Updated: Thursday, December 7, 2023

Background: Many people overlook the short- and long-term costs of financial caregiving, a growing problem that financial advisors and employers can help address. One in five adults now provide uncompensated care to loved ones with health problems, and this Research Minute provides a compilation of insights and research that underscores how caregivers face a series of financial and professional challenges.

Findings: On average, caregivers’ uncompensated expenses – things like housing, healthcare and transportation – add up to more than $7,000 a year, pushing almost half to say they’ve suffered financially. Many feel they have no choice but to withdraw money from savings accounts or retirement nest eggs, take on debt, pay bills late or scale back on their retirement contributions. The impact also extends into the workplace. Caregiving typically requires 24 hours a week, and about 60% of caregivers have jobs outside the home. As a result, 61% of those caregivers reported at least one work-related consequence, such as arriving late, leaving early, taking time off or retiring sooner than planned.

The need for caregivers will likely skyrocket. Each day, about 10,000 Baby Boomers turn 65, and they’re living longer than ever as life expectancy has risen by 17 years since the Social Security program debuted in 1935.

Caregivers have lower levels of financial assets and higher levels of debt compared to those who don’t care for loved ones. One in four caregivers has less than $1,000 in savings and investments, for example. For non-caregivers, the number was closer to one in seven.

The financial burdens of caregiving are often steeper for both women and Millennials. Women already have 30% less income than men during retirement, and a disproportionate number of caregivers (60%) are women. In addition, about 25% of the caregivers are in their twenties or thirties. Becoming a caregiver at a young age is especially difficult, because it’s a time when people often have smaller salaries and should be taking the biggest strides in their careers. Many people that age are also raising children, making them part of the so-called “sandwich” generation, which creates even more emotional and financial burdens.

Bottom Line: There are several ways financial advisors and employers can support caregivers as they cope with their emotions, their finances, and their careers. Financial advisors, for instance, should take a more holistic view of the way they help clients. It’s no longer about simply building a nest egg for retirement; it’s about working with a family to prepare for the emotional, physical and financial burden of a longer life span, the risks and caregiving issues that could occur at any point and the short- and long-term tradeoffs that come with different decisions.

Financial advisors should also form relationships with social workers, human resource managers or other professionals to make connections when helpful whilst taking professional development courses to meet the new challenges.

There are also several ways employers can support working caregivers, such as:

Help employees navigate challenging caregiving situations by sharing tools like the Caregiving Intensity IndexOpens. It’s a two-minute self-assessment that measures how caregiving is affecting someone’s well-being and how they’re coping with potential stressors, including money or family disagreements. It is already being used by several employers, as well as state governments in New York and Massachusetts.

Add benefits, such as flextime, paid family leave, geriatric care management services and emergency backup care.

Offer services that help people understand how to avoid running out of income during retirement. Encourage them to make sure their financial plans include the possibility of time off and extra expenses related to caregiving. Individuals should meet with financial advisors to better understand life expectancy and how to plan accordingly.

Create employee networks or caregiver resource groups so employees learn from each other about how to create a better work-life balance.

If not thoughtfully planned for, there can be long-term repercussions for caregivers’ financial security.

Read the full report here. Please write to Surya Kolluri, surya.kolluri@tiaa.org, or Shelly Eweka, shelly.eweka@tiaa.org with any questions.

Insights shared by guest contributors are their own and do not represent the views of DCIIA or the RRC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

RRC members are welcome to reach out about being a future guest contributor to the Research Minute - contact rrc@dciia.org.