Nearly half of investors are providing financial support, a
Wells Fargo/Gallup survey found, and many are spending enough to jeopardize
their retirement.
A new Wells Fargo/Gallup survey finds that 53%
of U.S. investors are spending time or money or both helping adult children or
extended family members, which affects their own financial well-being including
their ability to save for retirement.
More specifically, 45% of the almost 2,100
investors polled — with a minimum $10,000 invested in stocks, bonds or mutual
funds — said they contributed on average $10,000 in financial assistance to an
adult child, parent, parent-in-law, sibling, grandchild or other relative over
the past year. That’s twice the $5,000 that a previous Wells Fargo/Gallup
survey found investors could not handle. (They were not asked that question in
the latest survey.)
“It is extraordinarily generous for investors
to step in and help adult family members with this level of support, but there
is risk if they are not doing so from a position of strength,” said Mary
Sumners, regional president of Wells Fargo Advisors’ Northern Region, in a
statement.
The most common expense paid by investors was
living expenses for an adult child, incurred by 30% of respondents, followed by
living expenses for a parent or in-law (13%), medical expenses for an adult
child (9%), caregiver expenses (7%) and medical expenses (6%) for a parent or
in-law. An additional 29% of investors reported they had paid tuition for
college or other type of school, but that figure was not included in the
financial support stats of the latest survey.
Investors providing personal assistance or
care to family members spent an average 13 hours per week doing so. Women were
almost twice as likely as men to be caregivers (14% versus 8%) and even
more likely to be sole caregiver (40% versus 13%), according to the survey.
Both men and women reported that caring for
relatives has had a negative effect on their emotional health and time for
themselves, their family and friends and jobs. Not surprisingly, a higher
percentage of women than men reported these negative effects, since they also
reported spending more time on caregiving.
On the flip side, the experience of providing
care to relatives helped these investors understand how they want to be cared
for when they get older, and close to 60% said they were saving more for
medical and personal care that they had originally planned. About half said
they were now more likely to move to an assisted living community in their
later years.
Despite these experiences and changed
attitudes, the survey found that many investors are still underestimating the
costs for health care and long-term care in retirement. More than half expect
those costs will total less than $200,000, well below the roughly $330,000
total estimated for health care ($194,000) and long-term care ($138,000).
Only one-quarter reported having a health
savings account, and even fewer (20%) reported having long-term care insurance.
“Many people understand the need to save for
retirement, but it appears they have compartmentalized health care costs and
are not planning the way they need to,” Sumners said. “Underfunding health care
costs later in life could deplete retirement savings and make investors
vulnerable.”
The Wells Fargo/Gallup Investor and Retirement
Optimism survey polled 2,091 investors age 18 and older in early August, split
almost 60/40 between non-retirees and retirees and between those with annual
incomes above and below $90,000.
Bernice Napach is a senior writer at
ThinkAdvisor covering financial markets and asset managers, robo-advisors,
college planning and retirement issues. She has worked at Yahoo Finance,
Bloomberg TV, CNBC, Reuters, Investor's Business Daily and The Bond Buyer and
has written articles for The New York Times, TheStreet.com, The Star-Ledger,
The Record, Variety and Worth magazine. Bernice has a Bachelor of Science in
Social Welfare from SUNY at Stony Brook.
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