Caregiving in the US depletes incomes, job opportunities, and future retirement payments as family members struggle financially in order to “do what’s right.”
Nearly 50 million people, most of them working, provide an average of 24 hours a week of unpaid care to older or disabled adults, according to a recent survey. One of them was Dana Guthrie, who thought she could continue to administer a dental practice while helping care for her parents when their health began to go downhill.
“It was a great-paying job and I didn’t want to lose it,” says Ms. Guthrie, now 59. She cut a day out of her schedule and began to work evenings, then spent several nights a week at her parents’ home nearby. But between her mom’s liver disease and her father’s dementia, she finally quit her job and moved in with them full time. “They really needed me,” she says.
Labor Force Loss
Many Americans are making the same sort of sacrifices. The average caregiver is a 40-something woman who is closely related to the person she cares for. No matter their age or gender, caregiving is a driver of poverty. A recent study of nearly 13,000 people revealed that about 8% of people who become caregivers stop working.
Some States Offer Paid Family LeaveA handful of states have enacted laws that mandate assistance for caregivers, new parents and sometimes others, most for a 12-week period. Payroll taxes cover the cost, whether collected from employees, employers, or a combination of the two. These programs allow paid time off work to care for a family member with a serious health condition, as well as to bond with a newborn child or one that has been recently adopted. Many of the programs will also provide coverage for workers managing their own serious illness or certain other difficulties. As of this writing in January 2023, the programs are active in California, Massachusetts, New Jersey, New York, Rhode Island, Washington, the District of Columbia, Connecticut, Maryland, and Delaware. States that have programs set to go into effect include Oregon and Colorado. Read more and find out about the law in each state at the Bipartisan Policy Center. |
“It happens right away, in the first year,” says Yulya Truskinovsky, a study co-author and economist at Wayne State University. “We see little evidence that they either reduce hours or switch to self-employment. They leave the labor force and remain out of it for quite a long time.”
The effect is long lasting; seven years later, those caregivers still lagged their non-caregiving colleagues in labor participation. Guthrie is a prime example. After continuing to care for her parents for years, she relocated near her sister in another state when they died. She found work at dental offices there, but it never came close to the pay or satisfaction she got from the job she left. At the time she was interviewed, she was unemployed.
“We were a close-knit family and I would do it again,” she says. “But I took a beating, emotionally and financially, and I haven’t really been able to recover.”
In fact, leaving the workforce to take care of a family member makes a woman twice as likely to end up in poverty.
Caregivers Pay for Parent’s Needs
Most caregivers give more than their time. The “Caregiving Out-of-Pocket Costs” study by AARP, conducted in 2021, found that three-fourths of caregivers surveyed spent $7,242 on average per year in costs related to caregiving.
"AARP's new report shows the stark reality family caregivers face today,” says Nancy LeaMond, chief advocacy and engagement officer for AARP. “While financial challenges cross all segments of society, they hit hardest for Hispanic/Latino, African American and younger caregivers, as well as those caring for loved ones with dementia. Family caregivers are the backbone of America's long-term care system, and that backbone is breaking.”
The money was spent on a variety of needs, from helping with rent and assisted living charges, to making modifications so a loved one could stay at home. A fifth of the spending was used to pay hospitals, therapists and health-care providers, provide in-home care and adult day care, or purchase medical equipment/devices.
Caregivers who were juggling jobs with caregiving reported spending $10,525 on average, and noted that they had to do things — like take time off or work different hours — that impacted their job and increased emotional strain.
One such caregiver is Jan Beard. Her husband, Bob, had a stroke in 2015 that forced him into retirement while Jan continued to work from home.
"When Bob came home from therapy, he needed help with everything,” Jan says. “That included me walking with him everywhere he went in the house. Bob needed help with going to the restroom, bathing, getting dressed — everything.”
Jan looked at getting Bob in a facility to care for him, but her salary couldn’t cover the $4,000 monthly cost and pay her own bills. She was depleting savings to pay for wheelchairs, walkers, other equipment, and therapy. And his time in the hospital had left them with debt.
"Bob was in the hospital for several months, so you can imagine the hospital bills were astronomical. Insurance did pay for part of it, but we still had lots of bills coming in the first couple of years,” she says. “There wasn't enough monthly income to pay for his care and for the things that he needed and be able to survive.”
Finally, Jan and Bob moved into the basement of the home owned by their son and his wife. Jan still worries daily about her financial future while continuing to bathe, lift and move Bob.
“People do not realize what all is involved until you're in that place,” she says. “It's frustrating and sad and overwhelming.”
Credit for Caring Act
Introduced in May 2021, the bipartisan Credit for Caring Act would provide a maximum of $5,000 federal tax credit for eligible family caregivers. It is only for caregivers who work, offering them a 30% credit for qualified expenses they paid or incurred over $2,000. Services such as home care aides, adult day care and respite care, as well as home modifications like ramps and smart home technology to make caregiving easier and safer, would qualify.
The bill has widespread support, including from the Alzheimer’s Association, the National Association of Area Agencies on Aging, Walgreens, and many military and veterans’ groups. An AARP analysis found that apart from easing the burden on working caregivers, the legislation could grow the domestic gross product $1.7 trillion by supporting those 50 and older in the workplace.
The Credit for Caring Act is currently stalled in Congress. Until there is the political will to move the legislation through to signing, America’s caregivers will continue to pay a high price for their service and devotion.
This article is not intended to be a substitute for professional financial advice from a qualified financial advisor.
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Blog posting provided by Society of Certified Senior Advisors
