A new Wells Fargo/Gallup survey finds that 53% of U.S. investors are spending time or money or both helping adult children or extended family members, which affects their own financial well-being including their ability to save for retirement.
More specifically, 45% of the almost 2,100 investors polled — with a minimum $10,000 invested in stocks, bonds or mutual funds — said they contributed on average $10,000 in financial assistance to an adult child, parent, parent-in-law, sibling, grandchild or other relative over the past year. That’s twice the $5,000 that a previous Wells Fargo/Gallup survey found investors could not handle. (They were not asked that question in the latest survey.)
“It is extraordinarily generous for investors to step in and help adult family members with this level of support, but there is risk if they are not doing so from a position of strength,” said Mary Sumners, regional president of Wells Fargo Advisors’ Northern Region, in a statement.
The most common expense paid by investors was living expenses for an adult child, incurred by 30% of respondents, followed by living expenses for a parent or in-law (13%), medical expenses for an adult child (9%), caregiver expenses (7%) and medical expenses (6%) for a parent or in-law. An additional 29% of investors reported they had paid tuition for college or other type of school, but that figure was not included in the financial support stats of the latest survey.
Investors providing personal assistance or care to family members spent an average 13 hours per week doing so. Women were almost twice as likely as men to be caregivers (14% versus 8%) and even more likely to be sole caregiver (40% versus 13%), according to the survey.
Both men and women reported that caring for relatives has had a negative effect on their emotional health and time for themselves, their family and friends and jobs. Not surprisingly, a higher percentage of women than men reported these negative effects, since they also reported spending more time on caregiving.
On the flip side, the experience of providing care to relatives helped these investors understand how they want to be cared for when they get older, and close to 60% said they were saving more for medical and personal care that they had originally planned. About half said they were now more likely to move to an assisted living community in their later years.
Despite these experiences and changed attitudes, the survey found that many investors are still underestimating the costs for health care and long-term care in retirement. More than half expect those costs will total less than $200,000, well below the roughly $330,000 total estimated for health care ($194,000) and long-term care ($138,000).
Only one-quarter reported having a health savings account, and even fewer (20%) reported having long-term care insurance.
“Many people understand the need to save for retirement, but it appears they have compartmentalized health care costs and are not planning the way they need to,” Sumners said. “Underfunding health care costs later in life could deplete retirement savings and make investors vulnerable.”
The Wells Fargo/Gallup Investor and Retirement Optimism survey polled 2,091 investors age 18 and older in early August, split almost 60/40 between non-retirees and retirees and between those with annual incomes above and below $90,000.
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