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What farm families should know about financial caregiving

Published on: 17:34PM Dec 06, 2017

According to a new study released by Merrill Lynch, approximately 40 million family caregivers across the nation spend $190 billion annually caring for aging loved ones. Even with this added responsibility, the vast majority of respondents say they are grateful to care for an aging loved one and would gladly do it again. Financial caregiving is explained in this AgWeb Q&A and what it means for today’s farm family.


Q: What is a “financial caregiver” and why are their numbers increasing?

A financial caregiver is an individual who is contributing to and/or coordinating finances for their loved one(s). According to a study by Merrill Lynch, after two years of receiving care, 88 percent of care recipients are no longer managing their finances independently. The number of financial caregivers is increasing given the sheer size of baby boomers retiring—according to the latest estimates, as many as 10,000 baby boomers retire every day.

Q: How does the rise of financial caregiving impact a farm family?

It's probable that many farm family members already are financial caregivers. Farmers in the United States are older than those in most other occupations. According to the U.S. Labor Department, the median age for farmers and ranchers is 55.9 years, second among tracked occupations only to “motor vehicle operators, other,” who have a median age of 59.2. Given the considerable demands of a farming operation, assuming the role of a financial caregiver, in addition to current farm-related responsibilities, could easily test someone’s limits. It’s also a reminder of the need to address farm business priorities like estate planning and not leave them on the backburner. 

Q: What do some of the responsibilities of a financial caregiver look like?

According to the Merrill Lynch study, two of the larger responsibilities include paying bills from the recipient’s account (65 percent) and monitoring their bank accounts (53 percent). Other common responsibilities include handling insurance claims (47 percent), filing taxes (41 percent) and managing invested assets (21 percent). Respondents to the study noted that the top challenge they encounter as financial caregivers is navigating health insurance expenses. Two other notable challenges include not having legal authorization to perform their role, and inadequate or a lack of financial guidance.

Q: If I have an aging loved one, would it be a good idea to save money to help them?

Saving for a rainy day fund to address unexpected expenses always is a good idea. According to the study, 53 percent of respondents made financial sacrifices to compensate for caregiving expenses. One example of how to financially prepare would be setting up a Health Savings Account (HSA) for your loved one. That way, contributions for current or future medical expenses can be made on a tax-deductible basis with tax-free withdraws and earnings. Be sure to consult a tax or financial advisor, and check the terms of the HSA as rules vary.

Q: How do healthcare costs play into financial caregiving?

In a previous Merrill Lynch study, respondents cited unpredictable healthcare costs as their top financial concern in retirement. As healthcare costs continue to rise in the nation, steps should be taken to plan ahead. The best way to plan would be to draw up a retirement budget, which includes anticipated healthcare costs not covered by Medicare (i.e. dental and vision care). Other options pre-retirees, retirees and their family members also consider include: delaying retirement for the purpose of building up a reserve for healthcare costs, delaying social security, and allocating a portion of the higher benefit toward Medicare premiums. Given that needs and circumstances vary, anyone considering retirement planning should consult with tax and financial experts.

Q: What else can I do to prepare?

One of the simplest and more effective ways to prepare for a financial caregiving responsibility is to hold a family meeting. Having a focused and open dialogue can help spur decision-making among family members around important considerations, including the development or revision of a will, designating a financial and healthcare power of attorney, and other advance directives. Talking openly about issues of mortality or infirmity may not be easy, but those who hold family meetings get a head start on addressing complicated issues that take time to sort out. The clarity family meetings produce is not only to the benefit of an aging loved one but for the family itself given the tendency of financial caregiving and caregiving in general to fall unevenly on family members

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