Contributed by: Sandra Adams, CFP®
It is hard to avoid the statistics. They are in news articles. They are on TV. They are on social media. People are living longer and the potential costs that older adults can expect to pay for long term care are astronomical. AARP recently published a study “Valuing the Invaluable: 2015 Update.” The study reported that in 2013, about 40 million family caregivers in the U.S. provided an estimated 37 billion hours of care to an adult with limitations in daily activities. This care equated to an estimated economic value of $470 billion (up from an estimated $450 billion in 2009).
The Impact of Relying on Family Care
Many older adults either plan for their family members to care for them in older age or their failure to plan leaves them no other alternative but to rely on family members for care. Unfortunately, older adults do not realize that they might be impacting their family members’ long-term financial future when they are put in the position of being a caregiver (especially when it wasn’t planned).
The AARP study reported the following findings of family caregivers:
- 61% made workplace adjustments, which included cutting hours, taking leaves of absence, receiving warnings about attendance and turning down promotions; all of which affected pay negatively.
- 22% of retired caregivers left the workforce early, which affected potential retirement savings, pensions and/or Social Security benefits.
- 68% of caregivers used their own money to support long term care costs, which drained funds they had planned for their own future financial independence.
So what can be done to help avoid these potential pitfalls for the financial health of the entire family?
- First and foremost, plan ahead. If you can plan ahead, especially from a financial perspective, for future long term care costs you can either pay for professional caregivers OR pay your family members to provide care and offset any benefits they might be giving up by stepping away from their planned career path.
- Secondly, know your resources. Outside of your family, know what community and government resources might be available that can relieve stress from your family.
- Last, communicate your plans. If family caregiving is part of your family’s plan, make sure everyone is on board and has a way to make things fair (consider paid caregiver contracts, etc.). It is easier for all family members to make things work if they know in advance what the contingencies might be.
If you and your family are planning for family caregiver situations and have questions I can help with, please don’t hesitate to give me a call.
Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.