The Financial Implications of Being a Caregiver

When it comes to caring for an aging family member, the decision shouldn’t be entirely based on health care, the time commitment and emotional toll required, it should also be about the financial demands.

The burdens of caregiving can have a tremendous impact on one's physical and mental health in addition to being financially stressful.  

Caring.com’s yearly Usage and Attitudes Survey, released earlier this week, reveals how family caregivers of older adults living in the U.S. hold up financially as they care for elder loved ones. And according to the website’s CEO Andy Cohen, most people aren’t financially prepared for the role of caregiving.

I spoke with Cohen about what boomers can expect when taking on the care of a loved one.  Here is what he had to say:

Boomer:  How much do I need to know and understand about caregiving?  Will I be able to provide the same level of care that a professional caregiver can give?

Cohen:  Being a family caregiver is not an easy role. There are many tasks, questions, concerns, decisions, balancing acts and emotions involved in the process. When I went through the experience in caring for my mother, I constantly sought out information to make the best decisions for her care, and I found it difficult to find what I needed. I created Caring.com to help make that journey easier for others -- so that family caregivers feel less alone, get expert and peer guidance, and find ways to save time and money.

Every elder care situation is unique – there is not one solution that fits all. Some older adults may require, be more receptive or do better with professional care – and all family caregivers need breaks. There can also be unexpected benefits to utilizing assisted living communities and in-home care agencies, such as resolving older adult driving issues, overcoming elder loneliness, and helping to ensure that a loved one is eating well and engaged in activities regularly.

Sixty-five percent of family caregivers on Caring.com are caring for a loved one with Alzheimer's or another dementia. In many of these cases, when a loved one has more advanced stages of dementia, the care challenges can become too great for the family caregiver(s), and a memory care community or skilled nursing facility may be better equipped to keep the loved one safe, well cared for, and most comfortable.

We also found through our annual survey that one-third of family caregivers are spending more than 30 hours per week on caregiving tasks -- shopping for personal care items (81%), attending medical appointments (79%), transporting aging loved ones (75%), preparing meals (63%), administering medications (63%), and other caregiving activities. Utilizing professional care resources can ease that burden, especially for the 40% of family caregivers who said they are working full-time, part-time, or are self-employed.

Boomer:  Are there any legal issues involved with caregiving for a family member?

Cohen: Yes, definitely. There are legal documents that can assist older adults in a medical or financial emergency and ease stress and optimize outcomes in end of life as well. These include medical directives, power of attorney for finances or health decisions, a living trust, legal will, and (if needed) adult guardianship or conservatorship. It can also be very important to establish a personal care agreement with family members to proactively prevent or effectively manage any family conflicts arising from misunderstandings or expectations about care. Some families utilize the services of elder law attorneys to sort through the tricky financial and legal matters of eldercare and end of life, including estate planning.

Boomer: When is the right time for caregivers to speak to their loved ones about how to pay for their care?

Cohen: It’s a good idea to explore/understand options and start the conversation before there’s a health crisis or immediate need for care, and to plan and save for anticipated care needs ahead. The idea is to problem-solve together without dictating or arguing, approaching the discussion in a way that’s more informed and less stressful for all involved.

Before starting the conversation, the adult child can do research and test the waters to see how receptive their parent is to the discussion, gather information about how well the parent is managing, and learn what (if any) plans the parent has already established for their care and how to cover costs. If the parent is resistant, the adult child should consider a neutral third-party, such as a geriatric care manager, a financial planner or the family doctor to broach the conversation first. These are sensitive topics and can require inquiry and follow-up over weeks or months. Unfortunately, many family caregivers are not having these difficult but important conversations with their loved ones, and that may be contributing to nearly half of family caregivers spending over $5,000 annually on eldercare expenses.

Boomer: Not preparing for caregiving costs can be detrimental to current finances and can also derail retirement plans.  How can family caregivers, especially baby boomers best prepare for the costs associated with caregiving?

Cohen: First, the adult child needs to know what kind of shape their parents’ finances are in-- and that requires asking lots of financial questions, having some difficult conversations (ideally before there are any cognitive issues for the parent), and if necessary, proactively seeking out information in the household file cabinets, and mail/document piles.

Next, the family caregiver can help the parents find government programs and benefits they may qualify for and didn’t yet explore, including veteran’s benefits. Caregivers can also help identify other creative ways to pay for care, such as forgotten pensions, life insurance, annuities, reverse mortgages, or long-term care insurance plans they can use to cover the costs of care; and create budgets and plans to spend down their parents assets before tapping into their own finances.

In addition to saving the adult child’s retirement funds, this approach of spending down the parents’ assets can help their parents become eligible for government programs like Medicaid. Family caregivers may need to consider, discuss, and establish a durable Power of Attorney for finances to ease stress for their parents, and help manage their parents’ finances well, including avoiding unnecessary losses from elder-focused scams or financial errors due to dementia. Caring.com has a range of expert tips for budgeting and financial management, including a Turning 65 Checklist, ways to save money on common home-care expenses, how to find affordable meal and transportation services, and even ways to save on end-of-life or funeral expenses.

Boomer: How will caregiving affect my physical and mental health? Are their support groups or resources I can reach out to?

Cohen: Caring for an aging parent, spouse or other loved one usually begins with the best of intentions. Over time, however, a good thing can disintegrate into a tough, tense situation, and there are many risks to the family caregiver’s physical and mental health. It’s not uncommon for the adult child or spouse to ignore their own disease symptoms, miss health appointments, and develop serious health problems, including experiencing ongoing sleep deprivation, chronic pain, prolonged and intense stress, and severe depression. In fact, we’ve found through our annual surveys that family caregivers experience depression at rates two times or greater than the national average. Our most recent survey this summer also revealed that family caregivers are experiencing high blood pressure/hypertension (37%), arthritis (34%), high cholesterol (26%), obesity (18%), and diabetes (13%).

When caregivers don’t take care of themselves and don’t get a break, they increase their risk for health problems themselves. To help family caregivers get respite and support – and maintain wellness, Caring.com has burnout assessments and prevention guidance, a senior care directory of local service providers, online support groups and several other informative resources.