Caring for a loved one is a labor of love, but it often comes with significant financial challenges that are rarely discussed. Family caregivers provide invaluable support, often at the expense of their own financial stability. Whether it's reducing work hours, leaving a job entirely, or covering out-of-pocket expenses, the economic impact of family caregiving can be profound and long-lasting.
The Direct Known Costs of Family Caregiving
When people think of the costs associated with caregiving, they often think of medical expenses. However, the direct costs go beyond just healthcare. Caregivers frequently pay for items like medical supplies, medications or copays, groceries, home modifications, transportation, and specialized care services out of their own pockets.
According to a 2021 study by AARP, family caregivers spend an average of $7,242 per year on out-of-pocket expenses related to family caregiving, with those costs varying depending on the intensity of care required.
Caregivers living with their care recipient also incurred high costs averaging $8,616 per year. That number spikes to nearly $12,000 — $12,700 when adjusted for inflation in 2024 — for caregivers who live an hour or more from their loved one.
Loss of Income
One of the most significant financial impacts of caregiving is the loss of income. Many caregivers reduce their work hours or quit their jobs altogether to meet the demands of caregiving. This can result in a substantial loss of income, reduced retirement savings, and lower Social Security benefits.
There are few organizations that offer family caregivers some financial relief which can allow individuals to be paid to be a family caregiver, or at least offer supportive resources. Agreements among family members on compensation of one individual who may be carrying the load and long-term care insurance can benefit many more who may not be eligible for other programs.
Loss of Career Opportunities
More than half of employed caregivers (56%) experience at least one work-related strain and more than 50 percent of family caregivers have taken time off from their main job, reduced hours at work or quit their jobs altogether to accommodate their responsibilities, AARP researchers found.
According to the Caring Company study, which surveyed 1,500 employees and 300 human resources leaders to better understand the increasing importance of caregiving benefits, 32 percent of employees have left a job to take care of an older family member with daily living needs. And almost 25 percent of workers have quit work altogether to take care of an ill or disabled spouse, partner or extended family member.
For women, who make up the majority of family caregivers, the career implications can be even more severe. The time taken off from work not only affects immediate earnings but can also limit career advancement opportunities, leading to long-term financial insecurity.
Financial Impact on a Family Caregiver’s Own Family
As the caregiver spends more time away from their own family to care for a loved one, it can result in the caregiver feeling guilty or resentful, but it can also impact their ability to provide financially for them.
Many family caregivers also cut back on other spending which can undermine the family caregiver’s future financial security or needs of their own family. One in six people have reduced contributions to their retirement savings (16%) and roughly half have cut back on leisure spending (e.g., 45% cut back on eating out or vacations as a result of caregiving expenses).
When children are in the mix, individuals “sandwiched” between their loved one or a parent and the needs of their own children often cut back on spending and time with their children. The balance becomes tricky, and someone may feel left behind. How do you manage taking care of someone with special needs while not forgetting your daughter’s medicine or your spouse’s doctor’s appointment?
Long-Term Financial Planning
Given the financial burdens associated with caregiving, it's crucial for caregivers to plan ahead. This includes creating a budget that accounts for caregiving expenses, exploring financial assistance programs, and considering long-term care insurance. Caregivers should also seek support from financial advisors who specialize in elder care planning to ensure they are protecting their own financial future while providing the best care possible for their loved ones.
The founders of Watch Our Own experienced the stress firsthand when their loved ones changed to a managed care effort, forcing them to become the primary caretakers while managing work and family responsibilities. It is for this reason that they built the Watch Our Own app.
More importantly are the hidden costs that this app was designed for, not just for the person requiring special care, but for the entire family. The all-in-one caregiving app helps family caregivers organize, facilitate care and communicate with others to ensure that every loved one, not just one with special needs, is cared for. Being able to coordinate everyone into one app helps to save time, energy, money ad improve communication between all caregivers in one spot.
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