Millions of Americans will be financially burdened by caregiving responsibilities

Millions of Americans will be financially burdened by caregiving responsibilities
TIAA Institute report reveals many caregivers are young adults, and how advisors can help.
NOV 02, 2023

Americans are living longer but the downside is that many will require assistance from family members, who may in turn face a financial burden.

A new report from the TIAA Institute and the University of Pennsylvania School of Nursing reveals that one in five adults now provide care to loved ones with uncompensated expenses running to an average of $7,000.

Housing, healthcare, and transportation are among the expenses family caregivers incur and almost half of respondents said they have suffered financially and many take on debt, pay bills late, or tap their own savings accounts or retirement funds to cover the costs.

“Although the emotional and physical toll on family caregivers is well recognized, the financial impact of these roles has received less attention,” said Surya Kolluri, head of the TIAA Institute. “The impact on lifetime earnings, savings, Social Security benefits and retirement readiness can be severe. Especially today, as people are living longer, caregivers should plan for these costs at various life stages.”

The research found that 1 in 4 family caregivers has less than $1,000 in savings and investments compared to 1 in 7 non-caregivers.

YOUNGER ADULTS

Around one quarter of the family caregivers identified in the survey are in their twenties or thirties, a time when they typically have lower income levels and should be able to make gains in their careers.

Many are also raising children while also caring for older relatives.

“As younger generations increasingly take on caregiving roles, they face different financial pressures and trade-offs,” said Mary Naylor, director of the Penn Nursing’s New Courtland Center for Transitions and Health. “The financial choices made at younger ages have ripples for years to come, as families weigh the relative importance of present spending, saving for large expenses and saving for retirement.”

Women are also disproportionately impacted by caregiving responsibilities. Women already have 30% less income than men during retirement, and a disproportionate number of caregivers (60%) are women.

ADVISOR HELP

The report says there are ways that financial advisors and employers can help with the financial challenges faced by family caregivers.

Taking a holistic view of family circumstances, financial advisors can help clients prepare for a longer retirement including the emotional, physical, and financial burden of a longer life span and mitigate the risks of caregiving decisions.

Meanwhile, employers can help their employees to navigate the challenges including offering benefits such as flexible working, paid family leave, and assistance with creating financial plans that incorporate the potential additional costs of care.

“Health and wealth are increasingly two sides of the same coin,” Kolluri said. “The traditional role of a financial advisor needs to shift from retirement planning to a more holistic model that includes considerations such as longevity, health, family, finances, caregiving and, indeed, financial caregiving.”   

Latest News

'Bogged down' advisors just want to have fun (again)
'Bogged down' advisors just want to have fun (again)

Jim Cahn, of Wealth Enhancement Group, lifts the lid on his firm's partnership model, his views on RIA M&A, and the widely slept-on reason why advisors are merging into larger organizations.

Vestwell unveils new emergency savings account offering
Vestwell unveils new emergency savings account offering

The fintech firm is cementing its status in the workplace savings space with its latest ESA offering, which employers can integrate into their existing benefits package.

'Money Mimosas' and other ways to show your Valentine financial love
'Money Mimosas' and other ways to show your Valentine financial love

Wealth managers offer unique ideas for couples to grow closer emotionally and financially.

Limra research finds financial confidence on the rise among Black American workers
Limra research finds financial confidence on the rise among Black American workers

Survey findings suggest increased sense of financial security and more optimistic 2025 outlook, while highlighting employers' role in ensuring retirement readiness.

DOGE efforts sideswipe muni bonds backed by federal lease payments
DOGE efforts sideswipe muni bonds backed by federal lease payments

Falling prices for some securities within the $4 trillion state and local government debt market spotlight how the push to shrink spending is sending shockwaves across the US.

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.