What’s the Plan for Financial Caregiving?

February 22, 2023

By Molly McHugh BSN, RN, CCRN

For Surya Kolluri, the best way to address the financial aspects of caregiving is not during proverbial “hair on fire moments,” times of crisis that are emotional, stressful, and painful. In their recent conversation in the Caregiving NOW Initiative, Dr. Mary Naylor and Kolluri discussed the growing need to plan for the financial burdens of caregiving that many families will face. Kolluri, the head of the TIAA Institute, a trusted source of information on financial security, higher education, and retirement, identified ways that families, employers, and society could better prepare for the financial contributions and coordination that caregiving often involves.

“Financial Caregiving” is an Essential Component of Caregiving

Kolluri explained that “financial caregiving” encompasses both direct financial contributions to a family member or loved one, as well as management of that person’s financial affairs. Caregivers spend more than $7,000 of their own money each year to help their loved ones. “Many caregivers must often choose between their families and their finances. It’s a decision that will have ripples for years to come,” Kolluri said, pointing to trade-offs families make between present spending, saving for large expenses, and saving for retirement.

Financial caregiving also includes handling a loved one’s financial affairs, such as paying taxes, managing bank accounts, filing insurance claims, or identifying a Power of Attorney. Kolluri proposed creating a “Caregiving Roadmap” as a strategy to identify and plan for the complexities of caregiving responsibilities ahead of time, at different life stages. He suggested that this strategy may be even more critical for individuals who are already financially vulnerable, referencing “the inequality women face when they retire because they have 30% less income than men,” and individuals “leaving the workforce earlier than they should in order to take on these caregiving responsibilities.” A caregiving roadmap provides caregivers with a comprehensive plan to address all dimensions of caregiving preemptively, including critically important financial considerations.

Personal and Professional Interest

For Kolluri, planning for caregiving is both a personal and professional interest. He mentioned his father, who is now 87. Last Thanksgiving, Kolluri and his brother had a caregiving conversation with their father. “He doesn’t need help now. But he knows he might need it soon,” Kolluri explained.

Afterward, they arranged a caregiving consultation for their father. “A nurse evaluated his kitchen, his bathroom, his bedroom, and his medications. She gave us a document that had a range of care options – everything from in-home companionship to a memory care center. Today we have a plan, and because of that, we have peace of mind,” Kolluri said.

Heath and Wealth: Two Sides of the Same Coin

Kolluri urged the audience to consider health and wealth as two sides of the same coin. “It’s just as important to know about someone’s physical health as it is to know about the health of their retirement savings accounts. They feed into each other, and they’re both essential for longevity fitness.”

Similarly, aging and financial planning are closely tied together. He introduced the concept of “longevity literacy” and its impact on planning. A recent survey by the TIAA Institute asked individuals about the life expectancy of Americans who are now 60 years old. Given a multiple-choice answer set, more than half (53%) said either they didn’t know, or they underestimated how much longer the average 60-year-old would live. Just 37% of respondents knew the correct answer. (Side note: the actual answer is a life expectancy of 85 for women and 82 for men.)

Source: TIAA Institute/GFLEC, Longevity Literacy and Retirement Readiness, Data Brief, 2023.

Why is longevity literacy important? Kolluri gave two reasons: “One is that when people have a better understanding of life expectancy, they can create better retirement plans. The other is that with a better understanding of life expectancy, people can plan better about how they’ll need financial caregiving.”

Reframing Retirement Planning

In response to these challenges to financial caregiving, Surya Kolluri presented a number of recommendations for families, employers, and society at large.

Families should consider their potential caregiving responsibilities early on when engaging in financial planning. Kolluri suggests, “We must avoid hair-on-fire moments which are often easy to prevent… individuals and families must remember caregiving responsibilities include both medical caregiving and financial caregiving and let’s make sure that’s not an afterthought.”
Employers should evaluate the prevalence and extent of caregiving among their employees so that they can help employees navigate challenging caregiving situations. Employers could offer employee networks or resource groups where employees learn from each other about how to juggle work-life balances which may be more difficult than ever.
Society must make these issues more of a priority, through programs that improve understanding of longevity literacy, the increasing need for caregivers, and the increasing need for financial caregiving as part of caregiving. Highlighting these topics is central to supporting societal preparedness for future caregivers’ health and wealth.

Policy Options

In response to a question from the audience, Dr. Naylor and Kolluri discussed social policy options to support family caregivers, especially those without financial resources. They discussed options for states to pay caregivers (with appropriate training), federal tax credits, and expanding health savings accounts. Kolluri noted that from a public policy perspective, raising awareness of these caregiving issues, and reducing stigma, are key to developing the consensus needed for these social policies. He also pointed out that social policies could be designed to attract businesses to enter this space with new products and ideas to serve this growing population in the coming “longevity economy.”