t want to spend a lifetime building assets, and then all the sudden have a quick illness, and two or three years later, it’s all used up for the wrong purpose — not the fun part [of retirement], but trying to pay for the care that’s needed,” he said.
We spoke with local financial advisers to get their tips on how millennials can prepare for potential future costs and not run out of money should they need care.
1. Sock away as much savings as you can.
If you intend to pay for your own care, that’s going to take “a really aggressive and assertive savings program,” Foley said. And you must have the willpower to leave your savings untouched.
“Those aren’t dollars to pay for groceries and utilities and vacations in retirement,” she said. “That money has to be left alone so it is available if you need it for care.”
To get there, Azoury cites a rule of thumb to save at least 15% of your salary.
2. Max out 401(k)s and IRAs.
“Saving on a pretax basis through 401(k)s and IRAs is always the best answer,” Azoury said. Besides saving for the future, contributions reduce your current taxable income.
For 2025, the maximum amount employees can contribute to a 401(k) is $23,500, up from $23,000 for 2024. The limit is $7,000 for individual retirement account holders under age 50.
Yet, only 14% of Americans max out their 401(k), according to Vanguard’s 2024 “How America Saves Report.” That concerns financial advisers like Azoury, who said millennials can’t count on income from pensions or Social Security, even 10 years from now.
“There are projections [Social Security] will be broke in about 2034,” said Azoury. “So the No. 1 step is to try to max out 401(k)s, IRAs, and whatever’s available to you.”
3. Consider life insurance with a chronic care rider.
If you don’t think you can build up savings, insurance is an option.
It’s a good idea to talk with a financial adviser to see what makes sense for your situation. Let’s say you buy a $500,000 life insurance policy. You could enhance the policy by purchasing a chronic care rider, also called a chronic illness rider. The rider would allow you to use the death benefit to pay for long-term care, often up to the full amount of the death benefit, which is $500,000 in this example, Foley said.
If you use only a portion of the rider, say $300,000 for nursing care, there would be $200,000 of life insurance left when you die that would be paid to heirs or your estate, Foley explained.
And keep in mind, the younger and healthier you are, the cheaper the premium.
4. Pick your house for your future self.
Each month, Madison puts a little more toward her mortgage. “I’m hoping that one day this house will be paid off, and then that will at least be an expense that’s not on my budget,” she said.
If you hope to age in place like Madison, Foley recommended purchasing a home that works for you at ages 40 and 90.
“Think about aging in place with homes that have laundry, bedrooms and full bathrooms on the main floor, so that it’s easier to be in place, and the need for long-term care doesn’t push you out of your house, or you need it because you can’t get upstairs to a bathroom,” she said.
5. Don’t avoid it. Plan for it.
While it’s easy to get consumed by the day-to-day of work and raising families, planning now for a potentially expensive future shouldn’t be put on hold.
“It’s just like any other financial planning. The longer you wait, the harder it’s going to be to accomplish your goal or to have a viable path to accomplish your goal,” Milan said.
Azoury emphasized the importance of family conversations around long-term care scenarios, especially for millennials who may need to care for aging parents as well as their children.
They’re tough talks, but he said it’s fair to tell loved ones: “‘I hope to retire and have a life and not be broke when I get there because I took care of [mom and dad] for 10 years.’ You have to know what you can and can’t do financially,” he said. “You can’t be a hero about it.”
Help on the horizon?
Policymakers are well aware that caregiving can be a financial burden.
“When we poll AARP members, we know that 89% of Michiganders want to age in place, which will require direct care workers and most likely caregivers to provide the bulk of that care,” says Melissa Seifert, AARP Michigan associate state director of government affairs. She says aging-in-place costs will likely increase over time, including retrofitting homes to meet needs as people age and paying direct care workers.
It’s partly why AARP is advocating for a caregiving tax credit to offset costs for family caregivers, who currently spend on average $7,242 per year.
“AARP is working on getting this legislation over the finish line this year to allow a tax relief of thousands of dollars,” Seifert says. “We are still negotiating what that amount will be.”
While Madison would welcome any government assistance, she understands the importance of planning and that medical emergencies can wipe out savings. Her aunt experienced a fall at age 70 and now pays nearly $10,000 monthly to live in a group home with two caregivers. “She went from being the person in our family who did everything right financially,” Madison says. “Now she’s broke. She has no money — three years later after a fall.”
Even if you’re healthy and life is good, Madison urged others her age to plan for the unexpected.
“Not to be like the sky is falling, but it could, and you want to have a plan in place for when you get old, but also if something were to happen to you, especially if you’re the breadwinner of your family,” she said. “It’s better to be prepared than not prepared.”
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