An AARP study among family caregivers explored the out-of-pocket costs of caregiving and the financial strain on the family caregiver. The report from 2016 estimated the monetary costs of caring for an adult with care needs by quantifying the out-of-pocket costs family caregivers are incurring. In addition to out-of-pocket costs, the study also explored other financial and personal strains that family caregivers may experience due to caregiving.
Since 2016 more family members have found themselves thrust into the role of being a caregiver for a parent or another loved one. The problem is worsening, and it isn't all due to COVID-19.
We live in an aging world, and lifespans continue to push the envelope. We experience declines in our health, body, and minds as we get older. Unless you have prepared for the future costs and burdens of aging, the problem will fall to your family or your finances - often both.
Key findings include the following:
More than three-quarters (78%) of caregivers are incurring out-of-pocket costs due to caregiving. This report estimates that family caregivers, on average, are spending roughly $7,000 per year ($6,954) on out-of-pocket costs related to caregiving in 2016.
- A financial strain measure (annual caregiver expense divided by their annual income) shows caregivers are spending, on average, nearly 20% of their income on caregiving activities.
- Household expenses garner the largest share of out-of-pocket family caregivers spending with 41% of total spending. This includes rent/mortgage payments, home modifications, and other household expenses. Medical expenses account for the second-largest share of caregivers' spending (25%), including assisted living or skilled nursing facilities, insurance costs, and other medical expenses.
- Long-distance caregivers (defined as family caregivers living more than one hour from the care recipient) incurred the highest out-of-pocket costs ($11,923); however, caregivers living with their care recipient also incurred increased costs ($8,616).
- Caring for an adult over the age of 50 results in slightly higher out-of-pocket costs than caring for an adult younger than 50 years old ($7,064 vs. $5,721). Caring for an adult with dementia also resulted in higher out-of-pocket costs ($10,697 vs. $5,758 for adults who do not have dementia)
- More than half of employed caregivers (56%) experience at least one work-related strain. This may take the form of working different hours, fewer/more hours, and taking time off (whether paid or unpaid).
- Many family caregivers also need to cut back on other spending which can undermine the family caregiver's future financial security. One in six have reduced contributions to their retirement savings (16%), and roughly half have cut back on leisure spending (e.g., 45% cut back on eating out or vacations due to caregiving expenses).
The AARP study shows Latino/Hispanic families are burdened even more. The graphic shows Hispanic families with higher average costs to family caregivers.
Long-Term Care Affects Families and Finances
The financial costs and burdens of aging impact all American families - especially the daughters and daughters-in-law which typically become the default caregiver in the absence of Long-Term Care Insurance.
Affordable LTC Insurance will ease the burdens placed on family caregivers and provide resources for quality care either at home or in a facility.
LTC policies provide benefits for all types of care at home, adult day care, assisted living, memory care, and nursing homes. Health insurance and Medicare will pay for only a small part of these costs.
Many states have partnership plans which provide additional asset protection. The time to act is before retirement, when premiums are very affordable. Many experts suggest that too many people forget about long-term health care's burden on their loved ones. LTC Insurance reduces this burden so the family can be family. Plus, the insurance will protect assets like your 401k from the high cost of care.
Start Shopping for LTC Insurance Well Before You Retire
The best time to put a Long-Term Care insurance policy in place is well before you retire - most obtain coverage in their 50s. Premiums are based on age at application, health, and the benefit levels you choose.
Consider the current and future cost of long-term health care services where you live. Review the LTC NEWS Cost of Care Calculator and find where you live - Cost of Care Calculator - Choose Your State | LTC News.
Read the AARP report by clicking here.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
People require long-term health care due to changes in their health, body, and mind. Whether you become ill, have mobility problems, or have other aging issues, being prepared will reduce the stress and anxiety placed on family members and give you peace of mind to enjoy your future retirement.
Family caregivers face physical and emotional challenges they must deal with as they juggle their work and family responsibilities along with being a caregiver.
Professional care services are expensive and adversely impact income, assets, lifestyle, and legacy. The costs are expected to climb even higher in the decades ahead, placing tremendous financial pressure on American families.
Start researching your coverage options before retirement. Most people purchase coverage in their 50s—the earlier, the better to save money and take advantage of good health discounts.
LTC NEWS offers several tools and resources to help you in your research for a planning solution or help your family find the appropriate care for a loved one at the time of crisis.
To help you plan for the future costs and burdens of changing health and aging, LTC NEWS has put in place several resources, including:
- The LTC NEWS Cost of Care Calculator will show you the current and future cost of long-term health care services where you live. Plus, each state has vital state specific information you should know - Cost of Care Calculator - Choose Your State | LTC News
- The Ultimate Long-Term Care Guide is an outstanding read to help you get a good overview of the topic area.
- Compare the major insurance companies that offer Long-Term Care Insurance products here - Top Insurers for Long-Term Care Insurance | LTC News.
- A detailed tax guide that includes available tax incentives can be found by reviewing the Long-Term Care Tax Benefits Guide.
Find all the resources on LTC NEWS - Resources for Long-Term Care Planning | LTC News.
Benefits of Reverse Mortgages
Today's reverse mortgages for those aged 62 and older could be an ideal resource to fund a Long-Term Care Insurance policy OR even provide money to pay for care if you, or a loved one, already needs help and assistance.
Some people have much of their savings invested in their homes. With today's reverse mortgages, you can find ways to fund care solutions, care itself, even help with cash flow during your retirement.
Learn more by asking questions to an expert. LTC NEWS columnist and host of the TV Show "62 Who Knew" will answer your questions regarding caregiving, aging, health, retirement planning, long-term care, and reverse mortgages.
Just "Ask Mike." - Reverse Mortgages | LTC News.
Seek Professional Guidance
Experts suggest using a qualified Long-Term Care Insurance specialist to help you navigate the many options available to you and your family.
Insurance rates are regulated, so no insurance agent, agency, or financial advisor can give you special deals. However, insurance companies' premiums vary over 100% for the same coverage.
A specialist who works with the top companies can match your age, health, family history, and other factors and find you the best coverage at the best value. A specialist will save you money, and you will have peace of mind knowing they are making the appropriate recommendations - Work With a Specialist | LTC News.
Find Quality Caregivers and Long-Term Care Facilities
If your parent or loved one needs care now - or soon - you will need to find the appropriate care in the right setting depending on their needs.
Take a moment and read -
Get Expert Help Filing an LTC Insurance Claim
LTC NEWS provides free assistance with no obligation to help you or a loved one complete the claims process with your Long-Term Care Insurance policy.
You can also get support in finding quality caregivers and get recommendations for a proper care plan, whether a person has a policy or not. - Filing a Long-Term Care Insurance Claim | LTC News.
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You can write a story or ongoing column for LTC NEWS. You can write about many topics, including aging, caregiving, health, lifestyle, retirement planning, and long-term care, to name a few.
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