Are You a Primary Caregiver?
What happens if you are not able to provide care for your loved one when you are expected to be the one doing so?
When we talk with clients who are currently in or nearing retirement, a large part of their daily obligations consist of caring for a family member. Often it is an older adult—perhaps a parent, grandparent, aunt or uncle. Other times, clients are caregivers for their grandchildren.
In either event, what would happen to your family’s lifestyle and finances if you were unable to provide the care you intended to provide for your loved one?
According to a John Hopkins University study from 2012, on average the time spent by caregivers each week is:
25.3 hours for those aged 55-64,
30.7 hours for those aged 65-74, and
34.5 hours for those aged 75+.1
What’s more, those providing more than 21 hours of care each week are twice as likely to have been in the caregiving role for 10+ years.2 If any of these hours seem to reflect your current caregiving situation, you will need to budget early on and plan for additional expenses related to your caregiving activities.
According to AARP’s 2015 “Valuing the Invaluable” report, those who are age 50+ who leave the workforce to care for a parent can incur significant losses from lost income and benefits, with an average income loss of $303,880.2
While the losses in income alone might be enough to make caregivers wary of their plans for the future, there are other dangers to take into consideration as well. Research on family caregiving over the past 35 years has shown that the caregiver can experience negative side effects in their own financial situation, retirement security, social networks, careers, their ability to keep the person being cared for in their home and even their own physical and emotional health.2 In fact, according to AgingCare.com, back and shoulder injuries (the most common type of debilitating injury for caregivers) befall 52% of caregivers while caring for parents or grandparents.3 A large majority of caregivers are in their 40s and 50s, and such an injury can cause long-term distress for them as a result of caring for someone they love.
Remaining in the home is usually the primary goal for families with an ill loved one. When this is compromised and facility care becomes necessary, or unexpected medical care is needed for a caregiver who becomes ill or injured, costs can compound quickly.
However, with an intentional strategy, these costs can be lessened or avoided. Be proactive creating a plan before long-term care is needed. It is the most prudent action your family can take. Have a family plan in place designed to help defer some costs and some caregiving responsibilities. Not having a plan in place to afford medical care means you actually have chosen the most expensive plan that has the least amount of options, with the least amount of variables within your control.
Allotting additional monies for future healthcare needs can help keep those costs from bundling at a rapid pace. If setting aside additional funds isn’t something that you can afford to do, we recommend looking at your budget. Keep your living costs low whenever it is prudent to do so, but don’t skimp on the necessary professional services that can help your family when in duress.
Having qualified help empowers you and cultivates confidence, knowing that your plan is still on-track. This can be a lifesaver for caregivers in long-term caregiving situations who are just taking it one day at a time.
As a caregiver, it can be difficult to ask for help and to make room for your own needs. Avoid skimping on your personal necessities, such as emotional, physical and financial support. This more than ever is the time of your life where you will need the most safeguarding.
Areas that are overwhelming to you, like finances, tend to be areas you avoid when exhausted mentally and physically.4 When you are suffering from “Decision Fatigue” is when you are likely to need a qualified, financial advocate. Having qualified financial advice can help you avoid impulsive, expensive financial decisions—or worse—financial inaction.5 When you need funds available to cover rising expenses, it is important to pull those monies strategically from efficient accounts that are designed to have less tax consequences rather than impulsively pulling from accounts that will leave you with a hefty tax burden to pay.
Having someone specific that you can call for support when you’re in need alleviates the burden of feeling alone. Eldercare.gov is a great resource to start looking for respite care and long term care providers.6
If you have longevity that runs in your family, planning for your future is especially important. However, according to the American Association for Long Term Care’s Jesse Slome, the average person tends to underestimate their life expectancy, claiming, “Few people in their 50s and 60s are prepared for the financial consequences of their longevity.”7
Ultimately, it’s important to leverage your financial planner’s network and income planning strategies. They can often refer you to available community resources, help you estimate expenses, provide you with long-term care policies to defer expenses and caregiving responsibilities off of you, and design income streams for retirement to help cover these costs of aging.
1) Chakravarty, R. (n.d.). Long-Term Care: Families Face Steep Costs Even When It’s ‘Free’. Financial-Planning.com. Retrieved October 8, 2015, from http://www.financial-planning.com/gallery/fp/long-term-care-families-face-steep-costs-even-when-its-free-2693632-1.html
2) Reinhard, S., Feinberg, L., Choula, R., & Houser, A. (2015, July 1). Valuing the Invaluable: 2015 Update. AARP Public Policy Institute. Retrieved October 8, 2015, from http://www.aarp.org/content/dam/aarp/ppi/2015/valuing-the-invaluable-2015-update-undeniable-progress.pdf
3) Preventing Caregiver Injuries: How to Lift Safely. (n.d.). AgingCare.com. Retrieved October 8, 2015, from https://www.agingcare.com/Articles/Preventing-Injuries-Among-Caregivers-122277.htm
4) Ward, L. (2014, August 4). The Finances of Serious Illness. The Wall Street Journal. Retrieved October 8, 2015, from http://www.wsj.com/articles/SB10001424127887324577904578555711477165672
5) Tierney, J. (2011, August 20). Do You Suffer From Decision Fatigue? The New York Times. Retrieved October 8, 2015, from http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?_r=0
6) Greene, K. (2013, August 30). Survival Tips for Caregivers. The Wall Street Journal. Retrieved October 8, 2015, from http://www.wsj.com/articles/SB10001424127887324324404579040881814721714
7) 6 Things to Understand About Long-Term Care. (n.d.). Financial-Planning.com. Retrieved October 8, 2015, from http://www.financial-planning.com/news/insurance/6-Things-to-Understand-About-Long-Term-Care-2692081-1.html
Tags: Age Transitions, Aging, Asset Based Long-Term Care, budgeting, Caregiver, Caregiving, caution, Certified Financial Planner, CFP, decision fatigue, Financial Planning, income, Income Planning, Investment Answers, Life Insurance, Long-Term Care, money management, R. Travis Terlau, retirement, Rosalyn Carter, Travis Terlau, Valuing the Invaluable