Women Often Hurt Financially When They Become Caregivers For Elderly
When women assume the role of caregiver for an elderly person, they are two and a half times more likely to end up living in poverty than if they do not have to be a caregiver, an expert said.
The consequences for being a caregiver can be extreme and impact women more than men, according to Cindy Hounsell, president of the Women’s Institute for a Secure Retirement. Hounsell discussed the affects of care giving on women during a recent webinar sponsored by the International Retirement Resource Center entitled The Personal Cost of Caregiving: Women Need to Protect Their Retirement, Too.
To help prevent problems, families should consider signing a contract that sets out the duties of the person designated as the caregiver for an elderly relative and establishes the financial arrangement to compensate the caregiver.
“Financial advisors need to help women think about what they will need in the future and warn them about the expenses of care giving for an elderly relative or friend,” Hounsell said.
The issue is particularly important to women because women live longer and are more likely to end up as caregivers to an elderly person. They also are more likely to take off work or work part-time to be a caregiver.
“Women especially need to take control at the earliest possible age,” Hounsell said. “Women need to shift their thinking and recognize the reality of old age in the 21st Century.”
Nearly 25 percent of U.S. households, which translates to 22 million households, provide care to a relative or friend 50 years of age or older. On average, caregivers spend 4.5 years providing care.
Women often lose pay because they work part time or quit a job to be a caretaker. They lose opportunities for promotions and for training because of the extra time required.
Hounsell said women need to consider how their Social Security benefits and pension benefits will be affected if they take time off. Time taken off from work also reduces savings and investments and reduces the amount contributed to a 401(k) plan, including the employer’s matching funds.
On average, women lose a total of $324,000 in wages and Social Security because they take time off.
Miscellaneous expenses, such as food, clothing and medicine, cost an average of $12,000 a year.
“Do not be a martyr,” Hounsell warned. “Ask for financial help from brothers and sisters.”
Women tend to not make their own finances a priority, she said. Financial advisors need to discuss the possibility of caring for a loved one with their clients and include a ‘cost of caring’ component in the financial plan. When someone is caring for a loved one, a budget should be created for the person the client is helping. All costs should be recorded to prevent future family disputes.