More than 65 million Americans – about one out of three adults – provide care for someone who is ill, disabled, or aged. Although these caregivers are unpaid, the total value of their efforts is estimated at $450 billion annually – more than the value of paid home health care and more than the 2010 retail sales of Wal-Mart, the world's largest retailer.
Not surprisingly, about two-thirds of all caregivers help someone who is age 50 or older , typically a parent, a spouse, or a friend. Most people volunteer out of love and a sense of duty, but the high expense of professional care is an important factor. The average annual cost of nursing-home care exceeds $77,000.
Unpaid informal care giving, although free, could still have a significant financial impact. Seven out of 10 working caregivers reported having job difficulties, from changing their schedules or turning down a promotion to taking unpaid leave or giving up work entirely. For caregivers who live nearby or with the person receiving care, average out-of-pocket costs range from $4,570 to $5,885 annually. For long-distance caregivers, who often have substantial travel and lodging expenses, the average annual cost is $8,728.
Of course, the financial burden is only one aspect of the cost of care giving. Studies show that many caregivers also suffer physical and emotional effects, especially back problems and depression. The old expression, "Physician heal thyself," may be appropriate. When you provide care for someone else, it's important to take care of yourself.
As with many aspects of life, financial resources can make a significant difference. Only three percent of caregivers with six-figure incomes report suffering fair or poor health themselves, compared with one-third of those who have household incomes under $30,000.
If you haven't factored the cost of long-term care into your retirement needs, it may be wise to give it serious consideration. If you are caring for a loved one – or receiving care – a sound financial strategy could help alleviate some of the stress. You should contact a trusted advisor to discuss your situation and help you consider your options.
(Charles Sims Jr. is President/ CEO of The Sims Financial Group. Contact him at 901-682-2410 or visit www.SimsFinancial Group.com. The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.)