Consider caregiving costs when planning for retirement
Financial planning for retirement normally includes some travel and more time to be social with friends. However, most older adults do not allow for caregiving in their retirement budget - whether it's hiring a caregiver to care for a loved one or being a caregiver themselves.
Planning for Care
When caregiving needs become a priority for your family, map out the responsibilities of other family members involved. These conversations may be difficult, but they are essential:
- Who will manage all of the day-to-day aspects of providing care
- How to pay for costs of providing care (caring for a loved one, or receiving care)
- How to manage the finances of a loved one
- Who will manage medical needs in providing care
- How to balance work and caregiving responsibilities
- Who will identify and create legal documents, including wills or powers of attorney
Caregiving and Finances
Average annual costs for long-term care run from around $50,000 for assisted living to more than $100,000 for a private room in a nursing home. And hospital bills can pile up quickly after a major medical event. The reality is that the majority of older adults simply cannot afford these options in their later years.
If you are caring for a loved one, did you know that Family Caregivers Spend More Than $7,200 a Year on Out-of-Pocket Costs? A 2021 AARP study found that 87% of family caregivers feel financial strain from contributing to loved ones' care. It's a fact that the majority of us will both need care and provide care in our 60s and beyond.
It's smart to allow for caregiving in your retirement planning.
1. Start budgeting and planning today.
2. Downsize if possible.
3. If you have a current chronic condition, do the research to identify future costs for those with this condition.
4. If possible, buy any additional insurance.
5. Research Medicaid or veterans benefits so you will better understand how they can lessen your financial responsibility.
For more information about caregiving, visit the AARP website.