Young caregivers are not only delaying life milestones, but also have the most financial strain; Millennials spend more of their income (27%) on caregiving expenses than their elders, with the additional burden of earning less, the Wall Street Journal reports. So what’s a young person to do?
Millennials, those notorious industry killers and participation trophy winners, are often conflated with college students, or even sometimes teenagers. However, as the generation of people born between 1981 and 1996, the oldest Millennials are actually closer to 40, while those teens are Gen Z, the generation born post-1997. Millennials remember 9/11, and have lived through rapid technological and social change (floppy disks to flash drives, and the 2008 recession being just two examples). In contrast, Gen Z came of age in a world already shaped by these forces rather than having developed alongside them, and they’re growing up online as the children of the true digital age.
However, there’s another difference that’s beginning to emerge: Millennials are preparing to take care of their aging parents while the eldest Gen Z-ers are just getting started with their adult lives. AARP’s recently released study on caregiving, Caregiving in the U.S. 2020, surveyed 1,392 adult caregivers ages 18 and older, and found that an estimated 47.9 million (or 19.2%) of Americans are caregivers, including 23% of Millennials. A third of (employed) Millennial caregivers earn under $30,000 and spend 21 hours a week in their role as a caregiver in addition to working full time. It is therefore unsurprising that young caregivers are not only delaying life milestones, but also have the most financial strain; Millennials spend more of their income (27%) on caregiving expenses than their elders, with the additional burden of earning less, the Wall Street Journal reports.
So what’s a young person to do? Well, as most are caretakers for parents and grandparents, the first step is to initiate a conversation about expectations and preparations with them. There’s no one-size-fits-all approach to talking to parents about their future plans because every parent-child relationship is different, as is every financial, medical, and social situation. While the methods that each employee uses to address this topic are diverse, plan sponsors can help them understand and navigate these complex processes by providing informational resources and services. Webinars, financial planning and advising, even a checklist of suggested topics to address with parents can be helpful in finding a place to start. Information on estate and retirement planning, healthcare coverage for adult dependents, social security, housing, life insurance, and resources on healthy communication (such as setting expectations and boundaries and mediation services) can help employees and their parents stay informed and have productive conversations on what can be difficult and emotional topics.
Affordability is often a significant concern for caregivers, and therefore retirement planning, 401(k) and HSA contributions, and even career trajectories may look different for those who are currently caregivers, expect to become caregivers in the near future, and for those planning far in advance. Anticipating these wide-ranging employee concerns can help plan sponsors ensure they provide, and employees can find, the information they need to prepare for the future.
Finally, the COVID-19 pandemic resulted in broadly applied work from home orders, and many businesses are reconsidering the necessity of not only requiring workers to commute into a central location, but even that of retaining their office space. This can benefit caregivers who often reduce their working hours or find it necessary to give up their job altogether, not because of a lack of interest, but due to a lack of flexibility. An adaptable work from home policy can ensure that employees are not forced out of the company because their physical presence is required in an office, even if they can be just as productive remotely. In this way, both the employer and employee can win; companies retain productive employees, and employees avoid having to choose between family and finance.
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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