As the population ages, family dynamics are increasingly playing a crucial role in shaping financial planning and care strategies for older adults. Recent research and expert insights reveal the complex interplay between family relationships and the financial aspects of eldercare, highlighting both challenges and opportunities for families navigating this terrain.
The Impact of Family Relationships on Care Decisions
A groundbreaking study led by Associate Professor Gery Karantzas from Deakin University’s School of Psychology has shed light on how family relationships can significantly affect the care of elderly parents. The Families in Later Life Study, which tracks sons and daughters caring for aging parents in the community over a one-year period, focuses on the quality of the parent-child relationship and its impact on health outcomes for both parties.
Karantzas’s research reveals that family relationships marked by rejection or a sense of inadequacy can exacerbate negative outcomes, including problems with immune functioning and increased risk of depression, anxiety, and stress. Conversely, family relationships characterized by love and support appear to mitigate these physical and mental health issues.
Financial Caregiving: A Growing Concern
As life expectancy increases, so does the complexity of financial caregiving. Recent data from TIAA Institute highlights that many caregivers are now taking on the role of financial caregivers, coordinating some or all of their loved one’s money-related matters.
This financial caregiving often comes with significant costs. On average, family caregivers report spending approximately $7,200 per year in out-of-pocket expenses, with even higher costs for family members with conditions such as Alzheimer’s. Moreover, caregivers spend an average of 26% of their income on caregiving activities, with Black and Hispanic/Latino caregivers reporting even greater burdens at 34% and 47% of income, respectively.
The Sandwich Generation: Balancing Multiple Responsibilities
The rise of the “sandwich generation” – those caring for both children and elderly parents simultaneously – presents unique economic and financial challenges. Janet Morrow, Financial Advisor at Trinity Park Wealth Co., emphasizes the importance of comprehensive financial planning in these situations. “Money is very emotional – especially when you add helping family members into the equation,” Morrow states. She advises individuals to “make sure you’ve got your own oxygen mask on first,” to maintain financial wellness while supporting loved ones.
Strategies for Effective Financial Planning
Experts recommend several strategies for families navigating the financial aspects of eldercare:
- Early Planning: Sarah*, a caregiver who transitioned her parents into aged care, advises focusing on financial matters earlier. “In retrospect, I wish this had been done earlier. Doing so means you are armed with all the relevant information before you start making some big decisions,” she says.
- Seek Expert Assistance: The aged care sector is complex, and most families will only engage with it once or twice in their lives. Getting expert advice can make a significant difference in understanding the intricacies and options available.
- Longevity Literacy: Researchers suggest incorporating “longevity literacy” into financial planning. This involves raising awareness about longevity and caregiving, and planning for these aspects in the early stages of adult life.
- Government Programs: Families should explore government benefits and programs designed to support individuals caring for both children and elderly parents. Understanding and accessing these resources can significantly help reduce financial stress.
The Role of Financial Advisors
Financial advisors are increasingly recognizing the need to address family caregiving in their practice. The TIAA Institute recommends that advisors use a family-centered approach to establish and sustain trusting, longitudinal relationships that include both clients and their loved ones. This approach involves assessing family dynamics and incorporating potential caregiving scenarios into long-term financial plans.
As our society continues to age, the intersection of family dynamics and financial planning for eldercare will only grow in importance. By understanding these complex relationships and implementing comprehensive strategies, families can better navigate the challenges of caring for aging loved ones while maintaining their own financial well-being.
References:
1 Mercer. “Case study: A family navigates the aged care financial maze.”
2 National Center for Biotechnology Information. “Family Caregiving Roles and Impacts.”
3 Deakin University. “Study explores how family relationships can affect care of elderly parents.”
4 TIAA Institute. “How longevity affects financial planning and family caregiving.”
5 Canada Life. “The Sandwich Generation – Managing stress and finances.”
