By Surya Kolluri, Janet Weiner & Mary Naylor

Since 1935, when Social Security set the age to receive full benefits at 65, average life expectancy in the United States has risen by 17 years. This increased longevity has clear implications for financial planning, both in terms of the timing of retirement and the need to plan for a longer period of retirement. But there are less obvious implications as well, in terms of the likelihood and length of time that someone might need to care for a family member or require care themselves. Historically, caregiving has not been a focus for traditional financial planning, despite the fact that one in five Americans currently provide care to spouses, aging parents, or children with serious health problems. About 90% of caregivers are also financial caregivers, in that they provide financial support or manage financial matters for their loved ones. Although the emotional and physical toll on family caregivers is well recognized, the financial impact of these roles has received less attention. In this paper, we discuss financial caregiving, how increased longevity increases retirement security risk, and the need to plan for these costs across various life stages. We explore the concept of “longevity literacy” as a framework for improving individuals’ ability to incorporate financial caregiving expectations across the lifecycle, and for addressing longstanding issues of gender equity in retirement saving and readiness. Finally, we recommend ways that individuals, financial advisors, employers, and society can support a more inclusive retirement ecosystem that empowers people to plan for and address the financial challenges they are likely to face as family caregivers.

Source SSRN