We all tend to organically fall into certain roles in order to meet the needs of our loved ones, and within every family, there is most likely one person that is inclined to assume the role of caregiver. The tendency, in my opinion, is that caregivers are female. That fact is significant for financial advisors—not only do your female clients have unique needs and concerns, but if they are acting as caregiver in their family, then those needs and concerns become even more nuanced.
The role of the caregiver is also evolving in response to emerging family trends. With each generation, the life expectancy gets longer, which means that those playing caregiver will also be doing so for a longer period of time than in the past. In addition, it seems to be more common to have adult children move back home with their parents. Today’s caregiver may now be tending to an elderly loved one while also helping out with their grandchildren’s after-school activities.
For financial advisors, it is critical to know who among their clients is a caregiver, and to understand the cost associated with assuming this role. By having this insight and sharing it with your caregiving clients, you can be better equipped to help them achieve their goals, in spite of the particular hurdles they face.
Caregivers generally endure three unique costs that should be taken into account when financial planning:
Loss of Retirement Savings
Being a caregiver often means having to take time off of work, whether it is to accompany the loved one to doctor appointments, hold meetings with other healthcare or assisted living professionals, or provide more involved, hands-on support. It may start with a few hours here and there, then become a few days, which turns into a few weeks, which results in the caregiver deciding to leave the workforce for a temporary or permanent period of time. Taking leaves or stopping work altogether can dramatically affect retirement income, and so it will become crucial for the caregiver to look for others ways to save to compensate for that loss.
The average caregiver spends approximately $5,000 out of pocket each year to provide for their loved one. The expenses range from big to small—co-pays at appointments and the pharmacy, home modifications or tools to make caring in home easier, food for the loved one, automotive costs incurred by driving the loved one to and from appointments, the cups of coffee bought by the caregiver while waiting during appointments . . .you get the idea. All of these expenses quickly add up, and so it is important to plan for and budget for these expenses, as they are costs that were likely not previously considered or accounted for.
From a financial standpoint, this cost is less tangible, but still important. Being a caregiver is a demanding and challenging role, and it can take a toll. Financial professionals need to show an understanding for this aspect of caregiving, and they should even show their caregiving clients an awareness for what they are handling. When meeting with clients who are caregivers, ask them how it is going and, perhaps more importantly, how they (your client) are doing. Listen to them and suggest ways they can take care of themselves, maybe even adding into the budget a certain amount of “me” money, to help them care for themselves while caring for others.
It is important for financial advisors to know whether their clients are acting as caregivers because there are a number of costs associated with that role. In addition to simply knowing, though, financial advisors also need to recognize and account for everything that goes along with caregiving—in doing so, they will be in a better position to help their caregiver clients, foster a relationship with them and build trust.