8/20/2012 2:15 PM ET|
The high cost of caring for parents
Increasing numbers of adult children must provide care for an aging parent, which can take a significant toll on their finances. Fortunately, there are ways to reduce those costs.
Lucy Lazarony was 34 when her mother was diagnosed with Alzheimer's disease.
The diagnosis didn't immediately change Lazarony's life. She had recently left her reporting job at Bankrate.com to travel, and she followed through with her plans to spend several months in Scotland.
When Lazarony returned in February 2006, though, she moved into her parents' home in Delray Beach, Fla. For the next five years, she lived off her savings and any freelance gigs she could cobble together while helping to care for her parents as their health declined. The couple recently moved into an assisted-living complex, and Lazarony is trying to restart her career at a time when unemployment rates are the highest since the Great Depression.
"I felt good at the time I made the decision. . . . I knew I wanted to spend that time with my mom, because you don't get that time back," said Lazarony, now 40. What she hadn't realized is how much of her life she was committing. "A lot of people I know did really well in their careers in their 30s, or they started families. I've had a different type of caregiving experience."
Caring for aging parents can be rewarding, frustrating and exhausting in turns. It also can be expensive in more ways than caregivers may realize.
One-quarter of adult children provide physical or financial care to an aging parent -- a proportion that has tripled in the past 15 years, according to a recently released MetLife study. Employed caregivers over 50 stand to lose an estimated $3 trillion in wages, pensions and Social Security benefits because of their caregiving responsibilities, the study found. The average losses total more than $300,000 per person.
That toll doesn't include out-of-pocket expenses associated with caregiving, such as travel costs and purchasing needed household items. Those expenses average about $5,531 per year, according to the study. And it certainly doesn't include the costs of professional care, such as home health aides or nursing homes, which can total tens of thousands of dollars annually.
Some people find their parents require so much time that it's impossible to hang on to a job -- the caregivers either quit or get fired for missing so much work. The cost in lost wages and retirement benefits can be enormous, with estimates ranging from $303,260 to $659,139 per person.
Those who remain employed may have to reduce their hours, pass up promotions, turn down relocations and bypass educational opportunities -- all of which can reduce current wages and future retirement benefits.
"The time you used to spend working . . . you're now spending making phone calls, sending emails, dealing with finances, going on doctor visits," said Elizabeth Roberts, a senior vice president at Bryn Mawr Trust who frequently advises clients as they assume caregiver duties -- and who cares for an elderly mother. "It's harder to get the next promotion. If there are layoffs, well, you're not doing as much as you used to," so you're more vulnerable to getting the ax.
And the toll can afflict future generations as well. Caregivers who lose the opportunity to save adequately for their retirements may someday become a financial burden to their own children.
In addition, caregivers' physical and emotional health can take a beating. Nearly a third of caregivers reported problems with stress, anxiety or depression in a 2009 survey conducted by the National Alliance for Caregiving and AARP. Caregivers were more likely to report their health as "fair" or "poor" than those not providing care. Caregivers' health declined more the longer they provided care.
"If you're taking time off for doctor's appointments and crises," Roberts said, "you don't have as much time for your own vacations to rest up or for your own doctor's appointments."
Family caregivers may not have a lot of options, unfortunately. Medicare, the government health insurance program that covers people 65 and over, typically doesn't pay for custodial care -- help with activities like bathing, cleaning or cooking that elderly parents may need. Medicaid, which does cover such custodial care, is available only to the poorest elderly and may require the care to be in a nursing home.
If the parents don't have long-term-care insurance or savings to cover the cost of hiring help, the adult children usually have to figure out a way to provide it themselves.
Here are some things to consider when those responsibilities loom:
Assess your parents' resources
It may not be easy to get your parents to open up about their savings and investments. Parents might be embarrassed about their financial situation, or they may be defensive or paranoid about ceding control, particularly if they're suffering the beginning stages of dementia, Roberts noted. But getting a clearer idea of their resources can help you figure out whether you can afford help, and how much.
If your parents have equity in their home, a reverse mortgage can help them pay for care without having to move into a facility. (Read "A deal that could save your parents" for more.)
Create a team
The caregiving load can quickly become too big to carry by yourself. Enlist siblings, other family members or friends if you can, or paid help if you can afford it. Eventually all four of Lazarony's siblings played key roles in taking care of their mother, now 80, and their father, 79, who was diagnosed two years ago with vascular dementia.
When it became clear the family needed to hire a daytime caregiver, they opted to chip in to pay Lazarony sisters to do the work -- with the bulk of the funds donated by two brothers who lived farthest away, in California. A brother who lived close by pitched in on weekend evenings and all day Sunday so Lazarony and her sister could have a day off each week.
"My father used to joke, 'I'm just glad we had so many kids,'" Lazarony said.
Whether you have a lot of help or a little, one professional who can be well worth hiring is a geriatric care manager, who can assess your parents' situation, help you anticipate what might be next and connect you to resources in the community. You can get referrals from the National Association of Professional Geriatric Care Managers.
Learn about Medicare and Medicaid
While Medicare provides health insurance for people 65 and over, it doesn't cover everything. Caregivers may need to account for premiums, deductibles and services that aren't covered when budgeting their parents' money, and their own.
If your parents are poor enough to qualify for Medicaid, see if your state provides payments to family members who care for their parents. The programs don't pay much and aren't available in all states, but every little bit can help.
Explore all available benefits
Your community may offer a number of services for the elderly, from meals to day care, that can make caregiving easier. Start your search at the Eldercare Locator website. Another site, BenefitsCheckUp, can help you find programs that may help pay for prescription drugs, rent, utilities, meals and other needs. If money is tight, ask service providers if discounts or other financial help is available. Lazarony's family was paying $55 a day for a day care center when Lazarony discovered they were eligible for a scholarship that reduced the cost as a respite for caregivers. The scholarship reduced the bill to less than $90 a month.
Think twice about quitting your job
Trying to juggle caregiving and a job can be difficult and stressful. Before you quit your job, though, see if you might have other options that would allow you to continue earning wages and contributing to your retirement funds. Some companies offer flextime or the opportunity to share a job with another part-time worker. You also may qualify for up to 12 weeks of unpaid time off under the Family and Medical Leave Act. (Read about leave benefits here.)
Take care of yourself
If you're a caregiver, try to make sure you get enough rest, exercise, healthful food, time off and appropriate health care screenings. Support groups can help you deal with the stress of caregiving and inform you about resources you might not otherwise hear about.
Taking good care of yourself applies to your finances, too. Boost your retirement savings if you possibly can to insulate yourself against end-of-life expenses, and consider long-term-care insurance. Caregiving is an act of love for your parents; taking care of your finances is an act of love for yourself -- and your kids.
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
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