Family Caregivers Face Financial Stress, Physical Pressure, and Emotional Challenges.

An AARP study among family caregivers explored the out-of-pocket costs of caregiving and the financial strain on the family caregiver. The report from 2016 estimated the monetary costs of caring for an adult with care needs by quantifying the out-of-pocket costs family caregivers are incurring. In addition to out-of-pocket costs, the study also explored other financial and personal strains that family caregivers may experience due to caregiving.

Since 2016 more family members have found themselves thrust into the role of being a caregiver for a parent or another loved one. The problem is worsening, and it isn't all due to COVID-19.

We live in an aging world, and lifespans continue to push the envelope. We experience declines in our health, body, and minds as we get older. Unless you have prepared for the future costs and burdens of aging, the problem will fall to your family or your finances - often both.

Key findings include the following:

More than three-quarters (78%) of caregivers are incurring out-of-pocket costs due to caregiving. This report estimates that family caregivers, on average, are spending roughly $7,000 per year ($6,954) on out-of-pocket costs related to caregiving in 2016.

• A financial strain measure (annual caregiver expense divided by their annual income) shows caregivers are spending, on average, nearly 20% of their income on caregiving activities.
• Household expenses garner the largest share of out-of-pocket family caregivers spending with 41% of total spending. This includes rent/mortgage payments, home modifications, and other household expenses. Medical expenses account for the second-largest share of caregivers' spending (25%), including assisted living or skilled nursing facilities, insurance costs, and other medical expenses.
• Long-distance caregivers (defined as family caregivers living more than one hour from the care recipient) incurred the highest out-of-pocket costs ($11,923); however, caregivers living with their care recipient also incurred increased costs ($8,616). 
• Caring for an adult over the age of 50 results in slightly higher out-of-pocket costs than caring for an adult younger than 50 years old ($7,064 vs. $5,721). Caring for an adult with dementia also resulted in higher out-of-pocket costs ($10,697 vs. $5,758 for adults who do not have dementia)
• More than half of employed caregivers (56%) experience at least one work-related strain. This may take the form of working different hours, fewer/more hours, and taking time off (whether paid or unpaid). 
• Many family caregivers also need to cut back on other spending which can undermine the family caregiver's future financial security. One in six have reduced contributions to their retirement savings (16%), and roughly half have cut back on leisure spending (e.g., 45% cut back on eating out or vacations due to caregiving expenses). 

The AARP study shows Latino/Hispanic families are burdened even more. The graphic shows Hispanic families with higher average costs to family caregivers. 

Long-Term Care Affects Families and Finances

The financial costs and burdens of aging impact all American families - especially the daughters and daughters-in-law which typically become the default caregiver in the absence of Long-Term Care Insurance.

Affordable LTC Insurance will ease the burdens placed on family caregivers and provide resources for quality care either at home or in a facility. 

LTC policies provide benefits for all types of care at home, adult day care, assisted living, memory care, and nursing homes. Health insurance and Medicare will pay for only a small part of these costs.

Many states have partnership plans which provide additional asset protection. The time to act is before retirement, when premiums are very affordable. Many experts suggest that too many people forget about long-term health care's burden on their loved ones. LTC Insurance reduces this burden so the family can be family. Plus, the insurance will protect assets like your 401k from the high cost of care.

Start Shopping for LTC Insurance Well Before You Retire

The best time to put a Long-Term Care insurance policy in place is well before you retire - most obtain coverage in their 50s. Premiums are based on age at application, health, and the benefit levels you choose.

Consider the current and future cost of long-term health care services where you live. Review the LTC NEWS Cost of Care Calculator and find where you live - Cost of Care Calculator - Choose Your State | LTC News.