We all should plan that someday we will need caregiving. There are simply no guarantees on lifetime good health and longevity. What is certain, though, is that medical crises and chronic illness can wreak havoc on a family's finances.
The majority of people with health care or functional (communication, transportation, supervision) needs will require some caregiving assistance. For those who are not living in an assisted living or nursing home, only 3 in 10 use paid help from housekeepers, aides or other assistance. That's because most caregiving in the U.S. is done by informal caregivers — the friends and family of the person who needs help. These informal caregivers are often not paid for their work, often to great personal expense and risk.
Caregivers, on average, spend $7,000 to $13,000 out of pocket annually to help their care partners. They devote 23.7 hours per week on average (even more since the COVID-19 outbreak). Simply said, they are the backbone of the U.S. health care system and the front line of care provided to the ill and aging. If we paid these caregivers for their hours and reimbursed them for their time, we would be shelling out tens of thousands of dollars each to every single one of the nation's approximately 53 million caregivers.
Of course, caregivers don't do this for the money. Most of us do this for love — because it's family — and because we want to help. As an unfortunate result, caregivers’ personal finances suffer. They may rack up debt or reduce their savings. The younger they begin caregiving, the more dramatic the impact on their financial security.
I can't think of a single person who wants to sock their loved ones with a mountain of debt in return for caregiving. There are ways to prevent the cycle of financial detriment — or at least mitigate it — for your caregivers. By projecting your long-term needs, budgeting appropriately, learning your options, and setting up your accounts and assets deliberately, you can carve out a support plan for your current and future caregivers.
Creating a life care plan
Ideally, you want to take care of your caregivers while they're actively assisting you. You can improve your caregivers’ overall stress levels and reduce the burden of financial strain by helping them continue to pay their bills so they can put money into their own retirement or savings and not accumulate debt.