Few Americans assign a dollar amount to the worth of their children—they are without price. But as lead author of a new study looking at nursing home cost and use, Hurd can quantify the value that daughters, and children in general, bring to parents facing one of life’s most dreaded prospects: a stay in a nursing home.
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First the good news. The median stay in a nursing home was 10 days, and the amount a 57-year-old needed to set aside to cover average lifetime out-of-pocket spending on nursing home care was $7,344, according to the study, from senior principal researcher and director at the RAND Center for the Study of Aging.
That’s not nothing, but it’s also not the six-figure amounts often mentioned, which will prove accurate for some people, particularly in cases of dementia.
Hurd’s average assumes the $7,344 pot grows by an inflation-adjusted, or real, 3% until it is needed some 20 years down the line. To be extremely conservative, assume a zero return, and the amount that 57-year-old needs to set aside is more like $18,000. For someone with kids, both time spent in a nursing home and out-of-pocket costs are significantly lower than for those without children. The childless would need to put aside an average of $8,943 at age 57, compared to $6,094 for someone with daughters.
Hurd and his co-authors used data from the Health and Retirement Study (HRS), a longitudinal project sponsored by the National Institute on Aging and the Social Security Administration. It’s a nationally representative survey-based study focused on Americans over 50. It involves interviewing 20,000 people in each of a set of older age cohorts every two years. The RAND study followed a core cohort of people born between 1919 and 1923, with the survivors reaching age 87 to 91 in 2010.