There is no question that most employers want to bolster their employees' retirement security and financial well-being. Not only does it benefit the employee but also the employer - it creates a more satisfied workforce and improves retention. While many employers have considered enhancing their defined contribution retirement plans as part of their plan, they often neglect to recognize that caregiving may be undermining their efforts.
The Cost of Caregiving
Being a caregiver for an adult is expensive - nearly 8 in10 caregivers have routine out-of-pocket care-related expenses and on average spend 26% of their income on caregiving activities, according to AARP and the National Alliance for Caregiving. The most common expenses are rent or mortgage, home modifications, and medical costs - healthcare, therapists, in-home care, and medical equipment.
And most people are surprised by how much they have to spend out-of-pocket, having assumed that Medicare would cover most of their expenses. While Medicare pays for medical expenses, there are still deductibles and copays and services like non-medical in-home care or assisted living - two of the most expensive long-term-care services - are not covered by Medicare.
Caregiving’s Impact on Income
It’s not just the expenses - in addition to paying for care, employee caregivers often experience a reduction in salary. Approximately one-third of survey respondents said that they had two or more work-related strains, such as having to reduce their schedule or take leave. Other caregiver employees have turned down promotions and advancements and changed jobs because of their caregiving responsibilities. These changes result in an average annual income loss of $10,525. It is more than just an annual income loss - it also means that caregivers have a loss of savings and are not contributing to their retirement plans.
The Inequity in Caregiving
Although caregivers come from all backgrounds, the financial impact of being a caregiver is not the same for everyone. This results in many employees spending their income on caregiving as opposed to saving for their future needs.
Younger caregivers have had less time to work and build up savings.
Women, in general, spend more hours a week caregiving than men and have lower incomes.
Latinos and African Americans experience the biggest financial strain from caregiving, with African Americans spending more of their income on caregiving than any other group.
LGBTQ+ employees become family caregivers at a higher rate; however workplace policies and benefits may leave them at a disadvantage for saving.
Your Role As Employer
All of this means that many employee caregivers experience a reduction in income and savings, while at the same time spending their income to care for their loved ones. Even those employees who are fortunate enough not to experience these financial hardships are still faced with the challenges of caregiving - the demand for paid caregivers far outweighs the need, with a projected shortfall of a million caregivers in the US by 2030.
As an employer, you can support your caregiving employees and ultimately improve retention and productivity. Solutions such as Mellie are designed for those caring for an older adult - by providing education and facilitating access to benefits and services for older adults, Mellie can help reduce caregiving costs, as well as offer the coordination and support that employees need to remain in their current positions.
Contact Mellie to learn more about how we can help your employees balance caregiving with saving.