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 also are 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 also 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. According to the study, 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%).
Plus, caregivers spend an average $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 study, 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,” states the report, which was based on a nationwide sample of more than 2,200 respondents, including 2,010 caregivers.
What Millennials Want
In a new survey, millennial workers indicated that they are more confident making investment decisions on their own vs. members of older generations and also are very receptive to professional financial help, reports Schwab Retirement Plan Services.
Despite the financial demands they face, millennials are taking positive steps with regard to their saving and investing habits, especially with their 401(k)s, the survey found, and 80% said they would like personalized 401(k) advice.
Schwab notes that workers in the 25-to-36 age group are especially reliant on 401(k)s for the money they will need in retirement, with 78% reporting that a 401(k) is their largest or only source of retirement income.
The Schwab survey reveals that millennials are disproportionately affected by money-related stress. Thirty-five percent say it has affected their job performance, compared with 18% of Gen Xers and 11% of baby boomers.