Planning for the Costs of Caregiving

By Louise Schroeder, CFP®

The beginning of a new year usually brings with it making resolutions to improve our lives. But, we all know that making a plan and following through on it is what really makes the difference. An important issue for older adults involves planning for the possibility of needing care and how to manage the expenses that result. While this brief article cannot address the details, it can help both caregivers and individuals needing care to understand the value of making a plan.

For both care recipients and caregivers, the costs of long-term care can have a severe impact on their financial security. Caregiving costs include money that is paid to another person or business for services, equipment, supplies, travel, etc. The caregiving costs that are frequently overlooked are indirect costs that are realized by unpaid caregivers who are family, friends, and volunteers. These may include the cost of traveling, expenses for food, medication, and other personal expenses of the care recipient that the caregiver pays for out of their own pocket. And, they often include lost wages from having to take time off from work, changing to part-time hours, or having to quit a job or retire early. Along with this is a loss of benefits such as contributions to Social Security, retirement plans, and health savings accounts. The caregiver may have to pass up a promotion or other types of work opportunities. Family caregivers, who have to quit working, experience on average just over $300,000 in lost wages and benefits.

The amount of direct costs that may be involved depends on several factors. First, the higher the number of chronic health conditions a person has increases the potential for needing assistance with activities of daily living (ADLs) such as mobility, dressing, toileting, bathing, transferring (in and out of bed or a chair, etc.), eating, hygiene related to incontinence, and personal care activities. Second, the choice of whether to live and receive care at home and use adult day care and/or home health care versus moving to an assisted living facility, nursing home, or continuing care retirement community requires researching and planning for the associated expenses. Third, the individual may require assistance with instrumental activities of daily living (IADLs) that are related to living independently long before they need help with ADLs. These activities include, but are not limited to, home maintenance (inside and out), yard maintenance, meal preparation, shopping, managing finances and investments, communicating, travel, making appointments, and managing social activities.

Decisions regarding who will provide caregiving should factor in each person’s knowledge and experience about the activity, their availability (time and location), their willingness, and their own life/family situation. Responsibility should be divided among both unpaid family members, friends, and volunteers and paid health care providers.

For more information and resources related to aging and caring for the aged, make plans to attend the next Aging Advocates informational workshop. “Self Care for the Caregiver: Replenishing the Vessel” will be on Wednesday, February 20, 11:30 a.m.-1 p.m., Lytton Lounge of First Christian Church.

About Aging Advocates

Aging Advocates, a group of area businesses and agencies in the Payne County area meet monthly to advocate for older adults. From their experiences, they innovate ideas and raise awareness of older adult issues. It is important to look at the developing needs of the aging population and support, educate, and identify services valuable to a life fully lived.