A year ago, we discussed the true cost of caregiving, in which we highlighted the reported loss of wages over a lifetime (upwards of $140,000 for women). We also presented that the possible out-of-pocket costs ranged from $4,570 to $8,728 per year. Until just recently, that was the extent of available research on the subject. However, a recent AARP research study dug even deeper into the extent of out-of-pocket costs and provided specific detail on what you can expect to spend on out-of-pocket caregiving-related expenses (source). Below is our summary of the findings of that study.
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The Out-of-Pocket Expense of Caregiving
During the study, AARP found that “family caregivers spend an average of $6,954 on out-of-pocket costs related to caregiving, nearly 20% of their annual income.” This is a significant dollar amount and it is consistent among caregivers. Caregiver out-of-pocket expenses typically include:
- Household goods
- Food and meals
- Travel and transportation costs
- Minor (or major) home modifications
These types of costs are about 41% of expenses. Another 25% of out-of-pocket expenses include medical care co-pays and pharmaceuticals.
The Impact of Out-of-Pocket Costs
Taken directly from the report, the following breaks down the variation of expenses by ethnic groups and other scenarios, in order by dollar value:
- Asia-Americans/Pacific Islanders spent $2,935
- African-American family caregivers spent $6,616
- White family caregivers spent $6,964
- Caregivers who shared the same home spent $8,616
- Hispanic/Latino family caregivers spent an average of $9,022
- Caregivers for those with dementia spent $10,700
- Long-distance family caregivers (defined as those who lived more than an hour away) spent $11,923
These are costs coming directly out of your bank account, every year. Keep in mind that if your annual expenses are $10,700, in five years that will equal $53,500. That is a significant cost that can severely impact your day-to-day life, as well as what you had saved for your own future. So what can you do to prepare?
- Plan out all anticipated expenses for your aging loved one
- Put together a budget and timeline of these expenses
- Get help from a financial advisor
- Utilize caregiver financial assistance options that are available to you
- Keep track of your expenses and evaluate regularly
You need to be prepared and know what out-of-pocket expenses you can expect. Don’t wait until it is too late. Start discussing options with your family, aging loved one, and financial advisor today.
