Caregiving Costs: What does it mean to care for a loved one?

We always advise clients that the financial plans we sit down and create with them are documents that guide and help us understand the strengths and weaknesses of your financial situation. Analyzing them and keeping them going throughout retirement is essential. One of the key areas where most people have not adequately prepared for is caregiving.

There was an AARP report that showed that:

·       78% of caregivers pay for some caregiving costs out of their own pockets.

·       20% experience significant financial strain as a result of caregiving.

·       30% have stopped saving for their own needs or goals.

There are 8 million more caregivers in 2020 than there were in 2015. Caregivers are spending, on average, one quarter of their income on caregiving activities. Just imagine the toll that is taking on caregivers around the country, and with the increased number of caregivers, those costs are spreading to more and more people rather than less.

Financial Strain

Almost half of these caregivers are either dipping into personal savings, cutting back on their expenses, or reducing retirement savings to be able to continue to be caregivers. Over half are experiencing work-related impacts as well, including taking time off (paid and unpaid) and working different hours than they are accustomed to or best benefits them.

Interestingly enough, it’s housing that grabs the largest portion of caregiving expenses. 30% of household-related expenses are in the rent/mortgage category.

As you can imagine, the lowest quartile of household income is the most severely strained by these numbers.

Plan For It

We’ve previously addressed the need for long-term care planning, but this blog is meant to further highlight that need. Consider the rising costs of inflation, which have only aggravated these needs and made it ever the more essential to review financial plans. Consider these three financial planning questions:

·       Has the rising cost of goods stressed your financial future?

·       Are there adjustments to your portfolio that you can make to remedy this financial stress?

·       Should you be thinking about Long-Term Care Costs?

We’ll continue to watch these events happen and help anybody out there who is struggling with their finances. Prepare for the future now, don’t wait until it’s too late!