The Unavoidable Journey

Why you should incorporate caregiving costs into your financial plan

Ric Edelman: It's Thursday, February 22nd. Today we're talking about caregiving. Twenty-one percent of US adults, we're talking 53 million people, are caregivers. Chances are you may very well be one of them. And don't assume that caregivers are serving people who are much older than themselves. 6% of caregivers are caring for people who are under the age of 18. Another 3% are providing care to people who are between the ages of 18 and 49. It's everybody else who's 50 plus.  

And in fact, 24% of caregivers are providing care to two or more people. You're providing care to a child while you're also providing care to a parent. Caregivers represent all generations, racial and ethnic groups, income and education levels, family types, gender identities, sexual orientations. There's no way that you can argue that you are immune from being a caregiver. Fifty percent are caring for a parent or an in-law, 12% are providing care to a spouse or a partner, and 74% of caregivers are over the age of 75, and they are caring for someone over the age of 75. In other words, older person, typically a spouse caring for their partner.  

Caregivers say that 63% of the patients have long-term physical conditions, 27% have emotional or mental health issues, 32% have Alzheimer's or dementia, and most patients have more than one of these conditions. Caregivers provide, on average, 24 hours of care each week, and 14% of these caregivers are under the age of 18. Children caring for parents and grandparents. And it's a bit of a strenuous thing. Caregivers report physical, emotional and financial strain, 21% feel alone 21% of caregivers say their own health is bare or poor, and 23% say that caregiving has made their own health even worse than it was.  

A financial strain, 18% say they've experienced that a result of caregiving. They spend 25% of their income on caregiving expenses. We're talking about paying the rent for the mom or dad, paying for home modifications, medical expenses. Forty percent of caregivers are no longer saving money, or they've taken on debt, and 24% of them have used up their own savings. This is really rather scary as people find themselves with two careers, 61% of caregivers have a full-time job while they are a caregiver, so they really have two jobs at the same time. And those who have a career, half of them say they've often gone to work late or left early, or had to take time off to accommodate their care needs. Ten percent had to give up work entirely or retire early. We're talking a grand total of more than half a 1 trillion dollars in lost wages.  

Caregivers as a result of all of this are at increased risk for depression and cancer. They have a higher mortality rate than non-caregivers, which means not only are you caring for an aging mom or dad, you're going to die sooner because you're doing it. Why are so many people providing so much care for free in the face of all of these challenges? Why don't they just hire an in-home health aide instead? And what's the government doing with all of this?  

The median pay for in-home health aides is less than $30,000. Fifteen percent of home aides themselves live in poverty. Working conditions are physically and emotionally grueling. Injury rates are high. Imagine if you're five foot four, 130 pounds, and you're trying to lift a patient who's twice your size. So yeah, it's easily understandable why injury rates among caregivers are high. And on top of all that, training is probably negligible and they don't get any job advancements. Does this sound like a career you would really like to go have?  

Well, this is part of the reason why so many people provide free care to loved ones. There's no one else willing or able to do it. On the government front, President Joe Biden proposed spending $400 billion on home care. Congress cut it to $150 billion, and then it got removed entirely from legislation. There is no funding provided.  

Meanwhile, there's technology that may come to the rescue, robotics and artificial intelligence. The National Institute on Aging is funding projects that will use AI to calm people down who have dementia. At the University of Waterloo, they're working on a robotic baby seal that can react to people and its environment and help reduce anxiety and depression and improve the emotional well-being in people with dementia.  

But for now and for the foreseeable future, if you're not already a caregiver, you can count on becoming one. And when you are a caregiver, you're going to be on your own. Have you factored all of this into your financial plan? If you are a financial advisor, have you talked with your clients about their family circumstances to help determine the likelihood that one day they may have to become caregivers themselves, dealing with the economic and financial implications of all of that, not to mention the physical, emotional ones as well? 

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