Caregivers are unprepared, but one tough conversation can help
How caregiving touches finances
Caregiving has become an acute financial challenge, in Day’s view, because of the shift to multi-income households to manage the cost of living. She notes that in her grandparents’ generation, when a single income could support a family, her grandmother played that caregiving role for older and younger generations. Now, for most families, two incomes is a necessity. Losing a household earner to the unpaid work of caregiving can have huge impacts on a family’s capacity to earn, save, invest, and prepare for their own retirements.
That pressure is at its most acute for the so-called ‘sandwich generation,’ those with both children and aging parents to take care of. Often times the caregiving that those Canadians provide is financial more than physical, bearing the costs of nursing, care homes, or medical expenses. The study found that, on average, these ‘financial caregivers’ pay around $7,025 per year when the person they are caring for has some resources, and $10,190 per year when they person they are caring for has insufficient resources.
The result for those financial caregivers is a personal financial sacrifice. 46 per cent of the caregivers surveyed say they make personal sacrifices to care for their parent and most of those sacrifices are in savings. That includes reducing savings contributions, tapping into non-retirement savings, and borrowing from retirement accounts. In the case of 22 per cent of those making sacrifices, it involves taking on additional debt. While some lifestyle changes are to be expected in caregiving, Day says that a few hard planning conversations can prepare people to reckon with the financial realities of caregiving before they have to start the work.
How to talk about caregiving
Caregiving conversations can be a challenge, Day says, because the topic can be difficult for everyone involved to confront. They involve taboo conversations around wealth, wills, and healthcare that many people prefer to avoid. Those conversations can quickly stray into the ‘unseemly’ as topics like bathing frequency, bedsores, and end of life planning can all crop up.
Day believes that Canadians are getting better at these conversations. As people live longer and face a higher likelihood of requiring care in their elder years, more Canadians have anecdotal examples from their personal networks that can start to motivate a plan. That said, she believes advisors can advance this work by focusing on the financial and estate planning factors of aging.
