Family caregivers are no stranger to financial issues. When you assume the role of your family member’s primary care provider, it includes tackling the costs of their care as well as their expenses and necessities. On top of this, you also have your own finances to contend with. This is why a significant amount of financial planning is necessary to become a successful family caregiver.
To help you get started, ALTCP.org shares an in-depth look at the issues that caregivers face as well as a comprehensive guide to financial planning.
Download our free e-book Long Term Care Insurance and Retirement: 8 Essential Questions to learn more about how you can protect your future effectively.
Who Are the Family Caregivers Now?
According to the Caregiving in the US 2015 Report, the typical caregiver is a 49-year old woman caring for a relative (82%), with 49% caring for a parent or a parent-in-law in their late 60s. Although only one in ten provides care for a spouse, it is the higher-hour caregivers that are four times more likely to be caring for a spouse or partner.
An interesting change that we noted, however, is that the face of the caregiver seems to be changing as the newer generations step up to the plate.
Millennial caregivers or the individuals between the ages 18 and 34 are growing in numbers. Currently, this new generation of caregivers makes up nearly a quarter of the 43.5 million, as stated in The Millennial Caregiver by the National Alliance for Caregiving and AARP Public Policy Institute. Unlike their predecessors, these millennial caregivers are equally likely to be male or female. Typically, he or she is 27 years old and caring for a mother or a grandmother with a physical condition. Moreover, this age group works for 34.9 hours a week at their job, but they have not finished a degree. The average income also falls at $42,200, which is below the national median.
Also, millennial caregivers are also more likely to report their loved one’s emotional or mental health condition, which then leads to immediate care.
What Are the Services They Provide?
The demands of caregiving vary in each situation. The scope of the care you are providing is most likely different from that of someone else’s. However, the basic services include:
- Assist in accomplishing at least two of the Activities of Daily Living (bathing, dressing, grooming, eating, toileting, and moving)
- Perform house chores
- Provide or prepare meals
- Assist in addressing medical needs and reminders
- Provide companionship
Essentially, family caregivers cater to the emotional, mental, physical, social, and often financial needs of their care recipients. And the length of time that they provide the care varies, as well. According to The State of Caregiving: 2015 Report, 57% of caregivers have been providing care for family members for more than three years. Among the top health concerns that caregivers deal with are Alzheimer’s disease and other dementias. In 2016, these conditions cost the nation a total of $236 billion.
The Financial Impact of Caregiving
Although caregiving to a family member has plenty of positive effects, it can also cause significant blows in the different aspects of your life—that is if you are not careful. We all know that the cost of care is high, and it can surely cause a considerable change in your finances.
Let’s take a look at how it can affect your financial standing, and how you can take control of the situation.
Out of Pocket Costs
According to a survey conducted by AARP among caregivers age 18 and above, they were able to identify the financial strains that come with caregiving. Family caregivers spend on average approximately $7,000 a year on caregiving-related expenses. The amount then leaps to a whopping $11,923 for long distance caregivers who have to factor in travel expenses and even outside help.
These individuals spend approximately 20% of their income on caregiving-related costs. These expenses may include home modifications, insurance costs, and other medical expenses.
Effects on Employment
Some situations require not just the caregiver’s full attention but so much of his or her time as well. This becomes a predicament for family caregivers who are also full-time workers.
56% of family caregivers have shared that they have had to make adjustments at work because of caregiving. These include cutting back or adding more hours, working on different shifts, and even taking paid or unpaid time off. Other individuals have had to leave their jobs to become full-time family caregivers.
It is also necessary to highlight that family caregivers who keep their jobs are three times more likely to experience work productivity loss.
Addressing Your Loved One’s Financial Concerns
Part of the job of being a family caregiver is dealing with your family member’s financial concerns. It may feel awkward—like you are somehow overstepping—but it is necessary in most scenarios. After all, care sometimes means keeping them from financial abuse.
Taking Over Their Finances
If you are dealing with your parents’ money, then you and the members of the family should have a sit-down discussion about the current situation. Find solutions as a unit and delegate tasks. This way, every person will be involved.
More importantly, you have to make sure that all the necessary documents are in place. To be able to manage their finances effectively you must have legal authority, which in most cases, is granted through the different types of power of attorney.
Maximize Insurance Policy Benefits
Long term care insurance covers a vast range of services. It can cover the care in a nursing home, an adult day care center, and an assisted living facility. On top of that, these policies could include home care which would allow your loved ones to stay at home longer. For you, this could mean an extra pair of hands in handling all the needs of your loved one.
If your loved one is covered through long term care insurance, make sure to read all the specifics carefully. Some policies even provide compensation for family caregivers.
Medicare and Social Security Benefits
Retirees may be entitled to Social Security retirement benefits, so see if your care recipients are qualified for it. If not, then you may also look into Social Security disability benefits. Provided by a federal insurance program, these benefits allot income to individuals who cannot work because of a severe disability.
Medicare may also be a massive help in dealing with your loved one’s finances. In general, individuals can qualify for a plan once they turn 65 even if they are diagnosed. Just remember to apply during the time allotted (open enrollment period). Also, take into consideration the different supplement plans that can help with the costs. Be sure to consult with a specialist because these plans are quite complicated.
Tackling Your Own Finances
Family caregivers can take small steps to help keep their finances in check. To illustrate, we have found this video by AARP discussing the various financial tips in which caregivers can add a few dollars to their budget:
Let’s discuss further points:
Long Term Care Tax Deductions for the Family Caregiver
Did you know that family caregivers are entitled to long term care deductions? To do so, you must be able to claim that your care recipients are your dependents and that you are shouldering at least half of their expenses. Refer to www.irs.gov for more information regarding this matter.
Do Not Touch Your Retirement Funds
One of the biggest temptations, when you are going through a rough patch, is to dip into your retirement funds. However, we urge you not to do so yet. These funds are present for your future, and you must find ways to keep it that way.
Being a family caregiver, you may have been given a glimpse of the difficulties that life can throw at retirees. You have a unique perspective on how difficult it can be for individuals in their retirement years, and this is why you need to keep your retirement funds intact.
Maintain a Source of Income
As mentioned above, many have had to let go of their jobs to meet the demands of caregiving.
Be that as it may, this does not mean that you should not explore other opportunities. A regular, 9-5 may not be an option at the moment, but you can look into various opportunities on the Internet. Many online jobs allow workers to work at home, which makes it a perfect setup for family caregivers. This allows them to be within reach to their care recipients, while simultaneously holding down a job that provides income.
Prepare For Long Term Care Now
Family caregivers know firsthand how the long term care needs can easily overtake one’s life. As illustrated above, the costs involved ought not to be taken lightly.
This is why family caregivers are urged to secure long term care coverage early on. Providing care to loved ones can often lead a caregiver to neglect their own future needs. Often, their own retirement and long term care plans take the backburner in order to fulfill their role. Many assume that they will still have time to save for their own needs.
However, you must remember not to be lulled into a false sense of security. The cost of care in the country is expensive, and it appears to be increasing at a fast rate. Without a proper policy in place, your family members might have to cover most if not all of these costs.
To guide you in finding and selecting a suitable policy, you may request long term care insurance quotes from ALTCP. If you have further questions, please do not hesitate to let us know in the comments section.