New Baby Boomer budget item: Taking care of the parents
by AccountingWEB on
Americans who provide care for their aging parents lose an estimated three trillion dollars in wages, pension and Social Security benefits when they take time off to do so, according to "The MetLife Study of Caregiving Costs to Working Caregivers: Double Jeopardy for Baby Boomers Caring for Their Parents". Produced by the MetLife Mature Market Institute in conjunction with the National Alliance for Caregiving and the Center for Long Term Care Research and Policy at New York Medical College, the study reports that individually, average losses equal $324,044 for women and $283,716 for men. The percentage of adults providing care to a parent has tripled since 1994.
The researchers analyzed data from the National Health and Retirement Study (HRS) to determine the extent to which older adult children provide care to their parents. They also studied gender roles, the impact of caregiving on careers and the potential cost to the caregiver in lost wages and future retirement income.
"Nearly 10 million adult children over the age of 50 care for their aging parents," said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. "Assessing the long-term financial impact of caregiving for aging parents on caregivers themselves, especially those who must curtail their working careers to do so, is especially important, since it can jeopardize their future financial security."
In addition, the study found that:
- Adult children age 50+ who work and provide care to a parent are more likely than those who do not provide care, to report that their health is fair or poor.
- The percentage of adult children providing personal care and/or financial assistance to a parent has more than tripled over the past 15 years and currently represents a quarter of adult children, mainly Baby Boomers. Working and non-working adult children are almost equally likely to provide care to parents in need.
- Overall, caregiving sons and daughters provide comparable care in many respects, but daughters are more likely to provide basic care (i.e., help with dressing, feeding and bathing) and sons are more likely to provide financial assistance defined as providing $500 or more within the past two years. Twenty-eight percent of women provide basic care, compared with 17% of men.
- For women, the total individual amount of lost wages due to leaving the labor force early because of caregiving responsibilities equals $142,693. The estimated impact of caregiving on lost Social Security benefits is $131,351. A very conservative estimated impact on pensions is approximately $50,000. Thus, in total, the cost impact of caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044.
- For men, the total individual amount of lost wages due to leaving the labor force early because of caregiving responsibilities equals $89,107. The estimated impact of caregiving on lost Social Security benefits is $144,609. Adding in a conservative estimate of the impact on pensions at $50,000, the total impact equals $283,716 for men, or an average of $303,880 for male or female caregivers age 50+ who care for a parent.
"These family caregivers, the celebrated members of the sandwich generation, are juggling their responsibilities to their own families and to their parents," said Gail Hunt, president and CEO of the National Alliance for Caregiving. "There is also evidence that caregivers experience considerable health issues as a result of their focus on caring for others. The need for flexibility in the workplace and in policies that would benefit working caregivers is likely to increase in importance as more working caregivers approach their own retirement, while still caring for their loved ones."
"As the percentage of employees who are caregivers continues to grow, there will be greater demand on employers for help and support. There are many workplace resources and programs that can be made available that benefit all stakeholders since financial stress can negatively impact physical health and workplace productivity," adds Timmermann.
The study contains implications for individuals, employers and policymakers. It points out that employers can provide retirement planning and stress management information and can assist employees with accommodations like flex-time and family leave. Individuals, it says, should consider their own health when caregiving and should prepare financially for their own retirement. Policymakers are made aware of the fact that more states are considering paid family leave, especially as it is accrued through workers' compensation funds. On the federal level, a voluntary long-term care insurance program is part of the Affordable Care Act and will likely increase public awareness of the issue.
The study uses data from the Health and Retirement Study (HRS) conducted biannually by the University of Michigan with funding from the National Institute on Aging. First fielded in 1992, the HRS, a nationally representative sample, surveys adults over the age of 50 and provides extensive information on this population, including data on income, work and health status, and whether respondents provide basic, personal care and/or financial assistance to their parents. After cases with missing data were eliminated from the 2008 panel, the sample was restricted to 1,112 men and women who had a parent living.