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Are You Risking Your Own Retirement to Care for a Parent?

The cost of caring for a parent can be hard to bear

In many ways, I’m very lucky. My mother, who will turn 95 later this year, is financially well-off, thanks to her Texas teachers’ pension, my dad’s machinist pension, her stock from Exxon and her retiree health care coverage.

As a result, although my sister and I bear the emotional and other costs of caregiving, we don’t have to reach into our own pockets to pay for what my mother needs. But lots of other caregivers do. And they do so sometimes at the risk of their own financial futures—spending money they saved for their own retirement, reducing their contributions to their IRAs or 401(k)s, or even going into debt.

According to a study last year by the health care coordinator Evercare and the Maryland-based nonprofit National Alliance for Caregiving (NAC), about half of all those caring for someone older were helping them out financially—at an estimated average level of $5,531 a year. That worked out to more than 10 percent of the median income of the group surveyed, with those earning lower incomes often carrying the heaviest burden.

The study randomly surveyed 1,000 caregivers by telephone, and 41 of them volunteered to keep diaries of their expenditures for 30 days. The volunteers, whose parents tended to be sicker and frailer than average, recorded an even higher tab—$12,348 a year. That’s money those caregivers won’t have on hand for their own futures.

“It’s their retirement savings. It also might be money they were setting aside to pay for their kids’ college,” says Gail Gibson Hunt, president and CEO of the National Alliance for Caregiving. The amount being spent “was a much bigger figure than we had anticipated,” Hunt says.

Caregiving also exacts a price from the companies where these caregivers work. A 2006 study of employers by the MetLife Mature Market Institute found that the cost to U.S. businesses because of lost productivity of working caregivers is $17.1 billion to $33.6 billion per year.

Judie Lane, a public health microbiologist in California, hasn’t had time to add up what she spent on helping her mother for about nine years, until her mother’s death earlier this year. But she estimates it may have amounted to as much as $70,000. Expenses included moving her mother to a mobile home and having the doors widened to accommodate first a walker and later a wheelchair. The costs also included unpaid leave to assist her mother because she had run out of vacation days. Lane’s sister paid too, quitting her job to move in with their mother, thereby reducing her own retirement income and cutting off the source of her health insurance.

Getting old is an expensive business, and more of the expense is being dumped on individuals, as companies jettison traditional pension plans and health care coverage for retirees. Medicare only covers about 53 percent of health care costs for its recipients, and the additional dollars needed are enough to eat through most people’s retirement savings. Fidelity Investments estimates that a couple age 65 today will need at least $225,000 to cover their future medical costs. And that doesn’t include the cost of long-term care, over-the-counter medications and most dental care.

But medical costs aren’t the only expenses that caregivers cover. According to the NAC survey, medical outlays topped the list of expenditures, followed by household goods and food. The next-largest expenditures were for travel and transportation.

That one rings a bell. Now that I think of it, I do spend money taking my mother to endless doctors’ appointments and on trips to see the flowers that bloom in the spring and the leaves that turn in the fall. With gas at nearly $4 a gallon, my sister J.E. and I often rue my mother’s decision to send back her Exxon discount card when she stopped driving many years ago.

Other costs measured by the survey include home care; payments for nursing homes or assisted living facilities; house and yard maintenance; housing and utilities; caregiving services, such as respite care; home modifications, such as ramps and rails; clothing; medical equipment and supplies; and legal fees. Spending diaries produced some unexpected expenses: cigarettes and chewing tobacco, wine and whiskey—and even the cost of caring for the family pet.

Lane’s mother had a little poodle, who needed pet food and occasional vet care. “That thing never walked. If Mom was put in a wheelchair, the poodle was right there in her lap,” she says.

While Lane was helping her mother pay off her credit card debt, file for bankruptcy and qualify for Medi-Cal, California’s Medicaid program, she tried to keep up with her own retirement savings. Given the additional expenses for her mother, though, some months all she could set aside was $50.

The NAC study found that “the amount of out-of-pocket expenses was closely associated with reported stress, health and overall well-being of the caregiver.” But the intangible costs were important, too. “Time is the most expensive commodity I provide, but it has no price tag,” wrote one diarist. Other costs include emotional stress and lost personal and career opportunities.

And, like many caregivers quoted in the study, Lane found that the financial costs were not the hardest to bear. “Emotionally, that’s the biggest drain.”

Martha M. Hamilton, formerly with the Washington Post, writes a regular column, Your Financial Future, for AARP Bulletin Today. If you have decided to delay retirement because of the current economic crisis and are willing to be quoted by name in a column, please e-mail and put Martha Hamilton in the subject line.

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