Annual Caregiving Costs Still Cheaper than Assisted Living

Caring for a family member requires a substantial allocation of time and energy, and for nearly half of families providing care for a loved one, their savings feel the brunt of the impact, according to a new report from Caring.com.

About 46% of family caregivers spend more than $5,000 per year on caregiving expenses, as highlighted by Caring.com’s Senior Care Cost Index survey of 1,345 family caregivers from June 26 through July 20. 

A family caregiver is defined as someone who cares for a family member of friend without receiving payment for their services, which may include out-of-pocket costs for medications, medical bills, in-home care, senior living communities and more. About 54% of respondents said they care for a parent or spouse/significant other.

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Though the annual expenses may seem pricey when thinking in terms of out-of-pocket spending, most are still paying well below the $42,000 median annual cost of care in a single-occupancy assisted living unit, according to the 2014 Genworth Cost of Care Survey.

Of the 46% who spend more than $5,000 annually, 16% spend between $5,000-$9,999, while 11% said they spend from $10,000 to $19,999.

Only 7% of respondents said they spend $20,000-$29,999; while another 7% claimed to spend more than $50,000 on out-of-pocket caregiving each year. Despite the considerable costs, only a slim percentage of caregivers have spoken to their loved ones about how to finance care (3 in 10). 

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“Caregiving can be a startling endeavor that most people aren’t financially prepared for,” said Caring.com CEO Andy Cohen in a written statement. “Having an open and honest conversation about finances is a sensitive, but necessary decision to have.”

A much-needed conversation is also imperative not only for its effect on finances, but also how caregiving impacts current employment and retirement plans. 

A little more than one-third (33%) spend more than 30 hours per week on caregiving, making it almost the equivalent of a full-time job, notes Caring.com. While half of caregivers have made changes to their work schedules to accommodate caregiving, 30% often arrived late or left work early and 17% missed a significant amount of work.  

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“Family caregivers, especially baby boomers, run the risk of derailing their retirement plans if they don’t prepare for the costs associated with caregiving,” Cohen said. “Almost half of caregivers spend $25,000 on caregiving in just five years—that’s a significant chunk of money that could delay retirement by a couple of years.”

For 43% of family caregivers, deciding on a senior care or senior housing option only took one month, however, the same decision process took six months or more for 21% of caregivers.  For 10% of respondents, the decision-making process took more than a year.

When broken down into settings where individuals are receiving care, only 20% of people being creed for live in assisted living, nursing homes or other senior living communities.

Written by Jason Oliva