Five years ago, Karen got her PhD to teach at the college level. Upon graduating, she began her dream job, but she only was able to teach for about a year, when her mother’s Alzheimer’s began getting worse. Karen quit her job and put her dream on hold, and has been caring for her mother full-time ever since. For Karen, caring for her mother is a labor of love. Although she has to pay back student loans and put her teaching career on the back burner, her mother did so much for her throughout her life, that she really wanted to give back. Another reason Karen helps out is because she feels that it will be cheaper in the long run, considering the cost of assisted living and nursing home care. Unfortunately, the true cost to Karen may turn out to be much more than anticipated.
Family caregivers lovingly offer their help free of charge, contributing their time, energy, and often their own well-being, and what they do and the sacrifices that they make truly make them heroes. Currently, nearly 10 million people over the age of 50 are caring for their aging parents, according to a study conducted by the MetLife Mature Market Institute, in conjunction with the National Alliance for Caregiving and the New York Medical College. The number of caregivers has more than tripled over the past 15 years.
We know that what caregivers do is of incalculable emotional value and of enormous social worth. At the same time, the unpaid care they provide is estimated to be worth $3 trillion, according to MetLife.
Similar to Karen, many families assume that since assisted living communities and nursing homes are so expensive, it must be cheaper to do it yourself. But this is often a miscalculation. There are several hidden costs to family caregiving that should be taken into consideration. Being aware of these costs can also help non-caregivers appreciate the sacrifice caregivers make, and the profound importance of their role.
Here are the some of the hidden costs of caregiving:
1. Lost Wages
The MetLife study mentioned above said that for the typical woman, the total individual amount of lost wages due to leaving the labor force early because of unpaid family caregiving responsibilities equals $142,693. The estimated impact of unpaid family caregiving on lost Social Security benefits is $131,351. A very conservative estimated impact on pensions is approximately $50,000. Thus, in total, the cost impact of unpaid family caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044.
For unpaid family caregivers who are men, the total impact maybe greater or lesser depending upon the man’s career prior to becoming a family caregiver.
2. Not Planning for Your Own Retirement
Family caregivers are themselves aging, yet are providing care at a time when they also need to plan and save for their own retirement. The people who drop out of the workforce “can jeopardize their future financial security,” the MetLife study concluded. In addition, in a study by the National Alliance for Caregiving and Evercare found that a stunning 47% of working caregivers reported having used up all or most of their savings for retirement. In addition, leaving the workforce can also reduce your Social Security benefit, a key element in almost everyone’s retirement plan.
3. Decreased Employability
Caregivers who leave the workforce for months or years often find that it’s difficult to get another job when their time as a caregiver ends, due to lower wages after returning to the workforce with rusty skills and a big chunk of time on their resumes being unemployed.
4. Underestimating the Amount of Time You Will Be Providing Care
Some people think that the “job” of watching over loved ones will not last all that long. But sometimes it lasts a lot longer than you might think. Some people with Alzheimer’s can live 20+ years after a diagnosis. We might imagine ourselves providing care a few hours per week for a couple of months, but end up providing full-time care for many years. Leaving the workforce for two months may be tolerable, but leaving the workforce for years can be financially decimating.
5. Increased Health Care Costs
Caregiving is physically and mentally taxing. Gallup researchers found that caregivers have both worse physical and emotional health than non-caregivers. What’s more, a study by the Center on Aging found that more than 1 in 10 caregivers say that the role has caused their own health to decline. This translates into increased healthcare costs for family caregivers, particularly those who have lost their own health insurance because they left their job to become caregivers.
Addressing the Problem
According to AARP, family caregivers have reported dipping into savings, cutting back on personal spending, saving less for retirement, or taking out loans to make ends meet.
While a tax credit would certainly be nice, much more help is needed ― including caregiver relief, medical training for the tasks family members now must do, and Social Security credits to make up for the loss of benefits resulting from when caregivers must drop out of the workplace.
AARP strongly supports H.R.2505 – Credit for Caring Act of 2017, which would provide financial relief in the form of tax credit to caregivers. According to AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond, “As a nation, we need to do more to support America’s greatest support system. Passing the bipartisan Credit for Caring Act, which provides a federal tax credit of up to $3,000, would give some sorely needed financial relief to eligible family caregivers. Whether helping to pay for services or make home modifications, the costs can be enormous and may put their own economic and retirement security at risk.”
Currently, the Credit for Caring Act is still listed as “in Progress,” and seems to be on hold. No status updates have been made since May of this year.
Financial Planning for Caregivers
Caregivers are often so focused on managing their parent’s health and financial needs that they don’t even think about their own future needs. Although your focus is on providing care for your loved one, it’s important to think about and prepare for your own future financial and caregiving needs. If you haven’t done so already, now is the time to start planning for own your retirement.
Whether you are a senior or a caregiver, if you should ever want expert guidance with your financial planning process, remember that qualified assistance is available right here at the Farr Law Firm. Our team looks forward to helping you – no matter where you’re at in your financial journey! Call us to make an appointment.
Medicaid Planning for Seniors
How has caregiving impacted your own family? Were their costs that you did not anticipate? Are you now considering nursing home care? If you or your loved one is over 65 or suffering from any sort of serious health condition, the best time to do Medicaid Asset Protection planning is now. Whether you or your loved one is years away from needing nursing home care, is already in a nursing facility, or is somewhere in between, the time to plan is now, not when you are about to run out of money. Please don’t hesitate to call us at any time to make an appointment for an initial consultation:
Fairfax Elder Law Attorney: 703-691-1888
Fredericksburg Elder Law Attorney: 540-479-1435
Rockville Elder Law Attorney: 301-519-8041
DC Elder Law Attorney: 202-587-2797
About Evan H Farr, CELA, CAP
