Marilyn remembers the day that she toured 3 nursing homes for her elderly mother. “Each one was very functional, but they seemed cold and lonely, institutional”, she said. “At the end of the day I just cried. I couldn’t put my mother in one of those places. And the cost was outrageous. Eventually, I decided to take her in myself.”
What Marilyn didn’t realize was even having her mother home with her would end up being a huge financial strain too. The extra help she needed from regular nursing aid visits, the supplies – they all added up. “It really put a financial strain on my family”, said Marilyn.
Most family caregivers are unaware of the high cost of caring for a loved one at home. Calculating these costs in advance can help you know more of what to expect, and can help you evaluate if it’s truly something that will work for you.
Out Of Pocket Costs
Out of pocket costs for caregiving can be significant. A study done by AARP estimated that on average, family caregivers spend roughly $7,000 per year on out of pocket costs related to caregiving. (1) And if you’re caring for a loved one who lives far away, or one who lives with you in your home, expect to pay more. ($11,923 or $8,616, respectively). (1)
This can be a huge financial strain on caregivers and their families. The AARP study estimated that caregivers spend on average nearly 20% of their income on caregiving activities. (1) And it’s not all just for medical care – household expenses, such as rent or mortgage payments, or home modifications, account for about 41% of spending. (1) Medical expenses, such as assisted living, insurance, or other medical costs average around 25% of spending. (1)
Lost Wages And Career Advancement
Care for a family member yourself may feel like the best thing to do, but it will cost you in more ways than just out of pocket expenses. According to the Family Caregiver Alliance, women who care for their parents lose an estimated $324,044 in lost wages, benefits, and retirement funds. (Men lose $283,716.) (2)
And caregiving can negatively affect work performance and career advancement: 61% of caregivers experience at least one change in their employment due to caregiving, such as cutting back work hours, taking a leave of absence, taking a demotion, receiving a warning about performance or attendance, arriving late, or even giving up working entirely. (2)
Reduced Savings
Unfortunately, caregiving for a loved one typically comes at a time when the caregivers also need to plan and save for their own retirement. The decision to stop working in order to care for a loved one can jeopardize their future financial security. (3) This is dangerous, since it’s estimated that a couple can expect to pay an average of $280,000 in health care costs alone throughout their retirement. (4)
Plan and Prepare
The best thing to do? Start planning early. Set up a savings account now for yourself, so that you can be better prepared for the future. Next, talk with your loved one about what they’ve already done to plan for their own long-term care. You may qualify for tax breaks, or credits, or you may be able to utilize an employer FSA (flex spending account) to help cut some costs.
Talk with your employer about your situation too. More companies are starting to offer benefits to caregivers, such as helping to pay for backup care, or advisory services to help you navigate the many aspects of caregiving.
Even if your company doesn’t offer these formally, it’s still a good idea to have a discussion with them about your situation. There may be ways for you to work more flexible hours in order to manage the demands of caregiving, or even take some paid leave to assist with your loved one’s needs. Some big-name companies, such as Facebook, Microsoft, and Deloitte all offer different amounts of paid leave programs to care for loved ones.
In the end, making the decision to become a caregiver is a personal choice. The rewards of caregiving can be great, but it can also come at a high personal sacrifice – both financially and emotionally, for you and your family members. Do your research, and be sure to have an honest and open discussion with everyone involved.
References:
1. Rainville, Chuck, Laura Skufca, and Laura Mehegan. Family Caregiving and Out-of-Pocket Costs: 2016 Report. Washington, DC: AARP Research, November 2016. https://doi.org/10.26419/res.00138.001
2. https://www.caregiver.org/caregiver-statistics-work-and-caregiving
3. The MetLife Market Survey of Long-term Care Costs, 2011: https://www.aarp.org/content/dam/aarp/livable-communities/old-learn/health/the-metlife-market-survey-of-nursing-home-assisted-living-adult-day-services-and-home-care-costs-2011-aarp.pdf
4. The Fidelity Retiree Health Care Cost Estimate, 2018. https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
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