This article appeared in the New Brunswick Telegraph Journal. Often when we think of caregiving, we think of the emotional burden. More and more, it will be important for people to be prepared for the financial aspects, for themselves but also as caregivers.
Providing health care for aging parents – can we stand the strain?
It is well known that North American baby boomers (ages 40-68) are the wealthiest generation of citizens in history. Never has there been a group of people that has acquired assets and or wealth as have baby boomers. This group has been fortunate to be born after the Second World War, a period when all Western economies have seen virtual uninterrupted exponential growth.
Although parents of baby boomers have lived more enriched financial lives than their parents, looming health-care costs will be a financial strain on both their parents and on the boomers themselves. The issue that are germane to this imminent circumstance isn’t the costs themselves, but the lack of financial planning to cover them on the part of both parties. When it comes to financial planning, boomers are considered a savvy generation, but relatively few are prepared for the costs of caring for ailing elders. These are not just financial, but include the cost of being away from work and families.
The following statistics are going to be the most shocking associated with care-giving. According to a 2001 study conducted by the Met Life Mature Market Institute in Westport, Conn., a ‘full time career’ of care-giving costs on average $730,000 US in lost income.
Statistics Canada reports that about 1.4 million Canadians older than 45, combined full-time employment with care-giving. Today’s adults in their 40’s and 50’s represent the first generation that, in all likelihood, will spend more years helping their parents than taking care of their own children, according to a recent study by Axa Financial Inc. There is a sub-set of baby boomers, commonly referred to as the ‘sandwich generation’ who are simultaneously caring for elders and children.
Canadians who find themselves conscripted into the role of care-giver find themselves in a life turned upside down as they grapple with the medical treatments and associated costs, as well as the complexities of the illnesses themselves. At this point, turning to professional services for help may be apropos. Putting aside the emotional and physical stresses, the financial burden of caring for aging elders can be significant. Many care-givers find it necessary to reduce their hours of employment and turn down promotions at work or give up work all together to look after elders. This can create a somewhat thorny situation for the care-giver as it limits their ability to create wealth for their own retirement.
Although it can be awkward talking to parents about aging and finances, it is critical to have these discussions prior to becoming ill or incapacitated. Assets such as homes, life insurance and pensions may have to be deployed to sustain an acceptable life style for the aging elders in question.
The costs of farming out care-giving duties can very widely from basic housekeeping services at $30 per hour to institutionalizing a loved one at a rate of $2,000 – $5,000 a month depending on the provincial jurisdiction and the type of facility, whether it is long term care to retirement homes.
While aging and mortality are inevitable the financial drain on informal care- givers does not have to be. The Canadian Care-Giver Coalition has stated it hopes to persuade both provincial and federal governments to develop national strategies for care-givers, pointing out that 65 per cent of all households with care-givers report income lower than $45,000, according to a 2002 Health Canada Survey.
One does not need to be a genius to figure out that the cost of care-giving in most Canadian households will far outstrip the ability for the same to pay. Baby boomers can help subsidize the difference if they have the financial wherewithal to do so. The more important thing we may want to consider as baby boomers is this “… “Who is going to look after us?” Demographics are working against us.
New Brunswick Telegraph-Journal; July 11, 2006, page C1. By Rick Buckingham Rick Buckingham is president and CEO of Canadian 2 for 1 Pizza Inc. based in Fredericton. He can be reached by email at email@example.com