The Complexities of Caregiving: Financial Health and the Aging Crisis

By Kelsey Kruslak Manager, Financial Health Network I’m not a typical millennial. Besides the occasional avocado toast, I don’t have student debt, I own my house, and I have good savings habits. I was one of the 24% of millennials who were Financially Healthy before the global pandemic, according to the Financial Health Network’s FinHealth…

Wednesday, June 17, 2020
 The Complexities of Caregiving: Financial Health and the Aging Crisis

By Kelsey Kruslak
Manager, Financial Health Network

I’m not a typical millennial. Besides the occasional avocado toast, I don’t have student debt, I own my house, and I have good savings habits. I was one of the 24% of millennials who were Financially Healthy before the global pandemic, according to the Financial Health Network’s FinHealth Score®. I’m also part of the 25% of family caregivers in America who is a millennial. Like many my age, this wasn’t something I planned for at age 32. 

Over the last few months, the pandemic has hit Americans on both the financial and physical health fronts. According to new U.S. Financial Health Pulse data, 47% of people ages 18-25 and 37% of people ages 26-49 say their income has decreased. Additionally, those of us with caregiving duties – in my case, a small child and an older family member – are more overwhelmed than ever, worried about the impacts to financial and physical health for our family and loved ones, while dealing with the challenges of social distancing and stay-at-home orders.

The ‘Aging Crisis’ 

My role as a caregiver is the result of a quietly growing crisis in America that started long before the current COVID-19 pandemic.  With 40 million family caregivers in the U.S. today, this crisis affects multiple generations of the same family and is disproportionately impacting women and low- to moderate-income (LMI) households. These numbers are projected to peak over the next decade. This is, for lack of a better term, an “Aging Crisis.” 

From 2010 to 2030, the number of people in America older than 80 will increase by 79%, while the number of people between ages 45 and 64 (also the peak caregiving age) will increase by only 1%. Already, the number of adults providing personal care or financial assistance to a parent has more than tripled in the last 15 years to over 20%. 

Numerous trends amplify the effects of this disparity, including inadequate personal short- and long-term savings, declines in pension plans, gaps in Medicare coverage, rising healthcare costs, a limited supply of healthcare and caregiving workers, a declining birth rate, and the changing nature of work. This was all true before the COVID-19 pandemic shut down the U.S. economy, creating a massive spike in unemployment.

While the true effects of the pandemic are still unknown, early research from the U.S. Financial Health Pulse shows that people are coping by spending down personal savings, taking on credit card debt, and dipping into retirement savings, among other strategies, further accelerating the financial challenges of both carers and caregivers. 

Among all the statistics, it is clear that there will be more elderly people dependent on fewer younger people with an ever-increasing list of challenges, making financial health for all less attainable.  

Medicare and Me 

The scope of the financial implications for me, the caregiver, and the person needing care, my 76-year-old mother-in-law, came into sharp focus in late 2019. After a phone call in the middle of the night and a trip to the ER, I sat in my mother-in-law’s house trying to come to terms with how both her physical and financial situation had, literally, changed overnight. 

Like many of her peers, my mother-in-law was in fair, but not great, health before this incident. She was independent, lived alone, and seemed to be doing just fine. Now she was reliant on a walker, unable to get out of the house for basic necessities or even get out the door to her back yard.

I spent the next few days researching Medicare, wheelchairs, and in-home care providers. I went to doctor’s appointments and started estimating the total asset value of her house and mine. I quickly realized I was naive when it came to the financial implications of this unexpected medical shock. I had assumed there were more provisions for mobility needs like walkers. I was shocked to find that in-home care for an elderly person was more expensive than full-time daycare for my 3-year-old. 

My husband and I were not mentally, emotionally, or financially prepared for this. We were going to need to re-evaluate our current financial plans. What we found was that our situation is not unique. 

Aging in America

Research overwhelmingly shows that health shocks can have dramatic and long-term implications for financial health. This is especially true for the elderly.

Recent reports on the financial state of older Americans, including the Financial Health Network’s publications “Redesigning the Financial Roadmap for the LMI 50+ Segment” and the “U.S. Financial Health Pulse: 2019 Trends Report,” explore the unique challenges of older adults in America. Specifically, the Financial Health Network’s research has focused on people who are 50 years and older and considered low- to moderate-income (LMI). This demographic faces four main challenges to financial health: 1) healthcare shocks, 2) inadequate retirement and/or emergency savings, 3) unmanageable debt burdens, and 4) multigenerational family needs. 

As a result, 74% of LMI 50+ are struggling with some or all aspects of their financial health, with age, health, and work status playing large roles in where they fall on the spectrum. 

Many factors contribute to someone’s financial health, but the cost of healthcare is a recurring theme across many of the challenges the LMI 50+ face. These expenses often result in medical debt, tapping into savings, and loss of employment. As the Financial Health Network’s research shows, 38% of the LMI 50+ had to forgo healthcare or medication in the past year because they couldn’t afford it. For those who are younger than 65 and thus not yet eligible for Medicare, that proportion rises to 43%. Among those considered Financially Vulnerable based on the Financial Health Network’s FinHealth Score® framework, 64% indicate they’ve had to forgo healthcare or medication because of the costs.

Although Medicare eligibility results in some financial health improvements, overall costs are often higher as people’s conditions have worsened because of delayed treatment. For the disabled or very elderly, Medicare can also still have large gaps in coverage. A recent study by Gallup and West Health showed that people over age 65 had withdrawn an estimated $22 billion from long-term savings accounts in the previous year to pay for health expenses Medicare didn’t cover. 

The impact of medical shocks for people nearing retirement cannot be understated, as the median savings for this age group is just $15,000. Even if you add Social Security to $15,000, this presents a scary prospect for those facing the average 20-year American retirement.

The ‘Plan’ Part of Financial Health 

Of the four components of financial health (save, spend, borrow, and plan), plan is perhaps the most challenging, especially for someone who is struggling to manage the first three areas. For  me, my husband, and my mother-in-law, fortunately there is still time and we have options to consider, a luxury many caregivers don’t have after a health shock. 

Planning implies time, longevity, and future thinking. Millennials have been told to plan for the obvious: homeownership, future or current family needs, career paths, and our own retirement far off in the future. Many of us were not planning to become caregivers in our early 30s. And none of us were planning on a global pandemic affecting our financial health or the ability to provide care for our loved ones. 

Middle Age in America 

Even before the pandemic, millennials were struggling with student debt, stagnating wages and limited savings, leading to delays in marriage, homeownership, and having children. Recent research suggests that the effect of the pandemic is being felt more acutely by this generation than any other. The ripple effect on financial health for millennials has been lower short- and long-term savings and more long-term financial insecurity, which will likely only be accelerated by the effects of the pandemic. 

Caring for an aging parent is not a new phenomenon, but as the number of elderly needing care increases, the financial and emotional pressure on the limited number of caregivers will increase. Consider that one in four of the 40 million family caregivers in America is a millennial, and they spend an average of 21 hours a week providing that care.

Detailed research on the long-term financial impact of this trend isn’t yet widely available, but AARP reports that, on average, millennials spend 27% of their annual income on caregiving costs, averaging about $6,800. 

Women and the Aging Crisis

Any way you look at it, I fit the profile for most of today’s caregivers. In addition to being a millennial, I’m female and unpaid, which puts me right in the middle of most of the statistics.

Most paid (nine out of 10)  and unpaid (six out of 10) caregivers are women, and female caregivers are, on average, already making less than their male counterparts. In addition, women stand to lose more in savings and income during the time they are providing care because of reduced hours, lost benefits, or dropping out of the workforce altogether. The total amount of lost wages for women who leave the workforce is 60% greater than that of men, with individual losses equaling $142,693 for women and $89,107 for men.  

Additionally, women of color are more likely to be informal caregivers. Latina (21.0%) and black (20.3%) women provide informal caregiving at higher rates than white women (16.9%). In addition to having fewer financial resources to pay for rising caregiving costs, many people of color face the challenges of finding services that are culturally and linguistically appropriate. Few studies have examined how factors like race and ethnicity, sexual orientation, and socioeconomic or disability status affect caregiving.

And if that’s not enough, the person they are caring for is most likely female, especially if she’s part of the LMI 50+ demographic, where almost 60% are women. 

Lastly, but perhaps most importantly, COVID-19 is having a disproportionate impact on not only the black and Latinx communities, but also on women, and specifically women of color.

Recent findings from the U.S. Financial Health Pulse show that 36% of women say their income has decreased (compared with 29% of men) and that 40% of Latinx respondents say their income has decreased (compared with 32% of black respondents and 31% of white respondents).  

Age Is Just a Number

In the tangled crush of social, economic, political, and moral issues the aging crisis represents, it’s easy to focus on the obvious, like strengthening safety nets such as Medicare for the LMI 50+. But if the aging crisis tells us anything, it’s that all of us have a stake in this crisis. We have aging family members; we ARE the aging family; and we have customers, clients, and employees already acting as caregivers or about to step into a role. 

The impact of the pandemic only serves to underscore that it will take a conscious effort by all stakeholders to ensure the growing number of older adults in America don’t have such sobering prospects in their final years, and that their caregivers won’t face the same later in life. 

Specifically, financial service providers, employers, insurance companies, healthcare providers, policymakers and regulators, and those in the retirement space all have a role to play. Individually and collectively, they can lessen the impact of this crisis by helping older adults live their final years in financial security while supporting the financial health of the generation caring for them. Both millennials and the elderly can benefit from financial coaching and planning and from short- and long-term savings solutions. Providers can also help support millennials’ financial health through workplace benefits that include flexible work schedules, paid leave, and student loan assistance. 

Age might only be a number, but the numbers around financial health and aging are stark, as the precarious financial health of older generations becomes dependent on the precarious financial health of younger ones. 

In an effort to spotlight the financial needs of low- to moderate-income older adults, the Financial Health Network launched a new video series sponsored by AARP Foundation in collaboration with Chase. Each episode of “Rethinking the Golden Years: Financial Lives Over 50” features real conversations with 11 individuals from across the country who are navigating their financial lives in their later years. Explore the full series at