Caregiving and Retirement Planning: Start Planning Now
Beyond Saving for Your Own Retirement, You Must Anticipate the Costs of Providing Care for Your Aging Loved Ones.
I want to share with you this sobering story of Amy Goyer. She's a big deal at AARP. She's the family and caregiving expert at AARP. She was recently in the news. She's written two books on the subject of caregiving. And Amy has her own consulting business. And in fact, I may, if we're lucky, get her on this program before too long. The story that Amy shares is that her mom needs care. Her dad had Alzheimer's and to provide care for her parents, Amy did what loving daughters do. She devoted substantial amounts of time and effort to caring for her parents. And when her parents ran out of money, Amy depleted her own savings, and that wasn't enough. So she went into credit card debt. In 2019, Amy filed for bankruptcy. How could a person who is an expert in caregiving find herself personally in this situation?
Amy, of course, is not alone. There are 53 million Americans who are caregivers, and they provide nearly $500 billion a year of free care. Nobody would be crazy enough to do all this for free. Nobody except loving children. And when we refer to them providing free care, that's a huge misnomer, because the care that they are providing, of course, is not at all free.
There is a huge expense, and the expense is being born by those caregivers. Caregivers spend an average of 26% of their own income on caregiving expenses, according to AARP. A third of caregivers dip into their personal savings. 12% take out loans. Now, you might be thinking that caregiving is something that only older Americans have to deal with. Think about it. Who needs care? Old people. People in their 80s and 90s. If mom is in her 90s, their daughter is probably in her 60s. So caregiving is an issue I'll have to worry about in the future, right?
Not really. 23%, nearly one out of four caregivers, are millennials. The average caregiver in this country is 49 years of age. Parents may need care not in their 80s and 90s, but in their 60s or 70s as they encounter health issues themselves. And since many folks who are older weren't ever anticipating they would live as long as they're living, nor incur the expenses they're incurring, they run out of money, and they turn to their family for support – that most often means children. You need to recognize that if you thought the challenge of saving for your retirement was a huge burden itself, in addition to saving enough money for you to provide for your own lifestyle in your retirement, you must also anticipate the costs you will incur to provide care for your aging elders.
My Own Caregiving Story
My mom died at age 94. My oldest brother, 70 years old, serving as the primary caregiver for my mom in her 90s. Fortunately, we're in a family where economically it wasn't an issue. But the challenges themselves, the amount of time and devotion and care that my brother had to provide 2000 miles away from me to helping my mom on a daily basis, this is a huge impact to his ability to run his business, his interfering on my mom's behalf with the medical community and the nursing home community to making sure she's getting the care that she needs.
The emotional toll associated with all of this, is hard to overstate. We need to recognize that not only do we need to protect and secure and prepare for our own future, but we also need to anticipate the needs of our parents financial futures because if they aren't prepared themselves, their burden will be added to our burden. The challenge of growing old in America is getting exponentially more difficult because of the raging increase in the number of elder Americans. And the fact that this is likely our future is something we cannot ignore.
You Need to Factor Caregiving into Your Retirement Planning
You've got to anticipate this when dealing with your own retirement planning, how much money are you going to need to support your parents? And at the same time, your success in saving and preparing for your financial future will determine the burden you are going to place financially on your children.
Because when you're in your 80s and 90s, if you aren't financially prepared, your children will be the ones that you turn to. And even if you don't want to turn to them, they're going to insist because you're raising them right. And they will be dutiful, and they will be loving, and they will not let you suffer merely because you're out of money. Some people jokingly argue that their five children are their retirement plan, but I don't really think anybody truly has that as a design that they want to implement.
Think about the intergenerational aspects of retirement planning. If you haven't been saving for your retirement because you didn't think it was going to be a big deal for you, ask yourself, do you have parents who are still alive? Do you have in-laws who are still alive? It's you and your spouse, but there's four of them and you need to anticipate that at least one of them is going to have a long life expectancy begin to plan for your retirement because that's the future you are going to face with them.