If you follow our social channels, you may have seen our post last week linking to a recent AARP article about the financial burdens that often accompany family caregiving.
The article told the story of Amy, whose parents were in their 80s and in poor health when they moved into the independent living portion of a continuing care retirement community (CCRC). Her mother had suffered a stroke and her father was developing Alzheimer’s disease.
Their CCRC contract—likely a Type C or fee-for-service agreement—covered the apartment and meals for about $4,000 per month, but it did not include the growing cost of hands-on care. Long-term care insurance helped, but it did not cover everything, and Amy began paying the difference out of her own pocket.
Rising caregiving expenses
Within three years both parents required essentially round-the-clock care. Hoping to reduce costs and provide more personal attention, Amy moved them into her home and arranged for paid in-home caregivers while she also provided care. Even with pension income, Social Security, long-term care insurance, and VA benefits, the bills continued to rise.
Late in her father’s life, medical and caregiving expenses reached more than $10,000 per month. Amy reported paying over $90,000 a year for in-home care in addition to providing 60 to 80 hours of unpaid care each week.
“I paid for almost everything else,” Amy said—housing, food, clothing, incontinence supplies, expensive medical care for his service dog, and other items that improved his quality of life and made caregiving possible.
To cover the costs, including remodeling a bathroom to make it accessible, Amy used a home equity line of credit and accumulated substantial credit card debt. The financial pressure continued after her parents died, and she ultimately filed for bankruptcy.
>> Related: Aging in Place: Hidden Costs of Using Family as Caregivers
Family caregivers often pay the price
To the roughly 53 million family caregivers in the U.S., parts of Amy’s experience will sound familiar. Many caregivers choose to provide care at home both for emotional reasons and because it seems more affordable.
But research from AARP shows the average family caregiver spends close to $7,000 of personal money each year for a loved one’s needs. For some, as in Amy’s case, out-of-pocket costs are far higher. She reduced her work hours and income, depleted savings, and took on debt, ultimately damaging her long-term financial security and credit.
Many caregivers underestimate what they will sacrifice. On average, caregivers spend nearly 20 percent of their income on caregiving-related expenses.
According to 2020 research from AARP and the National Alliance for Caregiving, 22 percent of caregivers used up short-term savings and 12 percent exhausted long-term savings like retirement or education funds. The lost future growth on those assets can amount to tens or even hundreds of thousands of dollars for some people.
In addition, nearly 20 percent of caregivers reported leaving bills unpaid or paying them late, 15 percent borrowed money from family or friends, and 11 percent could not afford basic necessities such as food.
>> Related: The State of Unpaid Family Caregiving in the U.S.
Career and health consequences
Caregiving also affects employment and income. AARP/NAC found that 61 percent of family caregivers experienced at least one work-related impact. More than half—53 percent—had to arrive late, leave early, or take time off. Ten percent left their job or retired early to provide care, which results in lost wages, smaller retirement savings, and reduced Social Security benefits.
Beyond financial effects, caregiving takes a toll on mental and physical health. The research found that many caregivers face substantial personal strain:
- About 21 percent feel isolated or alone.
- Only 41 percent rate their health as excellent or very good.
- Another 21 percent report fair or poor health.
- Twenty-three percent say it is difficult to care for their own health.
- Twenty-three percent report caregiving has made their health worse.
>> Related: Caregiver Assistance—Addressing Caregiver Stress
Is family caregiving worth the cost?
Choosing to care for an aging loved one often comes from love, responsibility, and loyalty. Many caregivers find purpose in their role, but those positive feelings can coexist with intense stress and financial strain.
Before deciding to provide care at home or invite a loved one into your home, it’s important to fully understand what the role will require—financially, physically, and emotionally.
People frequently assume that moving someone into a senior living community, such as a CCRC or life plan community, will be more expensive than home care. That can be true or false depending on the person’s current needs and how those needs may change over time.
Amy’s experience and the AARP/NAC research show that what appears to be the most cost-effective option at first can become far more costly over time. Family caregivers can—and often do—pay a very high price for providing care.