The Long-Term Costs of Caring: How Caring for an Aging Parent Impacts Wealth Trajectories of Caregivers

Long-term care in the U.S. is a growing concern as our aging population exerts pressure on formal and informal care systems. Public expenditures on formal care are increasing rapidly, even as reliance on informal caregivers expands. Recent policy innovations are shifting Medicaid and Medicare funding toward home- and community-based services (HCBS) as an alternative to nursing home care. This may help reduce overall LTC care costs to states and the federal government, but it also shifts more responsibility to families and informal care networks. Not only can caregiving have negative impacts on the physical and mental health of caregivers, but it also can be expensive, both in terms of direct costs and in terms of lost wages and work opportunities. However, to date, these financial consequences are not fully understood. This project uses longitudinal, nationally representative data from six waves of the Health and Retirement Study (1998-2008) to evaluate whether caring for aging parents impacts caregivers' assets over time. Latent trajectory analysis was used to identify groups for whom caregiving had a negative impact on wealth trajectories. A four-group model fit best and revealed one group, with 4.3% of respondents, for whom caregiving had a significant, negative relationship. Further, race, education, and caregivers' health were significantly related to these trajectories. Gender and marital status were not related. Lastly, among caregivers, care duration did not significantly impact asset trajectories, and care intensity had mixed effects. Findings indicate that caring for an aging parent has a significant, negative impact for some adults over age 50, but only for a small group. Importantly, those who are negatively impacted are more likely to be in already vulnerable groups. As reliance on informal caregiving increases, special attention should be paid to those caregivers who may be particularly vulnerable to the financial impacts of caregiving; better assessments and more economic supports are needed to offset the potential exacerbating impacts of caregiving.