Out-Of-Pocket-Costs for Family Caregivers

A year ago, we discussed the true cost of caregiving, in which we highlighted the reported loss of wages over a lifetime (upwards of $140,000 for women). We also presented that the possible out-of-pocket costs ranged from $4,570 to $8,728 per year. Until just recently, that was the extent of available research on the subject. However, a recent AARP research study dug even deeper into the extent of out-of-pocket costs and provided specific detail on what you can expect to spend on out-of-pocket caregiving-related expenses (source). Below is our summary of the findings of that study.

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The Out-of-Pocket Expense of Caregiving

During the study, AARP found that “family caregivers spend an average of $6,954 on out-of-pocket costs related to caregiving, nearly 20% of their annual income.” This is a significant dollar amount and it is consistent among caregivers. Caregiver out-of-pocket expenses typically include:

  • Household goods
  • Food and meals
  • Travel and transportation costs
  • Minor (or major) home modifications

These types of costs are about 41% of expenses. Another 25% of out-of-pocket expenses include medical care co-pays and pharmaceuticals.

The Impact of Out-of-Pocket Costs

Taken directly from the report, the following breaks down the variation of expenses by ethnic groups and other scenarios, in order by dollar value:

  • Asia-Americans/Pacific Islanders spent $2,935
  • African-American family caregivers spent $6,616
  • White family caregivers spent $6,964
  • Caregivers who shared the same home spent $8,616
  • Hispanic/Latino family caregivers spent an average of $9,022
  • Caregivers for those with dementia spent $10,700
  • Long-distance family caregivers (defined as those who lived more than an hour away) spent $11,923

These are costs coming directly out of your bank account, every year. Keep in mind that if your annual expenses are $10,700, in five years that will equal $53,500. That is a significant cost that can severely impact your day-to-day life, as well as what you had saved for your own future. So what can you do to prepare?

  • Plan out all anticipated expenses for your aging loved one
  • Put together a budget and timeline of these expenses
  • Get help from a financial advisor
  • Utilize caregiver financial assistance options that are available to you
  • Keep track of your expenses and evaluate regularly

You need to be prepared and know what out-of-pocket expenses you can expect. Don’t wait until it is too late. Start discussing options with your family, aging loved one, and financial advisor today.