AMES, Iowa – As the state’s older population continues to increase, many Iowans eventually will be providing some level of care for an elderly parent or relative. Although taking on that caregiving role may have an emotional benefit, it also may have a negative financial impact, if the caregiver has to take time off from paid work or quit working altogether.
That’s why Iowa State University Extension and Outreach is piloting “Finances of Caregiving,” a program to help Iowans protect their own long-term financial security as they plan for taking on a caregiving role.
According to IowaAging.gov, about 350,000 Iowans are informal family caregivers.
“Providing care does not always mean that the person lives with you,” said Brenda Schmitt, a human sciences specialist in family finance with ISU Extension and Outreach.
“It may mean that you provide transportation or other services for someone who still lives in his or her own home. For most working Iowans, this requires flexible work schedules or using personal leave days, sometimes without pay,” Schmitt said.
“When making the decision whether to leave work or reduce your work hours to become a caregiver for an aging parent or other relative in need of constant care, you have several areas to consider. How will it affect your current spending plan? How will it affect your retirement? Losing a couple years of contributions when you’re near retirement may not make a big difference in your account balance. But, the longer you have until you plan to retire, the greater the impact on your retirement savings,” Schmitt said.
Caregiving has financial risks, said Suzanne Bartholomae, a family finance state extension specialist and adjunct associate professor in human development and family studies.
“Family caregivers absorb many costs and may have reduced income and retirement savings as a result of their caregiving responsibilities. One research study found that caregivers spent an average of $8,000 of their own money on long-term care-related expenses. Iowa caregivers can protect their own financial security through planning and understanding their options,” Bartholomae said.
That’s where “Finances of Caregiving” comes in. ISU Extension and Outreach started with an earlier curriculum – “What Every Adult Child Should Know,” developed by Celia R Hayhoe and the National Endowment for Financial Education – and adapted and updated it for use in Iowa. The five-week program involves face-to-face group workshops combined with learning online.
In the first lesson, participants begin to document their own financial situation. They also take a look at the finances of the person for whom they are or will be providing care, to see what resources might be available to pay for that care.
Next, participants begin to organize legal documents for the person receiving care, so that as the caregiver they can make necessary financial and medical decisions. They also can lay the groundwork to be paid for providing care, if resources are available.
As the program continues, participants examine the financial implications of caregiving that specifically will affect their retirement. In addition, they learn about communication techniques they can use with their families when discussing these difficult issues.
“Some people think they can’t get it all done, but you work at your own pace,” Schmitt said.
Another round of “Finances of Caregiving” pilots will begin this fall, and Bartholomae expects pilots to continue through 2017. This is an example of research in action, she said. ISU Extension and Outreach specialists will be evaluating the pilots as they progress to determine the most effective way to make the program available statewide.
“Family members are a key partner in the long-term care of older adults. They often provide care support and services when no formal service is available. Care and support provided by family members is essential to maintaining the health and well-being of Iowa families and communities,” Bartholomae said.
For more information about “Finances of Caregiving,” contact any ISU Extension and Outreach county office to get in touch with a human sciences specialist in family finance.