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The Real Cost of Caregiving

Personal Finance

Retirement Planning

Health & Wellness

October 25, 2022

Financial and emotional stress can take a toll, so start planning now.

Caregiving is not only financially expensive but emotionally expensive, too. According to last year’s statistics from AARP, about 48 million people support an adult family member or friend with unpaid care.

On average, family caregivers may be spending a quarter or more of their annual income on caregiving activities. The hours add up and can be challenging, especially while balancing jobs, family and household needs.

Most people assume that Medicare will pay for whatever a loved one needs, however there is still quite a bit of out-of-pocket money needed after Medicare payments. Others may hope to rely on Medicaid, which pays for long-term expenses, but assets have to be spent way down to qualify for these payments. The emotional energy that care requires can be as burdensome as the financial aspect. It is important to control what you can by preparing so you can be financially fit for retirement.

So, what does care cost and how can you anticipate how much aging parents or family members will need? This depends on whether the care needed is 24-hour or just task-oriented help. Adult daycare can be more affordable than having someone come to your house. It has social activities, medication management and meals, costing around $80 per day on average.

Assisted living communities with private spaces for residents can cost from $3,000 to $10,000 per month. These rates can even increase for those needing more hands-on care. Nursing homes can range from $4,000 to $12,000 per month or more.

These figures do not consider the emotional expense of caregiving. Caregivers are at high risk of stress-related illnesses and depression. They may overlook doctor appointments in favor of their family members in need. Time for self-care comes in second or third to other responsibilities. It could be so challenging to juggle work and care that it changes the course of a career path or results in a lower-paying job.

There are resources such as the Family and Medical Leave Act and Affordable Care Act. Employers may offer some type of benefits as well. However, planning for care and help well in advance of the need is highly important.

When to Discuss Long Term Care

Whether you’re early in your working years and your parents are healthy and active, or you’re starting to face care challenge, estimate the financial needs. If you haven’t had conversations with your parents about their financial situation, now is the time. Understand what kind of health insurance and coverage your they have.

Bring up the topic with siblings and start putting a small amount of cash away each month into an account. Look into long-term care insurance, not only for your parents, but for yourself. The younger and healthier you are when you sign up, the lower your cost will be, and the less burden to other family members.

The cost for care, staff, equipment, medicines and more adds up so quickly and money goes out the door so fast in care situations, that it can change the course of your retirement.

If you have questions about how the expense of care will affect your retirement plan or if you would like your current financial plan reviewed, schedule an appointment on Bayntree’s online calendar by selecting the date and time that is most convenient for you! You can also always reach us by emailing info@bayntree.com.

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Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.

Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.

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