As cognitive decline becomes an increasingly significant part of Americans’ lives, it is having a massive impact on families’ finances, according to a new study from RBC Wealth Management- U.S.
According to the Alzheimer’s Association, 5.7 million Americans are living with Alzheimer’s disease, a figure that is expected to reach 14 million by 2050.
As the population ages, the responsibility of caring for aging relatives is falling largely to next of kin. In fact, one in five (19%) American adults currently assists an older family member, according to the RBC survey. Specifically, 17% of respondents regularly help with chores, cooking, cleaning or traveling to appointments, 5% provide housing and 5% offer financial support.
The survey found that among those who provide financial support to an older relative, the average monthly contribution is $403. Twenty-two percent contribute $500 to $999, and 14% contribute more than $1,000.
RBC partnered with Ipsos to poll more than 2,000 Americans 35 and older on a range of issues related to their personal finances.
The survey focused largely on the sandwich generation.
According to Jen McGarry, who heads RBC’s client risk prevention division, this was of keen interest to RBC as the firm has a lot of clients caring for both their aging parents and their adult or teenage children.
As the survey found, many Americans currently know someone diagnosed with dementia.
Among respondents who have a senior relative in their life, 10% say someone they help care for has been diagnosed with some form of dementia, and another 9% say someone else in their family has been similarly diagnosed.
The hit to families’ finances is not only due to increased medical expenses but also because those with dementia may make financial missteps and are at increased risk for becoming targets of fraud and abuse.
The survey also found that many of the respondents are experiencing these effects firsthand. Among those respondents with a senior family member, one in ten (11%) either knows or suspects that their loved one has been a victim of financial abuse. This figure rises to 30% among those with a family member they care for who has been diagnosed with dementia.
Of note, 45% of total respondents cite “being taken advantage of” as a concern for their own retirement.
While many Americans with a senior relative who has been diagnosed with dementia are aware of potential abuses, not all are equipped to address them. Twenty-eight percent of respondents in this group have taken formal steps with a financial institution or lawyer to protect their family member’s finances in light of a diagnosis, and a similar proportion (29%) have taken some informal steps, while 43% have taken no steps at all.
Only about half of the people surveyed said they were familiar with the steps to take if they suspect an older relative has been a victim of abuse, according to McGarry.
She stressed that the industry has a significant responsibility and role to play in protecting vulnerable populations.
At RBC, the client risk prevention division, which McGarry heads, is responsible for protecting our senior and vulnerable clients. It is structured as a central unit that liaises with several other departments internally at RBC and agencies externally.
“The whole design is to be able to provide a one-stop shop for our financial advisors and frankly all employees at RBC WM who might need guidance on how to navigate through a situation regarding a senior or vulnerable client,” McGarry explained to ThinkAdvisor. “They might have a generic question, they might want us to opine on a path or right way to navigate a certain scenario.”
RBC’s advisors are working closely with clients and their families to understand how cognitive disease can put them at risk, and to put safeguards in place to preserve their dignity and their assets, according to McGarry.
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