June 29, 2023
I need to talk to those of you in your 50s and 60s about what you need to do today to make sure you protect your loved ones from caregiving financial distress.
Without making conscious choices today when you are young and healthy you increase the odds that your loved ones will end up having to make financial tradeoffs later on to care for you. They will do that out of love. But when they do that, they also create the ingredients for one day becoming a financial drain on their kids. It’s a vicious cycle I know you never would want for them.
So let’s take a deep breath together and understand what’s at stake and how to navigate this challenge.
More than one in five people recently surveyed by the Employee Benefit Research Institute report they are providing caregiving help to a family member. More than half of the caregivers also reported that they provide financial help to that person.
And it can often be a very large sum. More than half of the caregivers providing financial assistance said it amounted to at least $5,000 over a 12-month stretch, with nearly 1 in 4 of the financial contributors sharing that they used more than $11,000 of their own money over the year to help care for a loved one.
For many of those caregivers, providing financial assistance comes at a great cost to their own well-being. Many reported taking on new debt, borrowing from friends or family, or reducing their contributions to retirement plans.
I know you never would wish that financial stress on loved ones, but this is such a stand-in-your-truth-challenge.
The first step is to be open to the idea that at some point in your life you will need some help managing the day-to-day stuff. As I explain in detail in The Ultimate Retirement Guide for 50+ (newly updated in 2023) the cost of part-time at-home care is something you need to save for today. That’s how you protect your loved ones.
And once you seriously think about the potential needs of your much older future self, my hope is that it will make it easier to consider all the choices you can make today to save more for the future and to protect your loved ones from needing to upend their financial future to take care of that older you.