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Top Needs of Today’s Financial Caregiver

Jess Stonefield August 20, 2018
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We in the longevity industry generally have a “best-case” idea of who is managing the finances of older people: someone savvy enough to provide for his or her own immediate family while simultaneously having all the answers when it comes to asset management. Still, the numbers paint a different picture. Today’s financial caregiver is not a distant cousin who doubles as a CFO in his day job. It’s someone down in the dirt of daily caretaking—tired, stressed, and not necessarily educated about finances, let alone the financial caregiving process.

A recent study from Merrill Lynch, in partnership with AgeWave, showed more than 90 percent of senior caregivers today are the same ones managing their loved one’s finances—doing everything from paying bills to managing insurance claims and filing their annual taxes. What’s more, nearly 50 percent of those providing financial oversight to their loved ones don’t even have the legal authority to serve that role.

Indeed, when it comes to financial caregiving, the process is far messier than we realize. Many caregivers aren’t just helping write checks—they’re also covering the bills of loved ones who can’t otherwise afford them. They’re pooling money from many different sources, sharing the financial burden among many other family members, and/or struggling to manage their own finances at the same time. And, nearly 50 percent of those 40-59 are caring for their own children at the same time. They’re strapped. They’re stressed. And they’ve had to make a lot of sacrifices—financially and professionally—to weather the storm.

“The costs of caregiving can cause ripple effects throughout the caregiver’s life, with the potential to impact the caregiver’s work trajectory, retirement timing and nest egg,” says Cynthia Hutchins, Director of Financial Gerontology at Merrill Lynch. “In fact, many caregivers are willing to lend support at all costs—even if it risks putting their own financial future in jeopardy.”

The question remains: how can the longevity marketplace better serve these caregivers, and help them keep both their own finances—and their loved one’s finances—in order? The following are a few recommendations:

  1. Keep it simple. Nearly 60 percent of financial caregivers in a recent Merrill Lynch survey said managing health insurance expenses was their top financial challenge. Thus, today’s caregivers need access to apps and software that can help ease the process of managing and paying insurance claims, as well as paying bills, and pooling funds from multiple sources. The easier the process is, the less stressful it will be for them—and the more organized the finances will stay for their loved ones.
  2. Make it easy. As noted above, about half of financial caregivers don’t have the proper legal authority to manage the money they’re handling. As an industry, we can take the confusion out of the process by making the legal side of financial management as clear as possible. We can simplify the process of procuring power of attorney and understanding the responsibilities of serving as a trustee or federal benefits fiduciary.
  3. Provide specialized financial guidance. More than 65 percent of financial caregivers say they could benefit from specialized financial advice. The financial industry can step up to provide structured guidance surrounding financial management, including things like which expenses to plan for, the ethical issues of spending and managing third-party accounts, the tax benefits of serving as a caregiver, the tax implications of cashing out various retirement accounts on their family member’s behalf, and even the various grants and resources available to them throughout the caregiving process.
  4. Make the documentation process easier: Helping caregivers stay transparent isn’t just good for the aging loved one. It also assists in eliminating potential family disputes surrounding the money itself. Those in finance and even blockchain can find new, easily accessible ways to make the documentation of financial spending clear and well-organized for those caring for a loved one’s wealth.
  5. Provide hope of a resolution: More than 60 percent of caregivers inaccurately assume that when their loved one passes away, their caregiving responsibilities will also end. But when it comes to money, those issues can lag for months or years with no resolution. The industry can work to create processes that protect caregivers from the financial and emotional toll of financial caretaking by setting clear limits on familial responsibility, debt forgiveness, and other types of insurance to keep their own wealth protected—and their hearts at rest.

Aging is not easy. Caring for an aging family member is even less so. But the issue of money surrounding those issues makes life even more challenging. With our aging population continuing to grow, now is the time to support our financial caregivers—not deter them from undertaking the responsibility.

Jess Stonefield

Jess Stonefield is a contributing writer on aging, mental health and the greater longevity economy for publications such as Changing Aging, The Mighty and Next Avenue. She is passionate about impact investing and the greater concept of “equitable equity”—spreading wealth to all levels of our society. She is a communications expert for Senior Living Fund.

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