Americans are feeling more of a pinch in their finances and lifestyle, because of the need to care for an elderly relative or friend, according to a Northwestern Mutual study.
Think Advisor’s article, “Americans Are Spending More but Planning Less for Caregiving: Northwestern Mutual,” says the study found that Gen X and Millennials are the heart of the sandwich generation and are struggling with the competing pressures of caring for aging family members and their own children. At the same time, they are trying to create financial security and maintain a lifestyle.
The 2018 Northwestern Mutual C.A.R.E. (Costs, Accountabilities, Realities, Expectations) Study gathered the responses from more than a thousand American adults from the general population, with an oversample of 233 American adults age 35 to 49 (for a total of 413) and an oversample of 709 experienced caregivers (for a total of 987).
The study found that 30% of the respondents identify as current or past caregivers and 22% expect to become caregivers in the future. However, even though half of American caregivers say the care event was planned, many are still not prepared for the financial obligations, which seem to be increasing each year.
The survey found that 70% of caregivers provide financial support. In addition, 34% of current caregivers spend between 21% and 100% of their monthly budgets on caregiving-related expenses. Of those expenses, on average, $273 is spent on medicine/medical supplies and $159 on food, the survey found.
To cover caregiving costs, roughly 66% of experienced caregivers said they decreased their living expenses (significantly higher than the 51% who said so last year), according to the survey. However, the survey also found that people who believe they will provide care in the future, aren’t getting ready. About 57% of future caregivers anticipate incurring personal costs as a function of providing care. A total of 48% have not planned at all—a big increase from 35% last year.
“While financial expectations for caregivers continue to grow, unfortunately planning is taking a backseat,” Williams-Kemp said in a statement. “In an environment of rising costs and fluctuating economic and health care realities, winging it isn’t an option. Being proactive before a long-term event happens, can help ensure that you can still take care of your own needs, while caring for someone else’s well-being.”
Americans also aren’t planning for their own long-term care events. The study found that 75% of those surveyed, said they haven’t planned for their own long-term care needs. Of those who did take steps to prepare, 52% included provisions in their financial plan, 42% purchased a long-term care product and 35% increased their savings.
The research also found that Americans are most likely to look to their spouse/partner (47%) or children (26%) to be their caregivers. However, a majority (69%) have yet to share those preferences with these family members or anyone else.
Reference: Think Advisor (March 15, 2018) “Americans Are Spending More but Planning Less for Caregiving: Northwestern Mutual”