Tuesday, March 11, 2014

Cost of Caring for Parents

There are obvious as well as hidden costs
when caring for aging parents.
Trish responded as most of us would when she realized her aging parents needed help.  Her mother was diagnosed with cancer and her father just wasn't up to the task of caring for his ailing wife during her recovery.  Being a single woman without children, Trish left her career and closed up her house and returned to her childhood home to care for them.  What was to be a temporary stay turned permanent when her mother passed away quite unexpectedly and Trish was faced with the long term care of her aging father.  Siblings with their own busy families pitched in here and there, but the day to day tasks of caring for Dad fell squarely on Trish’s shoulders.  Trish struggled to make ends meet on her father’s limited pension but medical bills and living expenses made it difficult. She also began to worry about her own future as she had given up a profitable career to be the family Caregiver.

Adult children Step up to the Task
Trish’s experiences are not at all uncommon these days as the Baby Boomer generation enters their elder years.  In fact, over 25% of adult children over 50 are now providing personal care and financial assistance to their parents.  This percentage has tripled over the past 15 years and is expected to continue to grow. 

Family values play a large role when deciding to put personal lives on hold and become the primary Caregiver for an aging parent.  Most families, in response to a sudden need, make the decision without true consideration of the depth of commitment required or the present or future cost.  Of course providing care for a cherished loved one is not about the numbers, yet it is wise to know what to expect when taking on this responsibility.

Pull out the Calculator
Providing care for an aging parent does have a cost.  According to a 2011 study by the MetLife Institute, women who take time off work to care for a loved one, on average, lose close to $350,000 in earned income, pension and Social Security benefits.  Men statistically average less loss, but that is because they are less likely to become the primary Caregiver for their parents.  It is job that is traditionally taken on by daughters and daughter-in-laws.  In addition to lost future income, there is often the present loss of health insurance, benefits as well as opportunities for career advancement.  Moreover rejoining the workforce at a later date is sometimes much harder than expected.  All these issues add up to real financial cost for caring for aging parents.  This financial loss taken on by the adult children can often be multiplied by their parent’s cost of health care and elder care.

Most aging Americans have some financial preparations made for their retirement.  Yet the financial planning industry has traditionally focused on perfecting portfolios and building nest eggs.  Until recently there has been little talk about planning for the cost of the care years. The cost of care can totally derail a sound financial plan and then the burden of paying for later life care often falls on the adult children.  With hourly rate for certified home nursing aides ranging from $17.00 up to $30.00/hour and nursing facility costs averaging over $80,000 a year, the cost of elder care can be staggering.

Have the Conversation
The problem is that most families don’t start thinking about their parent’s care needs until there is need for actual care.  Usually that is due to a parent’s illness or a crisis situation which demands immediate attention. Aging parents and adult children generally are not proactively arranging for these long term care needs and so are caught unaware and unprepared. 

The best time to make caregiving decisions is long before they are needed.  Having open dialog with your parents and siblings about the financial situation and making advanced decisions on how to cover care costs and divide up care tasks with family members will make the entire process much easier.

Trish never regrets the time she spent caring for her parents, but now that they have passed on, she wonders how to get her own life back on track and get prepared for her own elder care years.

Kate McCarthy is Director of Operations for HomeAid Health Care which provides services for the elderly who wish to remain safe and independent at home.  HomeAid is sister company to Prairie Home Assisted Living which has served the physical, spiritual, mental and health needs of their Residents since 1999.  Together the two family owned companies provide comprehensive care for the elderly in the Fox Valley of Wisconsin.

Sources :
“How to Prepare to Financially Support Aging Parents” by Philip Moeller.  Retrieved from www.money.usnes.com on 3/10/14.
 "The MetLife Study of Caregiving Costs to Working Caregivers” by MetLife.  Retrieved from www.metlife.com on 3/10/14.