How Family Caregivers Can Avoid Money Catastrophes

By Richard Eisenberg, Next Avenue Editor

How big a financial toll can family caregiving take? Well, Amy Goyer, who is AARP’s family and caregiving expert, says the costs of caring for her parents led her to file for bankruptcy.

“I wish I’d met with a financial adviser from the very beginning who would have kept me on track and maybe been able to steer me in different directions that would have avoided bankruptcy,” Goyer, based in the Washington, D.C. area, told me in the new episode of the “Friends Talk Money” podcast I co-host. (You can hear the episode wherever you get podcasts.)

When Family Caregiving Costs Are Staggering

Goyer has been a family caregiver her entire adult life. In her 20s, she assisted her grandmother who had Alzheimer’s. In recent years, she gave up her full-time job at AARP to help her mother who had a stroke and then her father who developed Alzheimer’s (both moved into her house), as well as her older sister. Goyer knew how to help them with their health. But the staggering caregiving costs, which turned into staggering credit card bills, were something she hadn’t prepared for.

Family caregiving has also been a financial catastrophe for Janet Harris, 60, of rural Stony Mountain, Ga. who’s been unemployed after losing her job of 23 years at the American Cancer Society. Since 2019, Harris has been assisting her husband Alonzo, 75, a retired car salesman who has had prostate cancer and liver cancer and is now blind after having a stroke.

“I had no savings and no income, and I was getting a little flushed,” said Harris. “I don’t know how I made it, sincerely, going from a sixty-thousand dollar job to a three-hundred-and-sixty-five dollars a week unemployment payment.”

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Harris borrowed money from family and friends. “I feel indebted,” she said. But, she added, it helped her get through the tough financial times. “God gave me back a little of myself,” Harris told me.

How the Pandemic Has Pinched Family Caregivers

Their stories reflect what many of the nation’s 48 million unpaid caregivers of adults are experiencing, made tougher due to the pandemic.

A new survey to be released April 8 by Hero, a medication management service, found that 56% of caregivers now spend $10,000 or more annually assisting loved ones and 26% spend over $25,000. And an AARP and National Alliance for Caregiving study found that 28% of family caregivers stopped saving last year and 23% took on more debt. One in five reported “high financial strain” due to caregiving.

(I’ll offer some money advice for family caregivers from my “Friends Talk Money” co-hosts Terry Savage, Pam Krueger and our guests shortly.)

In a global EMD Serono (part of pharmaceutical giant Merck MRK ) survey, 54% of caregivers said the pandemic has worsened their financial health.

“We’re seeing an already strained population getting further strain with the pandemic,” said Lynn Taylor, senior vice president of health care, global government and public affairs at EMD Serono.

On “Friends Talk Money,” Krueger said: “During the pandemic, the world was turned upside down for millions of families who suddenly found themselves needing to help a parent or a family member or even a dear friend in need. Suddenly and unexpectedly, you have to find a way to make your life and your parent’s life or a loved one’s life better, not only financially, but emotionally.”

Savage calls this “an intergenerational gift” you might give your parent.

At a Longevity Project caregiving in America webinar I attended March 31, Terry Fulmer, president of the John A. Hartford Foundation (a funder of Next Avenue), put it bluntly: “We didn’t realize how grave the consequences would be for family caregivers in the pandemic.”

In her remarkable new book about caregiver burnout, “Already Toast,” journalist Kate Washington notes that she lost $80,000 in income so she could work less and help her husband Brad, who was diagnosed with cancer, recuperate from a stem-cell transplant.

Savage noted that leaving your job or cutting your hours to let you be a family caregiver can have long-term economic consequences. Your Social Security benefits will be reduced and you’ll have less ability to contribute to a retirement plan, she said. “That snowballs in the future,” Savage added.

Advice From the ‘Friends Talk Money’ Podcast

So, what can family caregivers do to help protect their finances from getting clobbered while generously assisting loved ones? Here are some suggestions from my “Friends Talk Money” co-hosts and me, plus experts we spoke with:

Get organized financially to track your caregiving expenses and to keep track of finances of the person you’re caring for. AARP has an excellent new free digital workbook on its site to do this, “Financial Workbook for Family Caregivers.”

Savage, a personal finance syndicated columnist and author, also has a useful, four-page personal financial organizer on her site. “I think you can use it as a template for making a scavenger hunt out of getting the documentation together that you’re going to need down the road,” she said.

C. Grace Whiting, the National Alliance for Caregiving CEO and a Next Avenue Influencer in Aging, recommends checking out the WISER.org (The Women’s Institute for a Secure Retirement) site’s resources for caregivers about planning and managing finances. WISER has a free guide there: “Financial Steps for Caregivers: What You Need to Know About Protecting Your Money and Retirement.”

And Next Avenue’s new free series of guides and resources, “Fast-Forward: Take Control of the Rest of Your Life,” includes ways to get money-management support.

Consider signing up for an app specifically for the money side of caregiving. For instance, Carefull.com ($12.99 a month) sends you alerts if it spots unusual financial transactions of the person receiving care and has a host of useful articles by personal finance writer and former family caregiver Cameron Huddleston.

Carefull CEO and founder Max Goldman told me that the financial aspect of family caregiving “doesn’t get talked about very much, but it’s very much the lifeblood of the entire caregiving experience.”

Have candid conversations with your parents, as soon as possible. It’s best to learn all you can about their financial situation, bills that need paying and any long-term-care insurance policies they have.

If your parent has dementia and you haven’t had any money talks with him or her yet, Huddleston offered this advice on the new “Friends Talk Money” episode: “You don’t want to put them on the defensive by pointing out that they’re no longer capable of managing their money anymore. It’s just going to make them upset.” Instead, she said, while visiting, say something like: “Mom, I’d love to help you go through your mail and sort out the junk” or “Mom, I can help you write some of those checks.”

Goyer emphasized the importance of getting a power of attorney document drafted, so you’ll be able to manage your parents’ finances if they can’t.

If you learn that your mother or father has a long-term care policy and is having difficulty with daily activities such as bathing, toileting or dressing, Savage said, get your parent’s doctor to certify this as soon as you can. Then, notify the insurer, since the policy’s benefits likely won’t kick in until 100 days or so after it authorizes payments.

“That way, by the time you need someone there full-time, you’ve gone past that deductible,” said Savage.

And if you have adult children, this could be a good time to begin having conversations with them about your financial situation in case they ever need to become your caregiver, Savage advised.

Look into programs from government agencies that might reduce your caregiving expenses. Harris was able to cut her utility bills through a program in Georgia this way. But, she noted, “You have to research it yourself.”

Harris also recommends joining caregiver resource groups on social media to find out about money-saving ideas for family caregivers.

Whiting had one important reminder for family caregivers: “Take care of yourself. You matter too.”

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