An estimated 48 million Americans are caring for someone over the age of 18. Many of them are family members caring for an elderly parent or older relative — and the value of that unpaid care is estimated at about $600 billion dollars a year, according to a recent report by AARP.
Daphne Taylor, Debbie Taylor and Shelia Miller know the cost of caregiving firsthand. These sisters started caring for their 87-year-old mother after she had a stroke four years ago. Coincidently, the three had all retired around that same time. Miller and Debbie Taylor live in Alexandria, Virginia, while Daphne Taylor resides in Washington, D.C.
“We started out saying, ‘Okay, this is our life now,’ and we’ll do trial and error,” said Debbie Taylor, now 63, recalling how the sisters stepped in to provide around-the-clock care to keep their mother at home.
“It was all a learning process,” said Daphne Taylor, 65, a retired project manager. She took the lead in creating spreadsheets to coordinate care, track medications and note her mom’s progress. She says the ups and downs of her mother’s health and coordinating necessary services has been frustrating. “I was always able to get done what needed to be done in the working world,” Daphne said.
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Sisters Shelia Miller, Debbie Taylor and Daphne Taylor of the Washington, D.C., area care for their mother, Ernestine Taylor.
Managing health-related and long-term care expenses is also a challenge. Trying to arrange care quickly and efficiently, the sisters have paid out-of-pocket for medical equipment, transportation and supplies that were not covered by Medicare or insurance, including a $5,000 hospital bed.
“We’re trying to take care of our mom 24/7,” Debbie said. “There’s just no way in the world that you have time to try and figure this all out.”
The alternatives to being the primary caregivers for their mom are also expensive. The median cost for a private room in a nursing home is more than $100,000 a year — and more than $60,000 a year for a home health aide, according to a Genworth survey.
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Meanwhile, family caregivers spend more than a quarter of their annual income on caregiving costs, according to a 2021 AARP report. Many of them have stopped saving money or taken on more debt to pay for those expenses.
Planning ahead for long-term care can reduce some of the financial strain, says certified financial planner and CNBC FA Council member Barry Glassman, but few families actually do it. “It’s tough because a person in their 80s doesn’t really know when they may need help, or what help they may need, if at all,” said Glassman, who is president of Glassman Wealth Services, with offices in Vienna, Virginia, and North Bethesda, Maryland.
Still experts say taking these five steps can help prevent burnout and financial stress for many family caregivers.
1. Seek help from the government, non-profits
Medicare and most health insurance plans generally don’t pay for long-term care. However, if an elderly individual is eligible for Medicaid or a U.S. veteran, there’s a good chance a family member can get paid for caring for them.
Family caregivers may be able to be paid by Medicaid, depending on their state of residence. The amount of funds can vary contingent on the elderly person’s needs and the average wage paid to home health aides in that state. Go to the American Council on Aging’s website at medicaidplanningassistance.org to find out if your loved one is eligible for a Medicaid long-term care program that pays family members.
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In many states, former service members can manage their own long-term care, including choosing a caregiver, who may be a family member — and their military pension can also cover caregiving costs. The U.S. Department of Veteran Affairs’ Caregiver Support Program website can provide more information on how a caregiver of a military veteran can qualify for financial assistance.
Consider getting respite care for your loved one, too. Although options for family members to get paid for caregiving are limited, you may be able to get help by paying someone else to give you a bit of a break. Check out state and federal funding, as well as private sources that may be available to help you pay for respite care on the ARCH Respite Network and Resource Center website.
Research other government health and disability programs in your state, as well as disease-specific and non-profit organizations that may offer financial resources for caregivers, on the Family Caregiving Alliance website.
2. Take advantage of tax breaks
If your elderly parent or relative lives with you and qualifies as a dependent, you may be eligible to claim them as a dependent on your federal tax return.
You can deduct medical and health-related expenses for yourself, your spouse and your dependents that exceed 7.5% of your adjusted gross income on your federal income tax return. Qualifying expenses may also include including home modifications, equipment, and transportation.
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You may also qualify for a dependent care tax credit for a percentage of up to $3,000 in qualified care expenses for one person or $6,000 for two people.
3. Ask about employer benefits that can help
You may be able to save even more money by taking advantage of health savings accounts and flexible spending accounts offered by your employer — and using that money to pay for qualified medical, dental and vision expenses for a dependent.
You generally have to be enrolled in a high-deductible health insurance plan to contribute to a HSA — which allows for up to $7,750 in contributions for a family in 2023. If you’re 55 and older, you can contribute an extra $1,000. Contributions are tax-free, earnings are tax-free and you can withdraw the money tax-free for qualified medical expenses, too. You can make contributions to an HSA for 2023 until the tax deadline next April.
It’s tough because a person in their 80s doesn’t really know when they may need help, or what help they may need, if at all.
Barry Glassman
president of Glassman Wealth Services
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You may be able to contribute your pre-tax income to a health flexible spending account, as well as a dependent care flexible spending account. A health FSA covers qualified health-care expenses. The contribution limit is $3,050 in 2023. A dependent care FSA allows you to put away pre-tax money to cover in-home or daycare expenses for a dependent of any age while you are at work, up to $5,000 per household in 2023.
Consult a tax professional to find out if those accounts, as well as other tax breaks ,will provide some financial relief to your caregiving situation.
Find out if your employer offers other caregiving benefits, such as paid time off for caregiving, mental health and counseling services, remote work and flexible schedules.
4. Find support from a group or care specialist
Emotional stress and burnout can add to the financial strain of caregiving. Connecting with other caregivers in a support group may alleviate or help you better manage the multi-faceted aspects of caregiving. Search online for caregiver support groups that meet in your area or virtually.
A care manager may be another avenue of support you can engage even before a crisis. “We can be their ‘black umbrella,’ being there in the corner for them when it starts to rain,” said Anne Sansevero of the Aging Life Care Association. “But they have it in their closet, and they’ve got everything organized.”
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Care managers are often social workers or nurses who can help with creating, evaluating and monitoring a plan to help you care for your loved one. They can make referrals and provide you with a list of resources in your area for in-home care, adult day programs and other services. The fee can range from $125 to $350 an hour, Sansevero said.
5. Plan ahead for costs and decision making
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Finally, a key strategy to saving money and reducing the emotional stress of care is planning early.
If your older parent or relative is reasonably healthy and under the age of 70, consider helping them buy long-term care insurance if they can’t afford the premiums on their own, recommends CFP Ivory Johnson, founder of Washington, D.C.-based Delancey Wealth Management and a CNBC FA Council member.
Cash flow, family dynamics and personal preference are all factors to consider when looking at a long term insurance. And be sure to understand the fine print. “You can absorb all the risk, you can transfer all the risk, or you can do a little of both,” said Susan Hirshman, director of wealth management at Schwab Wealth Advisory and the Schwab Center for Financial Research. “There’s not one general rule.”
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And discuss with older parents their wishes for who will make health and financial decisions if they are unable to do so. Know where they keep the legal documents that spell out these wishes — health-care proxy or power of attorney, living will or advanced medical directive, and durable power of attorney for their finances.
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Liza Akhvledziani Carew and her husband David Carew visited Kenya’s Masai Mara National Reserve on their honeymoon. The couple strategically use credit card points to help pay for their travel.Supplied
Driving through rolling savannah plains in Kenya’s Maasai Mara National Reserve on her honeymoon, Liza Akhvledziani Carew saw elephants, lions and giraffes. She was reminded of the sheer vastness of the world and felt her “own little life” put into context.
For Ms. Akhvledziani Carew, the chief executive officer of a startup that helps Canadians earn more credit card points, travel is a non-negotiable budget item.
“It’s a big part of our lifestyle. That’s probably what I would spend most of my money on,” she said, adding that the couple pays for part of their travel with a “sophisticated [credit card reward] points strategy.”
The cost of travelling has soared in recent years, driven by the postpandemic travel boom, inflation and new taxes imposed by destinations affected by overtourism.
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But for many Canadians, travel remains a high-priority spending area, regardless of rising costs. And it’s clashing with other financial goals.
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Kathleen Daunt, a financial adviser with the New School of Finance in Toronto, works with clients who are saving for a major financial milestone, most commonly to buy a home.
When she sits down with her clients and calculates the amount they’d need to save each month to reach that goal – which usuallymeans not spending on travel – they balk at the trade-off.
“People expect to have all the items on their list of priorities. If anything, it means you have to understand your priorities and have flexibility,” she said.
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She also said roughly two in five new clients will cite annual travel as one of their top financial goals.
Ms. Daunt said she sees the desire for travel as a mix of social media-induced fear of missing out, widespread burnout and a societal view of vacations as a right – all of which can make it easier to justify overspending.
“You have that same old expectation [of being able to take vacations] but everything just feels more pricey,” she said. “It’s so much money for a family of four or more to do an on-a-plane vacation.”
Canadians’ overseas trips were up 32 per cent in the July-to-September period last year from the same period a year earlier, and up 6.5 per cent from 2019, according to Statistics Canada’s most recent national travel survey. The amount they spent abroad also jumped, rising 20 per cent in 2024 from a year earlier and nearly 40 per cent from 2019.
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Even the trade war with the United States and growing possibility of a recession have not dimmed Canadians’ vacation ambitions. While travel south of the border by plane and car is down, Transat A.T. Inc. chief executive officer Annick Guerard said on a conference call with analysts in March that Canadians’ spending on transatlantic flights has not been affected.
According to estimates by Barry Choi, a personal finance and travel expert at moneywehave.com and regular Globe and Mail contributor, a two-week European vacation costs about US$5,050 ($7,000), though he noted the estimate was for a solo traveller, so couples or families should expect to pay notably more. Timing can significantly affect costs, with June to August the most expensive months.
In contrast, according to the Canada Mortgage and Housing Corp., Canadians’ average monthly mortgage payment at the end of 2024 was $2,042 (and much higher in Toronto, at $3,006, and Vancouver, at $3,053).
Rachel Dodds, a professor at Toronto Metropolitan University’s Ted Rogers School of Hospitality and Tourism Management who studies overtourism and consumer motivations for travel, said social media plays a huge role in stoking travel interest. According to data from TikTok,as of mid-2024 the app had seen a 410-per-cent increase in travel content views since 2021.
“Everyone has a phone, everyone consumes [travel content] – if you see a reel on Instagram you’re like, ‘Oh, I wanna go there,’” Prof. Dodds said. That goes both ways: While on vacation, people are much more likely to post photos for the “instant gratification” of likes and comments. “There’s an emotional and sharing aspect of it that didn’t exist before 15 years ago.”
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Relative to previous decades, travelling is now more affordable and is seen as a right rather than a privilege in Western countries, Prof. Dodds said. And that increasein affordability has come at a time when many people, particularly millennials and Gen Zers, have more disposable income but feel other large financial goals are out of reach.
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“Travel has become a substitute for those kinds of things,” she said.
Prof. Dodds said we are an increasingly lonely society, and many people are travelling to connect with others to have meaningful, authentic experiences of other cultures. That’s given rise to sustainable travel, and nature-based trips and community experiences, rather than the traditional resort-based vacations.
While Ms. Daunt said none of her clients have ultimately chosen travelling over other financial goals, some have opted to delay major purchases. She said she usually sees people negotiating within their new budgets to downgrade from a trip every year to once every two or three years, or from pricier international trips to smaller ones close to home.
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“It’s hard, because we have the push from feeling burnt out and I would argue expecting vacations. We live in a country where we feel like, ‘I deserve to be able to have vacations,’ and there’s this other push on the home-buying side where there’s so much FOMO when it comes to home purchasing despite a bonkers overpriced market,” she said. “We’re still putting those expectations on ourselves.”
A strategy of making small regular contributions to a dedicated travel savings account can be aneffective way to save for vacations without compromising other travel goals, she said.
For Ms. Akhvledziani Carew’s part, when she and her husband bought their home a few years ago after years of rigorous monthly savings goals that mimicked what they expected to spend on mortgage payments.
They also tapped their investments, and her husband sold a condo he previously owned. She said they did slightly less-elaborate trips, but their points strategy meant they didn’t have to cut back much.
“It was a different position we were starting from,” she acknowledged, but added later “you build your lifestyle around the thing that’s most important to you.”
FILE – A coin being inserted into a piggy bank. Getty Images
Some money experts have insight on what helps the average American feel better about their financial situation – and it has little to do with a high income or assets.
Emergency savings amount
Conclusion:
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The investment adviser group Vanguard surveyed thousands of its clients about their financial situation, and found the strongest predictor of financial well-being and lower financial stress was having at least $2,000 in emergency savings.
By the numbers:
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Those who have at least $2,000 in emergency savings were associated with having a 21% higher level of financial well-being, versus those who didn’t have any emergency savings.
Those who have an additional three to six months of expenses saved up saw an additional 13% boost in financial well-being.
Dig deeper:
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Additionally, those with an income of $500,000 or more saw a 12% boost in financial well-being.
And those with over $1 million in assets had an 18% boost.
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Financial well-being
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More perspective:
Financial well-being is a state wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life, according to the Consumer Financial Protection Bureau.
Dig deeper:
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Vanguard asked how often people spent thinking about and dealing with their finances, and found that those who have an emergency savings fund spent 2.5 fewer hours per week on financial matters.
On average, those without emergency savings spent more than 7 hours per week on financial matters.
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Big picture view:
Most financial experts, including Vanguard, recommend having about three to six months of expenses accessible in an emergency savings fund.
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The Source: Information in this article was taken from a Vanguard report, which analyzed data after surveying more than 12,000 investors of varying age, income and asset ranges. This story was reported from Detroit.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Start-ups and companies seeking scale-up funding no longer flock to the stock market as readily as they once did. Many bypass the high street banks too. The reason? They have other options thanks to the ready availability of different types of funding from private markets, at least for those businesses showing fast growth potential.
Private capital markets, which have grown significantly in recent years, offer services ranging from debt funding, seed and venture capital to minority stakes and full buyouts.
Their efforts to rival public markets have been helped by bouts of volatility and illiquidity that have hit stock markets. The tougher life gets for listed companies, the more companies are tempted to go or stay private. Being on a public market comes with extra costs, the legal obligation to be fully transparent on all aspects of the business and the risk of a lifeless share price. Increasing numbers of listed companies are being taken private as their discounted shares make them easy prey.
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Ironically, one way for investors to tap into the growth and profitability of private markets is through investing in companies that use public stock markets to raise capital for their private funding operations. Intermediate Capital provides a range of private funding, spanning debt, mezzanine finance and private equity. Petershill Partners, whose parent is Goldman Sachs, provides capital and expertise to private capital managers.
Investment trusts have invested in private markets for decades, and range from Pantheon International, which specialises in private equity assets, to Scottish Mortgage, which allocates a proportion of its portfolio to unquoted companies. Lucrative returns are not guaranteed and it has become an increasingly crowded market, which brings additional risks. Investors should take care to avoid overexposure and to research the available options properly.
