How to Avoid the Caregiving Wallet Drain
Industry Perspective Apart from the emotional burden, a glut of unforeseen, actual costs can jeopardize the financial future of today’s caregivers.
“I thought that was covered by Medicare?”
“Why has my mom’s long-term care plan met the maximum benefits available after only five years?”
“What if my 94-year-old father’s savings and benefits won’t cover his assisted living costs any longer?”
These are the startling realities and conversations happening around the cost of caring for a nation with a growing older population.
At the turn of the century, the average lifespan was 47 years. Today, Pew Research reports 10,000 boomers turn 65 every day—a phenomenon that will continue until 2030—and 1 in 50 baby boom-age women will live to age 100.
Bonus lifespan years have created a caregiver nation: 44 million family members or friends who are often not ready for the tolls—be they physical, emotional or financial—of taking care of an older loved one.
According to AARP, 89 percent of older Americans want to stay living in their homes as independently and as long as possible. But there are costs to modify a loved one’s home for safety as we age.
"In a caregiving cost study, on average, one-half of caregivers spend 10 percent of their annual salary on care-related costs."
In addition, many caregivers are unaware of costs for in-home care or moving a loved one to an assisted living facility or nursing home—costs that could range from $500,000 to $1 million over 10 years. Some families decide to move mom and dad into their home or investigate the new housing trend where everyone moves into a home designed toward multi-generational living.
There may also be costs for transportation, meal delivery, medications, pet care, etc. And, if you are one of the nation’s 8 million long-distance caregivers, living at least two hours away but sometimes across the country, your costs will be higher to hire local help and will include your extra travel.
Strategy is key
In a caregiving cost study, The National Alliance for Caregiving (NAC) found that on average, one-half of caregivers spend 10 percent of their annual salary on care-related costs. And, in a separate study, NAC found 6 in 10 caregivers had stopped saving for their own retirement and 4 in 10 were using their retirement savings to help cover care costs for their loved one.
Three things all family caregivers should do to avoid the caregiving cost drain:
Know the plan. Understand a loved one’s wishes for long-term care: what is already planned, what is covered but more importantly, what may not be covered.
Engage an expert. Talk with a financial advisor about the impact of caregiving on your own financial future. Another resource is an elder care attorney who can help families navigate senior legal issues as well as advise on the financial impact of certain decisions.
Have the family conversation. Communication is critical but often difficult to start. Some caregivers turn to geriatric care managers who are trained to help counsel families on these conversations. They often provide the objective, expert perspective to navigate any conflicts or sensitivities that can arise. If employed, check your work-life benefits, some employers provide access to a geriatric care manager.