So, who are caregivers and what do they do?  A caregiver is someone who helps another with things he or she cannot do for him/herself due to a serious medical condition or the aging process in general. Often, caregivers are family members who care for their parents or close relatives as they get older, develop health problems and can no longer take care of themselves.  Caregiving can include transportation, housekeeping, grocery shopping, bill paying, personal care, managing legal or insurance matters or providing a place to live.

Caregiving can be a rewarding experience, but it can be filled with enormous challenges, such as time commitment, competing demands, physical and mental stress, and financial implications.  The financial implications can affect both the person needing care (care receiver) and the family caregiver.

No one wants to envision spending their later years living in a nursing home or being dependent on the help of others to live at home, yet most Americans will need long-term care at some point in their lives. Planning for long-term care needs is crucial for financial security and peace of mind.

Long-term care is an umbrella term for services and supports designed to help people live independently on a daily basis, such as eating, bathing and dressing, either in a care facility or one’s home. A misconception is that health insurance, Medicare or disability insurance cover these services, but they do not.

Medicaid does cover long-term care services, but you only qualify if your income and assets do not exceed levels set by your state.  You can purchase long-term care insurance, annuities or other hybrid or combination products. The other option is to pay for it with savings, pensions or income from investments.  The National Association of Insurance Commissioners (NAIC) developed A Shopper’s Guide to Long-term Care Insurance to help consumers understand long-term care and the insurance options that can help pay for long-term care services. The document is available at                                                                                             

According to the Genworth 2018 Cost of Care Survey, the national median annual cost for long-term care ranges from $48,048 to $100,375, depending on the type of care needed. Paying for long-term care may be one of the largest financial investments a person or the person’s family will make.  Therefore, it is important for older adults to start the planning process, even if other family members are reluctant to do so. Here are some important steps:

  • Think about ultimate goals for where the person wants to live and how they will receive care, should it be needed.
  • Consider unique needs, such as risk factors for long-term care. Risk factors include age, gender, disability, health status and living situation.
  • Understand the range of long-term care services and supports, including home care, adult day care, assisted living and nursing homes.
  • Do the research regarding costs of long-term care services in the person’s community.
  • Determine what financial resources are available to cover long-term care and address any gaps in financing before it is needed.

Beyond the financial strain on the care receiver, the family caregiver’s personal finances are often impacted in direct and indirect ways.  More than three in four family caregivers are incurring out-of-pocket costs because of caregiving. According to the Family Caregiving and Out-of-Pocket Costs: 2016 Report, family caregivers spend an average of $7,000 per year on out-of-pocket costs related to caregiving. Many family caregivers are using their savings and cutting back on their own personal spending to accommodate for caregiving costs. Furthermore, employed caregivers may experience work-related strain if they need to leave their job, take unpaid leave, or cut back on hours because of family caregiving responsibilities.  

The cost of caring for a family member can be financially significant.  It requires planning, just like retirement planning, and should involve all family members who may be impacted by future care needs of a loved one.  Financial counselors can assist clients in determining these costs and help caregivers plan and budget for these expenses.

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