How caregiving affects retirement planning, career advancement

Adults who are raising children while caring for their aging parents are part of what is known as the ‘Sandwich Generation’. Rising consumer prices combined with a competitive housing market are making it difficult for many families to make ends meet.

Adding the financial burden of caring for aging parents to an already tight budget can significantly derail working parents, and studies show that the emotional toll can affect women more than men.

Related: Dave Ramsey Explains How to Thrive in a Fulfilling Retirement

We spoke with Vanessa Okwuraiwe, director at Edward Jones, to reveal the findings from their recent study, “Caregiving Responsibilities Leave Half of American Women Lacking Confidence in Their Ability to Save for the Future.”

The data highlights that many women have to take a step back in their careers to care for a relative, which can hinder the ability to save, make strategic investment decisions and plan for retirement. While there is no easy fix, the burden may ease over time as access to resources increases with the number of women in the financial services industry.

Women are more likely to suffer career setbacks and lower retirement savings when caring for family members

Men are also affected by caring for aging family members, but women often feel the emotional pleasure.

A surprising finding from the study highlights a disparity in financial planning: women are responsible for 85% of household spending decisions. They are considered the financial directors of their families, but only 42% have sole responsibility for investment decisions.

Okwuraiwe noted that lack of confidence and resources is the likely cause.

“Insights from the report and research tell us that only about 50% of women feel confident about their financial future,” she explained. “If only 50% of women feel financially confident about their future, then of course there will be a correlation where just over 40% of women have sole responsibility for their investment decisions.”

More on personal finance:

• How your mortgage is the key to early retirement
• The report on Social Security benefits confirms that big changes are coming
• The average American faces a major retirement 401(k) dilemma.

“Women are often in charge of the budget, but the more complex decisions are left to their male counterparts. We still have an opportunity in financial services to have more women who are financial advisors,” said Okwuraiwe. “The more women we see in the profession, the more women feel confident about their financial future and they can take more responsibility in investing. decision making.”

Edward Jones is partnering with Everfi to increase access to financial educational resources, hoping to reach one million people by 2025. Increasing access to educational resources is another way women can play a more challenging role in their financial plans.

“As we continue to invest in financial education, women will be the beneficiaries,” she continued. “We will see women feeling confident enough to take more responsibility for financial planning and investing.”

64% of women in the sandwich generation said that caregiving had a negative impact on their ability to save for financial purposes, and more than half (57%) of women had to step back from work responsibilities to care by a relative. This barrier to career advancement and loss of potential earned income can add up significantly over time, putting female caregivers at greater risk of becoming financially insecure.

“Women are more likely to step away from their careers to take care of family members, be it children or elderly relatives,” Okwuraiwe said. “As they move away from their careers, they’re likely to earn less, and a cycle starts: If they’re earning less, then they’re not going to save as much in their 401(k)s, and they’re not investing as much.”

A mother and daughter are seen talking over a cup of coffee.

Shutterstock

Ways to lighten the burden of caregiving

Okwuraiwe notes that there is no overnight solution to helping sandwich generation caregivers, but including access to financial resources and having financial advisors who understand the unique challenges women face today is a good place to start.

“We’re finding that there’s always an implication when you retire from your career, even though women might be earning more than they were in the past,” she said. “There’s a way to change what’s already happening by giving advice.”

Counselors who work with women to help them balance competing financial, professional and personal obligations will be key to enacting change.

Related: The average American faces a major retirement 401(k) dilemma.

“Women want a financial advisor who understands them and can ask them the right questions to know what matters most,” she added. “This is a call to our industry to make sure we’re doing everything we can to give women the resources they need to make the changes they need to build a successful financial plan for their future. When we have more confidence in this generation of women, it will have a positive impact on families and society for generations to come.”

“Once financial advisors can give women this more holistic understanding of their opportunities, where you’re not just talking about their finances, but health, purpose and family comprehensively, then you’re going to be able to help women achieve better results.” good “

Okwuraiwe also believes that the federal government should take steps to provide a better financial safety net, especially when workers are approaching retirement or need to take time off from work.

“Public policy initiatives need to be developed to mitigate the negative consequences of taking a step back from your career for our carers,” she said. “When it comes to saving for retirement or investing in your financial future, I believe we can do more to ensure society and government can better support more families.

Related: Veteran fund manager sees world of pain coming for stocks