If you’re a Gen-X or Millennial household, there’s a looming monthly expense you may not have included in your budget: the cost of caring for aging parents or extended family.

A March 2018 study from a major U.S. life insurer, titled “Financial and Lifestyle Costs of Caregiving” found that three in 10 Americans are either presently serving as caregivers or have done so in the past, while one in five expect to do so in the future. Caregiving was defined as “a situation where you are responsible for providing care—or the resources for that care—to someone or several people over a substantial period of time.”

Caring for elderly family members is not a new social trend. What is different, at least in the United States, is the extent to which caregiving may become the norm for successive generations. According to the report, “Gen X and even Millennials are the heart of the sandwich generation and struggling with the pressures of caring for aging family members and their own children while building financial security and maintaining a lifestyle.”

Older Americans: Living Longer, Living Alone

In the past, caregiving duties were primarily managed by spouses; wives cared for aging husbands, and vice versa. But a range of demographic and social changes have altered this dynamic. A November 2016 report from Kaiser Health News points to increased longevity, a large and graying baby-boom generation, the decline in marriage, the rise in divorce, increased childlessness and family mobility, as factors that have “upended the traditional caregiving support system.”

As a result, “Americans spend less time than ever in a married state,” says Susan Brown, a sociologist from Bowling Green State University. Data from the 2015 U.S. Census reports that 43 percent of those 65 and older now live alone. And these aging single adults often have limited family connections to tap for caregiving assistance. Jonathan Vespa, a demographer for the Census, sums it up: “As people have fewer children, there are fewer people in that next generation to help take care of the older generation.”

Younger Americans: Staying Single, or Marrying Later

Changes among younger generations affect the caregiving dynamic as well. More young adults are staying single, and those who do marry are waiting until their late 20s. Both factors impact the younger generation’s caregiving abilities. Single households don’t have the economic efficiencies that usually come from marriage, i.e., two providers under one roof. And when married couples have children later, it makes the “sandwich” of simultaneously caring for both aging adults and growing children more likely—and more likely that caregiving will not be just an emotional and time commitment, but also a financial one.

The Financial Impact of Caregiving

The “Financial and Lifestyle Costs of Caregiving” report found that approximately seven in 10 caregivers provide financial support. Support ranged from modest amounts, like paying co-pays on medications, to major lifestyle changes, like caregivers switching from full-time to part-time employment. Experienced caregivers reported making the following adjustments to provide financial assistance: 67 percent reduced living expenses; 25 percent withdrew money from non-retirement savings; 21 percent worked more, including additional employment; 21 percent borrowed money; 19 percent withdrew money from retirement savings; 19 percent cashed in or sold assets; 17 percent stopped or reduced contributions to non-retirement savings; and 15 percent stopped or reduced contributions to retirement savings.

Reading between the lines, many of these caregivers resorted to more than one of these options; i.e., besides reducing living expenses, they worked more, or borrowed money. The harsh reality: In almost every circumstance, caregiving exacts a toll on the personal finances of the caregiver.

And Yet…People Avoid Planning for It!

Writing about these issues in a March 2018 ThinkAdvisor article, Emily Zulz pointed to perhaps the most astonishing finding from the survey: “People who believe they will provide care in the future are not taking steps to prepare.”

This avoidance is often two-sided: Aging adults may not want to face their need for assistance, or reveal their financial insufficiencies. Family members who are potential caregivers might be hesitant about interfering, and quite frankly, reluctant to take on the assignment.

But a tough situation will almost certainly become worse if everyone waits until it is an emergency. It will likely be more expensive, with fewer options. Having a discussion today about caregiving may not change the practical or financial realities of the situation, but it does give everyone more time to prepare, to adjust, to look at different possibilities.

And as a practical note, it’s probably the prospective caregivers who should initiate the conversation, because one of the reasons an older adult may need care is that some of their faculties—cognition, mobility, stamina etc.—are declining. A study published by Merrill Lynch found that over 90 percent of caregivers were managing the finances of the aging adult within four months of beginning care.

Caregiving for an aging parent or family member is a noble and compassionate decision. It is also potentially costly.

Pre-emptive discussion, and the inclusion of financial professionals in the conversation, is a path to making the best of a challenging situation.

This article was prepared by an independent third party. Material discussed is meant for general informational purposes only and is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice.

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9 Fl., New York, NY 10017, 212-541-8800. Securities products/services and advisory services offered through PAS, a registered broker/dealer and investment adviser. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. Wealth Advisory Group LLC is not an affiliate or subsidiary of PAS or Guardian.

PAS is a member FINRA, SIPC.

By Elozor M Preil

Neither Guardian, PAS, Wealth Advisory Group, their affiliates/subsidiaries or their representatives render tax or legal advice. Please consult your own independent CPA/accountant/tax adviser and/or your attorney for advice concerning your particular circumstances.