The High Price of Family Caregiving

If you follow our social media accounts, you may have seen our post last week about a recent AARP article on the financial burdens that can accompany family caregiving.

The article shared the story of a woman named Amy whose parents were both in their 80s and in failing health when they moved into the independent living section of a continuing care retirement community (CCRC, also called a life plan community). Her mother had had a stroke and her father was developing Alzheimer’s disease.

While their $4,000 per month CCRC contract (likely a Type C or fee for service contract) provided for their apartment and meals, it did not cover the additional costs of the care services they increasingly required. Long-term care insurance (LTCi) helped, but it did not pay for all of the expenses, and Amy found herself having to make up the cost difference out of her own pocket.

Increasing caregiving expenses

Within three years, Amy’s parents both needed around-the-clock care. In hopes of saving money, Amy opted to move them out of the CCRC and into her home so she could care for them herself and with the help of paid in-home caregivers. Again, even with pension income, Social Security, LTC insurance, and VA benefits, the caregiving expenses mounted.

In her father’s final years, for example, his medical expenses alone topped $10,000 per month, including over $90,000 per year that Amy was paying to in-home caregivers. This was in addition to the 60 to 80 hours of unpaid care per week Amy was providing.

“I paid for almost everything else,” Amy explained, “the house, food, clothing, incontinence supplies, his service dog’s costly medical care, and other things that enhanced Dad’s life and made it easier to care for him.”

To cover these overwhelming costs, including remodeling a bathroom to make it handicap accessible, Amy took out a home equity line of credit and ran up immense credit card debt. But this was not enough, and soon after her parents had passed away, Amy made the difficult decision to file for bankruptcy.

Family caregivers literally pay the price

To the estimated 53 million family caregivers in the U.S, parts of Amy’s story may sound all too familiar. She made the heartfelt decision to care for her parents in her own home not only for emotional reasons but because it seemed like the more cost-effective caregiving solution at the time.

But an AARP study has revealed that the average family caregiver spends nearly $7,000 of their own money each year to meet their loved one’s needs. As Amy’s story reveals, those expenses also can be substantially higher in some cases. Amy had to cut her work hours, thus reducing her income, depleted her savings, and ran up overwhelming credit card debt, ultimately leading her to file for bankruptcy, which will impact her finances and credit-worthiness for years to come.

The reality is that many family caregivers underestimate just how much they will have to sacrifice in order to care for their aging loved one. In fact, the average amount spent by caregivers out-of-pocket is nearly 20 percent of their income.

Based on 2020 research from AARP and the National Alliance for Caregiving (NAC), 22 percent of caregivers also have used up their personal short-term savings and 12 percent have depleted long-term savings (for things like retirement or education). When you consider the loss of future growth on these assets it can range in the hundreds of thousands for some.

Furthermore, nearly 20 percent have left bills unpaid or paid them late, 15 percent have had to borrow money from family or friends, and 11 percent have been unable to afford basic expenses like food.

Career and health impacts of family caregiving

Then there is the impact on the caregiver’s career and income. The AARP/NAC research found that 61 percent of family caregivers have experienced at least one work-related impact. Most (53 percent) reported having to go in late, leave early, or take time off to accommodate care. And 10 percent of caregivers have had to give up their job altogether or retire early in order to care for their loved one, leading to lost income, lost retirement savings, and lost Social Security savings.

But these unforeseen expenses and lost income/savings may be just the tip of the iceberg. In addition to work-related stress, family caregivers also take on sometimes overwhelming personal stress because of their caregiving tasks, which can lead to deterioration of their mental and physical health. The AARP/NAC research discovered that, among family caregivers:

21 percent they feel alone.
Only 41 percent report their health status as excellent or very good.
21 percent report being in fair or poor health.
23 percent find it difficult to take care of their own health.
23 percent say caregiving has made their own health worse.

Is family caregiving worth the price?

Making the decision to care for an aging loved one may be made from a place of love, responsibility, and loyalty to that family member. Indeed, many people feel their family caregiving tasks give them a sense of purpose. But even if you have willingly decided to take on the caregiver role, these loving emotions can coexist with a great deal of stress and financial strain.

Before making the decision to care for a loved one, in their home or in yours, it is vital to understand exactly what you are taking on — financially, physically, and emotionally.

People often assume that moving their loved one to a senior living community, such as a continuing care retirement community (CCRC, or life plan community), will be more costly than caring for them at home. This may or may not end up being the case, however, depending on many factors, particularly the person’s care needs both now and into the future.

As Amy’s story and the AARP/NAC research show, what may seem like the most cost-effective solution and the reality of the family caregiving journey can be two very different things. And it may be that the caregiver ends up paying a very heavy price.

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