Family caregivers are America’s other form of social security, providing the bulk of long-term care today. According to a new study by Merrill Lynch Wealth Management, conducted in partnership with Age Wave, 40 million family caregivers in the U.S. spend $190 billion per year on their adult care recipients. Despite the financial, emotional, and functional challenges in this life stage, preserving the dignity of their loved one is their primary goal.
We sat down with Rachel Barzilay, CAP®, CFP®, CRPC®, Managing Director, Wealth Management Advisor and Senior Portfolio Manager with Merrill Lynch Wealth Management in Boca Raton, to hear more about the study and how families can plan ahead to manage the rising cost of caregiving.
What is caregiving and how are loved ones involved financially?
Caregiving entails providing a variety of services and support to an adult family member or friend in need. This form of caregiving can occur in a variety of settings, including in a care recipient’s home or even at an assisted living facility where a caregiver visits his/her care recipient. According to the recent study, 92 percent of caregivers are also financial caregivers who are contributing to and/or coordinating finances for their loved one. Financial caregiving is often far more complex than simply contributing to the recipient’s care. It can include the following:
- Paying bills from their recipient’s account
- Monitoring bank accounts
- Handling insurance claims
- Filing taxes
- Managing invested assets
As the cost of health care and navigating health insurance continues to rise, 66 percent of caregivers feel they could benefit from financial advice.
What sacrifices and trade-offs do caregivers make?
From time out of the workforce to the risk of putting their own financial future in jeopardy, caregivers in South Florida were more likely to be financial contributors (70% vs 68% nationally) and to experience extreme stress due to financial contributions (33% vs. 29% nationally). This comes as caregivers are lacking in resources and not holding critical discussions about the financial ramifications of their contributions. Two in five caregivers under the age of 64 have made sacrifices at work due to caregiving responsibilities, including reducing their hours and leaving the workforce.
What are some of the misconceptions of caregiving?
Contrary to all we hear about the stress and sacrifices of caregiving, for many caregivers, the role is also often associated with a range of positive experiences and rewards. Caregivers describe a complex and demanding, yet often nourishing, journey that is defined by honor, gratitude, fulfillment, purpose, and strong family bonds. Even with the added burdens, caregiving can bring tremendous purpose and meaning to one’s life.
According to the study, 77 percent say they would gladly take on being a caregiver for a loved one again and that it strengthened the bond between themselves and the care recipient, bringing their family closer together. In addition, 86 percent say watching their loved one’s health struggle was a motivator that caused them to place more value on taking care of their own health.
What does the future of caregiving look like?
The aging of the baby boomers will result in unprecedented numbers of people in America needing care. People who are 80 and older will most likely need long-term care, and this is the fastest growing demographic in the decades ahead.
With respect to financial planning, health should be a big consideration of any discussion, because people are living longer and healthier lives. We now need to plan for significantly longer retirements than generations past – including how we will manage aging healthcare needs. At Merrill Lynch, this is one of the seven life priorities that we discuss with our clients regularly. Be prepared to ask your advisor how you can best prepare for this stage – for yourself and for your loved ones.