Let Down by a Broken Retirement System, Older Americans Rely on Family for Support

Raising retirement readiness of Americans could help adults in both older and younger generations. Currently, due to lack of sufficient retirement income and high expenses, many older Americans rely upon younger generations for financial and economic support. In the U.S., 30% of adults with at least one parent ages 65 or older say their aging parent or parents need help handling affairs or caring for themselves.

Friends and family spend money, provide care, and experience considerable anxiety helping their older adult relatives. As a result, older Americans lack the independence they might wish they had, while younger Americans transfer resources to their older parents in the form of financial assistance by paying for elder care or providing that care, and they experience stress anticipating these costs, as well as doing the work.

Older Americans Relying Upon Family for Financial Support

Nearly a third of midlife adults with at least one living parent (32%) are providing financial support to them, four in ten (42%) expect to be doing so in the future, and more than half (54%) provided $1,000 or more to their parents in 2019.

These direct financial transfers go to helping older adults with ongoing necessities like groceries or other household items, and more expensive, less frequent costs such as medical bills. More than a quarter of middle-age adults who provide financial support to their parents (28%) find that it is a “high financial strain on their own family,” and report that they face difficulty preparing for their retirement as they financially support other family members.

Any policies that support the financial independence of older adults are also a direct help to young adults who support them.

American Adults Spend Considerable Time Caring for Aging Parents

Older Americans also rely upon younger family members for care support. As adults age, about a fourth require care or assisted living when mental and/or physical ailments develop. In response, some adult children place parents in nursing care facilities or pay for costly full- or part-time home care. In 2016, employing a home health aide full-time for a year cost almost $46,480, using adult day services cost nearly $18,000, and the median annual cost of assisted living facilities was $43,539, or $92,378 for nursing home care.

At other times, adult children may provide such care themselves, often because paid elder care is pricey—one quarter (25%) of family caregivers said it was “very difficult to get affordable services in the older adult’s community.” The result of this cost pressure is such that nearly one in five adults—34.2 million individuals—provide unpaid care to an adult ages 50 or older.

Unpaid care includes helping out with daily activities in life, such as transportation, grocery shopping or bathing/showering, and more elaborate tasks, such as performing some medical and nursing care tasks.

In some cases, unpaid care can also include helping manage a parent’s finances. One in four adult children with a parent ages 65 or older says their parent relies upon a family member to handle their finances, and 92% of caregivers provide financial care to their parents, with 88% of those financial caregivers performing tasks like paying bills, managing investments, preparing taxes, handling insurance and monitoring accounts.

Providing care to an older parent can also mean foregoing paid work, because providing care is so time-intensive. When adult children provide care to a parent, they spend an average of 77 hours per month, or about two weeks of full-time employment, performing that care. The lost income and longer-term impacts to the career growth and future financial security of caregivers compounds over time, with one study estimating the opportunity cost of informal elder care in the United States amounting to $522 billion annually.

Caring for Aging Relatives Can Be Stressful

With the financial and time costs, it is no wonder that the prospect of caring for aging parents can be stressful and anxiety-inducing. A study by Pew Research Center found that of the nearly one-third of midlife adults who provide care to a parent “nearly half (47%) are concerned about being able to provide financial support to their parents in the future.” These anxieties increase as the concern that a parent can’t live independently increases with age.

Studies show that the stress of caring for others without sufficient income can have a substantial impact on an individual’s health. Two out five caregivers of someone ages 50 or older report high levels of emotional stress, and one study found that worrying about family members’ well-being, including the well-being of an aging parent, was associated with poorer sleep quality at night, which then exacerbates the feelings of stress and anxiety the next day.

Some of the stress of being a caregiver may come from an absence of existing plans for future care—only half of caregivers report that their parent(s) had made plans for their future care and only 43% of caregivers have plans for their own future care. Better and easier planning for late-in-life care, including improving aging adults’ financial security, is crucial to supporting older Americans and the families that care for them.

Care Burdens Differ by Demographics Factors

Americans in middle- and lower-socioeconomic classes are disproportionately likely to rely upon the financial, time and emotional support of younger generations. Lower-income adults worry more: “Adults with annual family incomes less than $75,000 are more likely than those with higher incomes to say they have parents who need help (35% vs. 22%).”

Lower-income adults who provide care to an older adult also are least likely to be working full-time while providing that care, and are less likely to have access to flexible working hours, time off or paid leave to accommodate the time challenges of caring for an older relative.

Table 1: Non-White Households More Likely to Provide Support to Aging Parents

These differences also are observable by race and ethnicity groups (See Table 1, above). Hispanic Americans, followed by “Other” (Asian, Indigenous and mixed-race identifying individuals) and Black Americans are most likely to have a parent or grandparent living with them, or to be providing a parent or grandparent with financial support. Other research shows that Hispanic, Asian and Black caregivers of older adults are most likely to face “high burden” care situations when providing unpaid care at home.

All this suggests that improving the financial security of older Americans will help older Americans achieve greater independence and improve the lives of the community and family members upon whom they rely. To do this requires bolstering the retirement security of older Americans by strengthening Social Security and making sure all workers have access to retirement plans, lowering out-of-pocket healthcare costs by strengthening Medicare and making long-term care more affordable.

These programs and policies are crucial to supporting the independence of older Americans, especially for those at the fringes of our economic system whose families disproportionately share the financial burdens of aging.  

Appendix Table 1: Non-whites More Likely to Provide Support to Older Parents

Sample: All households with parents (or in-laws) ages 65 and over who are alive
Source: Survey of Consumer Finances

Jessica Forden, MA, is a research associate at The New School’s Schwartz Center for Economics Policy Analysis in New York City. Siavash Radpour, PhD, is associate research director at The New School’s ReLab