The pandemic has revealed some uncomfortable truths about aging. Social realities have a new perspective. And financial costs are suddenly more apparent — both to those growing older and those who might become their caregivers.
The pandemic has awakened all generations to the perils of isolation for themselves as well as their parents or grandparents. But it has also raised concerns about communal senior living and how future pandemics might impact health outcomes in these settings.
The practical result is that many people have become unexpected caregivers for family or even close friends. Those good deeds — paid or unpaid — divert energy from the caregiver’s life and health and financial plans. The impact is greater than you might think, both immediately and in the years to come.
It’s a mental and financial cost most frequently born by women. A new Fidelity study on the impact of COVID-19 says: “Approximately 45% of women say they’ve taken on an even larger share of household responsibilities compared to their significant other since the onset of the pandemic (compared to 38% of men). Additionally, as the pandemic continues, nearly 4 in 10 working women (39%) are actively considering leaving the workforce or reducing their hours due to increased remote schooling, caregiving responsibilities and other unpaid labor.”
While the emotional and mental costs of caregiving are substantial, this column will focus on the financial impacts — some of which may not be apparent for years.
In our most recent podcast at FriendsTalkMoney.org, my colleagues Pam Krueger (Wealthramp.com) and Richard Eisenberg (PBS’ NextAvenue website) and I discuss the social and financial issues related to caregiving. Our podcast includes comments from one family caregiver who was forced to file for bankruptcy because of her interrupted career and the caregiving costs she assumed.
That’s not a unique case. A new study by Hero, a medication management service, found that 56% of caregivers now spend $10,000 or more annually assisting loved ones and 26% spend over $25,000. That’s enough to make a serious dent in any budget. Separately, more than half of caregivers in another survey said their new role had a damaging effect on their own personal finances.
Consider These Costs
—Social Security benefits: If you drop out of work to care for an aging parent, you are likely to lose valuable quarters of high-earning credits. That will impact your initial Social Security check as well as future inflation adjustments to be made on that base benefit.
—Retirement contributions: If you’re not working, you’re not contributing to your 401(k) plan at work or your IRA. It’s not just the dent in your current contributions but also the future growth of that money you will lose.
—Raises and promotions: Your employer may be understanding about a temporary leave, or part-time work, to keep your current job. But once you’re off the promotion track, your career and future earnings may be substantially derailed.
—Your own health insurance: If your medical insurance is tied to your job, leaving the workforce can be an especially costly mistake.
Clearly, many caregivers feel they don’t have a choice. The challenge may seem overwhelming, but you’re not alone. AARP.org is the place to start your search for caregiving resources. You’ll find everything from links to local resources to a community group where caregivers support each other. Experts provide ideas on topics ranging from long-distance caregiving to dealing with burnout.
One more bit of advice. It’s important to have all the information and powers you need to be successful as a caregiver. That could include updating an estate plan or getting a healthcare power of attorney. Bank accounts and credit cards must be accessible, in case a health situation worsens.
Caregiving won’t be easy, but at least you’ll be off to a good start.