About one-third of Americans who are caregivers for their elderly parents spend more than 10 percent of their own retirement savings caring for a loved one, according to a new survey from The PNC Financial Services Group Inc.
The fall 2014 Perspectives on Retirement survey showed 60 percent of Americans are anxious about providing physical care for parents and other relatives as they prepare for retirement themselves. And 43 percent will become financially responsible for an adult relative’s care.
The survey included 1,021 participants from 37 states who responded from July 31 to Aug. 12. Those surveyed: were between ages 35 and 75, about 20 percent of whom were retirees; had total investable assets of at least $100,000; had liquid investable assets of at least $50,000 or a minimum of $250,000 in total investable assets; and made all or were equally involved in making the long-term financial investment decisions for their households.
Of those surveyed, 29 percent are saving more in anticipation of caring for an elderly relative and 24 percent are delaying luxury purchases and travel. That’s a recent trend among those planning for retirement, partially due to longer life expectancies, said Lori Craig, a Milwaukee-based senior vice president and market executive at PNC Wealth Management.
“From being in this industry for as long as I’ve been, anecdotally, I can tell you that it wasn’t even a part of the conversation we had with our clients years ago,” Craig said.
Now, she tells clients to save “until it hurts” and ensure they are getting professional advice on savings and investments while securing the assets they have with long-term care insurance and life insurance. It’s also important to have proper wills, power of attorney forms and other health documents up to date.
“Save money and start as early as you can,” Craig said. “We don’t know what’s going to happen. Because there is that uncertainty, you really need to think about protecting your family’s wealth and health together.”
Craig Hulce, a 53-year-old Menomonee Falls resident and former financial advisor who took the Perspectives on Retirement survey, spends a significant portion of his time caring for his 18-year-old son, who has an acute long-term illness. His mother, who is 78, is also beginning to experience minor health issues.
While he didn’t specifically plan for relatives’ health care costs, Hulce and his wife have always made a point of saving 20 to 30 percent of their take-home pay.
“We’ve probably spent a fair amount of money on my son that would have been spent on retirement savings,” Hulce said, though he probably would have gifted those funds to his son later in retirement. “I probably do not anticipate to spend 10 percent (of my retirement savings) on my mother.”
Hulce and his mother have already made plans for her care when she does go into assisted living or a nursing home. His mother picked a place out and planned for the costs, which she will fund through Medicare and a Medicare supplement plan.
But not everyone is as prepared as Hulce’s family. Michael Weil, director of wealth management at Milwaukee-based Next Generation Wealth Management, said he sees baby boomers working longer and expects it could be because they’re worried about paying for the care of elderly relatives.
“They do relay stories back that they might have an elderly parent that requires care and it’s kind of a wakeup call that having enough money, this could potentially be an issue later on,” Weil said. “People, I think, are more cognizant of it than ever that they may need to save more money, and hence they may need to be working longer to do that.”