Caregiving can run the gamut from checking in on an elderly neighbor once a week to helping an older or disabled loved one function daily in his or her home. Though there are those who make a living caring for others, millions of them nationwide provide services that go unpaid -- namely, folks who care for family members in need. And while it's clear that caregiving can take an emotional toll on those who provide it, it can take a financial toll as well.
An estimated 40 million U.S. adults act as caregivers in some capacity, according to a new Merrill Lynch study, and they collectively spend $190 billion per year to serve in those roles. Now, the flip side there is that those who are willing to provide care end up saving their loved ones roughly $500 billion by helping them avoid paying for professional services.
Still, the majority of caregivers are feeling the impact on their own finances. A good 88% feel they need help managing their money as a result of the roles they've taken on. Additionally, more than half of caregivers have made financial sacrifices to compensate for caregiving expenses, and also say they have no idea how much they've spent on related expenses to date. And that's truly unfortunate because, if anything, caregivers should be rewarded, not punished, for giving so much of themselves.
What are caregivers giving up?
Caregivers across the country sacrifice more than just time to help their loved ones; in many cases, they also give up their personal financial security. Consider these troubling statistics:
- 30% of caregivers say they've have had to cut back on expenses
- 24% of caregivers have struggled to pay their own bills
- 21% of caregivers have needed to tap their personal savings to provide care
Furthermore, 40% of caregivers under the age of 64 have made career sacrifices to help their loved ones, including reducing their hours and leaving the workforce sooner than planned. And as a peripheral sacrifice, many will inevitably lower their Social Security benefits in the process.
Easing the burden for caregivers
Clearly, caregivers shouldn't have to be the ones to suffer financially when they're already going above and beyond. That's why it's critical to discuss the subject of long-term care with your loved ones and encourage them to plan for it earlier on in life. Unfortunately, long-term care is one of many things Medicare won't cover, so it's crucial to save and prepare for it in other ways, especially since a good 70% of seniors will end up needing long-term care at some point in time or another.
For starters, talk to your loved ones about securing long-term care insurance, which can help defray the cost of care later on, thus making it a feasible option even for families who aren't wealthy. This way, if your family members do come to need care, the burden won't necessarily fall entirely on you.
In addition, encourage family members, especially older ones, to get ahead of health issues early on so that they don't escalate into major problems. When you're dealing with an elderly parent, for example, it's not unheard of for a drawn-out cough to evolve into pneumonia when left untreated, and that's the sort of situation that could result in you needing to take time off from work to provide care in some capacity.
Finally, factor caregiving into your personal financial plan and persuade your family members to do the same. Most working Americans have less than $1,000 in savings, and if you're forced to stop working, even if temporarily, to care for a loved one, you could quickly land in a dangerous situation where you're short the income to pay your basic bills. Similarly, your loved ones should have adequate savings so that if you really can't manage to provide the care they need, they have other options for accessing it.
Being a caregiver is one of the toughest positions you might ever find yourself in, and while planning for it may not do much to ease the emotional impact, it will soften the financial blow. And that's one blow you don't deserve to face.