U.S. investors squeezed for
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(Graphic: Business Wire)
Specifically, 45% of investors say they have provided financial assistance to one or more of the relatives listed in the graph below, 21% have provided personal assistance, and 13% have provided both. For this survey, personal assistance was defined as providing personal care, making medical decisions, hiring professional caregivers, handling financial matters, shopping, cooking, driving to appointments, or similar tasks.
Support provided by U.S. investors to family |
||||
Financial assistance |
|
Personal assistance/Care |
||
Adult child |
31% |
|
n/a |
|
Parent or parent in-law |
15% |
|
11% |
|
Adult sibling |
9% |
|
3% |
|
Grandchild |
8% |
|
4% |
|
Other relative (grandparent, aunt, uncle, etc.) |
6% |
|
7% |
|
Yes to any |
45% |
|
21% |
|
Yes to both |
13% |
|||
NET YES TO EITHER |
53% |
The poll was conducted Aug. 5–11, with a representative sample of 2,091
The poll did not measure every type of family expense investors might have – but of the types measured, the most common, current or past, is non-college related living expenses for an adult child. Thirty percent of investors say they have incurred such costs. A distant second (13%) is living expenses for a parent or parent-in-law. This is followed by significant medical expenses for an adult child (9%), caregiver expenses for a parent or in-law (7%) and medical expenses for a parent or in-law (6%).
Additionally, 29% of investors report they paid college or other school tuition for an adult child, but this was not factored into the financial support statistics reported above.
Helping family averages
Expenses investors incurred add up to a considerable sum. When asked how much they spent in total in the past year financially supporting adult family members — not including college expenses for an adult child — investors estimate spending
Most investors report that family-related expenses have taken a negative, although minor, toll on their finances. Only 7% say the impact has been very negative; 19% say it has been somewhat negative, 39% say a little negative and 36% say not negative at all. Last year, however, the 2018 Q3
Retired (44%) and non-retired (39%) investors are about equally likely to report providing significant financial help to extended family. Non-retired investors, however, are 11 percentage-points more likely than retired investors to say that providing this monetary help has harmed their finances (31% vs. 20%).
“It is extraordinarily generous for investors to step in and help adult family members with this level of support, but there is risk if they are not doing so from a position of strength,” Sumners said. “Working with an advisor to build and maintain a comprehensive plan may help investors avoid sabotaging their own goals as they help close relatives.”
The gift of time also has downstream impacts
The time investors contribute to helping family members is significant. Investors who report providing personal assistance to adult family members say they spend 13 hours per week on average on such activities.
Helping family has the potential to enhance family bonds and life satisfaction. In particular, more than a quarter (28%) of investors who provide assistance to a family member say that doing so has had a positive impact on their emotional health. But the poll suggests that the downside outweighs the upside for many investors. Investors who spend time helping family are most likely to say it has had a negative effect on the time they have for themselves (56%) as well as on their emotional health (52%), their ability to take time away from home (47%) and their time for friends (40%).
Thirty-eight percent of investors who provide personal assistance to family also report that the time they have spent has negatively affected their ability to focus on their job or career, and 37% say it has negatively affected the time they have for their immediate family.
When examining factors related to time and money, nearly one in four say the time commitment has negatively affected their ability to save for retirement (23%) or their finances more generally (22%).
Effect that providing personal assistance to others has had on different aspects of investor-caregivers lives |
||||||
Total negative |
|
Neutral |
|
Total positive |
||
|
% |
|
% |
|
% |
|
Finances/standard of living |
22 |
|
70 |
|
8 |
|
Ability to save for retirement |
23 |
|
67 |
|
10 |
|
Time for your immediate family |
37 |
|
48 |
|
15 |
|
Ability to focus on your job or career |
38 |
|
59 |
|
2 |
|
Time for friends |
40 |
|
49 |
|
11 |
|
Ability to take vacations or time away from home |
47 |
|
41 |
|
12 |
|
Emotional health |
52 |
|
21 |
|
28 |
|
Time for yourself |
56 |
|
30 |
|
14 |
“It is hard for people to imagine that the time and money they spend today could have an impact 20 or 30 years from now, but it is only then when you may see the true costs,” Sumners said. “It’s not that people won’t make the same decisions to support their family members, but seeing an illustration of the possible impact may influence their decision to supplement their own savings or earning potential right away.”
Women feel the squeeze of family time-commitments more than men
The poll shows that women investors are more likely than men to spend time helping a parent or in-law (14% of women versus 8% of men). Women who provide this care are also much more likely than their male counterparts to be the sole caregiver (40% versus 13%).
This may partly explain why among all investors who provide care to any family member, women are much more likely than men to say the care negatively affects the time they have away from home (56% of women versus 30% of men) as well as time for friends (46% versus 27%). Women are also more likely than men to say that family caregiving has a negative effect on their emotional health (57% versus 40%).
Men |
|
Women |
|
Gap |
||
|
% |
|
% |
|
% |
|
Your ability to take vacations or time away from home |
30 |
|
56 |
|
26 |
|
Having time for friends |
27 |
|
46 |
|
19 |
|
Your emotional health |
40 |
|
57 |
|
17 |
|
Having time for your immediate family |
32 |
|
39 |
|
7 |
|
Having time for yourself |
53 |
|
59 |
|
6 |
|
Your ability to focus on your job or career |
37 |
|
40 |
|
3 |
|
Your finances/standard of living |
22 |
|
22 |
|
0 |
|
Your ability to save for retirement |
26 |
|
21 |
|
-5 |
Silver lining of time commitments may be more realistic planning for retirement
Six in 10 investors who provide personal assistance to a parent or other adult family member (61%) say the experience has changed how they want to be cared for when they are older. The effect is particularly strong on non-retirees, 70% of whom say it has changed how they want to be cared for down the road. The figure is 49% among retirees, possibly reflecting the shorter window this age group has to adjust their lifestyle plans.
The most common change that investors say they are making as a result of the experience of caregiving is saving more for medical/personal care than they originally planned (59%). About half (49%) say they are more likely to move to an assisted-living community in their later years. Fewer show greater interest in purchasing long-term care insurance (38%) or moving into a multi-generational home in their later years (28%) as a result.
One area investors may still be unrealistic about in retirement is estimating what they will need to pay for healthcare and long-term care, not including what Medicare pays for. When asked to estimate costs, over half, 53% say it will be less than
Compounding the possibility that investors won’t have saved enough for their healthcare in retirement, relatively few report owning financial products that could help them pay these bills down the road. About a quarter of investors report having a Health Savings Account (24%), 20% say they have long-term care insurance and just 6% have longevity insurance.
Non-retirees (32%) are significantly more likely than retirees (12%) to have a Health Savings Account (HSA), reflecting the relatively recent emergence of HSAs as a healthcare financing option. There is no difference, however, in the two groups’ use of long-term care or longevity insurance.
“Many people understand the need to save for retirement, but it appears they have compartmentalized healthcare costs and are not planning the way they need to. Without planning, these expenses need to be funded outside the budget which can bring stress and the feeling of being out of control,” Sumners said. “More importantly, underfunding healthcare costs later in life could deplete retirement savings and make investors vulnerable. By sufficiently planning for retirement as well as other future needs, investors can potentially take back control and interrupt the cycle of familial support.”
1Individual healthcare cost: HealthView Services as cited in “Retiring this year? How much you’ll need for health-care costs,”
About the
The results of this
For this study, the American investor is defined as an adult in a household with stocks, bonds or mutual funds of
About
With
About
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This news release contains forward-looking statements about our future financial performance and business. Because forward-looking statements are based on our current expectations and assumptions regarding the future, they are subject to inherent risks and uncertainties. Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the
View source version on businesswire.com: https://www.businesswire.com/news/home/20190918005144/en/
Media
Desari.Mueller@wellsfargoadvisors.com
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