While many aspects of caregiving have been previously studied, financial caregiving remains largely unexamined.
A Merrill Lynch study, conducted in partnership with Age Wave — “The Journey of Caregiving: Honor, Responsibility and Financial Complexity” — finds that 92% of caregivers say they are also financial caregivers, performing at least one aspect of financial caregiving during their caregiving journey.
“Money may not be the first thing that comes to mind when we think about what caregivers do and who they are,” the report states. “But financial relationships are an integral and necessary part of caregiving, and they’re part of almost every caregiving situation.”
In fact, according to the report, after two years of receiving care, 88% of care recipients are no longer managing their finances independently.
The report defines financial caregiving as potentially two different roles. A “financial contributor” is a caregiver who pays for care, and a “financial coordinator” is a caregiver who oversees and organizes other aspects of their care recipient’s finances, such as paying bills, managing investments, preparing taxes, handling insurance and monitoring accounts.
The report finds that financial coordination, not direct financial contribution, is the most common form of financial caregiving. According to the report, 88% of financial caregivers are financial coordinators and 68% are financial contributors.
The financial contributor and coordinator roles are not always mutually exclusive, though.
The report finds that financial caregivers are responsible for a wide variety of tasks, including paying bills from their recipient’s account (65%), monitoring bank accounts (53%), handling insurance claims (47%), filing taxes (41%), and managing invested assets (21%).
According to the report, caregivers on average spend $7,000 on caregiving per year, which goes toward paying for personal, medical and household needs.
“Yet, many are contributing far more,” the report notes.
Caregivers for people with Alzheimer’s and other forms of dementia spend, on average, 54% more than the average caregiver, the report finds. In addition, caregivers for a spouse spend 68% more than the average and those who are caregiving from a distance spend 71% more than the national average.
In total, the report estimates that financial caregivers collectively spend an estimated $190 billion per year on their care recipients for out-of-pocket, care-related expenses.
Despite covering these hefty financial costs, the report finds there is little discussion of their ramifications. According to the report, 75% of financial contributors and their care recipients have not discussed the financial impact of these contributions.
And 66% of caregivers feel they could benefit from financial advice.
“While some caregivers may feel compelled to contribute financially, not knowing how much they’ve spent makes it difficult to plan and can have ripple effects throughout their lives,” the report states.
The study is based on a nationwide sample of more than 2,200 respondents, including 2,010 caregivers.
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