According to data collected by the National Alliance for Caregiving, more than 66 million Americans provide care to a family member—nearly 40 percent of the adult population. While this group includes people caring for the sick or disabled, the majority are supporting an elderly relative.
Aside from spouses, adult children are most often the ones who take on responsibility for aging parents. A study by MetLife found that 10 million adult children over age 50 were acting as caregivers for their parents—a figure that represents roughly one quarter of Baby Boomers.
Family caregivers handle a wide range of tasks, from running errands and preparing meals to helping with dressing, bathing, and toileting. Some families can hire professional caregivers to handle these duties, but many cannot afford paid help or choose to care for their parents themselves.
Most seniors prefer to remain in their own homes as long as possible, a choice known as “aging in place.” While this is often perceived as the most affordable option, the reality is that depending on the level of care required, staying at home can become costly for adult children—financially, physically, and emotionally.
>> Related: Aging in Place: Hidden Costs of Using Family as Caregivers
The hard costs of caregiving
Becoming an unpaid caregiver brings many costs. Beyond the emotional strain and physical wear—stress, exhaustion, and bodily pain—there are significant financial consequences.
Many adult children reduce their hours or leave the workforce to care for a parent, which cuts earnings and reduces pension and Social Security accruals. MetLife’s research estimates a cumulative loss of nearly $3 trillion in earnings for adult-child caregivers in the U.S. On average, sons lose about $283,716 in combined wages, pension, and Social Security benefits, while daughters lose about $324,044.
Caregivers also incur out-of-pocket expenses for their loved one’s needs. On average, family caregivers spend almost $7,000 per year from their own funds to cover items like medical bills, utilities, and food.
Another important yet less visible cost is the caregiver’s own health. Caregiving is associated with a higher incidence of depression, anxiety, back problems, and other health issues, which can lead to additional medical expenses and reduced quality of life.
>> Related: Caregiver Assistance — Addressing Caregiver Stress
Jeopardizing your own retirement
One of the most serious and long-lasting impacts of caregiving is the effect on retirement savings, which can happen in two main ways.
First, reduced work hours and income typically mean smaller or no contributions to retirement accounts like 401(k)s, and lower income can also reduce employer matching contributions. This problem often occurs at a critical time: the average age of an adult-child caregiver is about 49.2, an age when many people plan to increase retirement contributions as other obligations decline.
Second, some caregivers tap into existing retirement savings to cover current expenses for themselves and their parents. Using nest egg funds to make ends meet may be necessary in the short term, but it undermines future financial security.
Funding aging parents’ care
If you become a caregiver, there are steps to manage costs while protecting your long-term financial and physical well-being:
- Check whether a long-term care insurance policy exists for your parent; such policies can help cover some care costs.
- Explore government programs for which your parent may qualify, including Medicaid, veterans’ benefits, or disability assistance.
- Review both your parents’ and your own budgets to find possible savings—cutting discretionary expenses can help avoid dipping into retirement funds.
- Seek support from siblings or other family members, both financially and with caregiving time; no one should shoulder full-time care alone.
- Consider hiring a home care aide if it proves more cost-effective and allows you to maintain work hours or reduce time away from employment.
Preparing for your aging parents’ future
Although we can’t predict the future, open conversations with your parents about their wishes and potential care needs can reduce stress and help you plan. Discussing long-term living arrangements and care preferences early makes decisions easier when needs change.
>> Related: Time to Have a Senior Care Talk With Your Parents?
Another option to consider is a retirement community that offers a continuum of care, such as a continuing care retirement community (CCRC). While these communities may appear expensive initially, they can provide stability and peace of mind for both seniors and their families.
Begin researching local options and available resources to make informed decisions that balance your parents’ needs with your financial and personal well-being.