Study of mass affluent and high-net-worth investors shows impact of lost time, financial mismanagement, and more
While clients facing cognitive decline are well known to be at risk of financial exploitation, that’s not the only threat they face when it comes to their overall household wealth.
According to a new survey of 1,000 mass-affluent and high-net-worth investors (HNWIs) conducted by RBC Wealth Management – U.S. and Aon, the overall lifetime cost of care for dementia frequently results in direct and indirect expenses of more than US$750,000.
Depending on when a diagnosis is received, caring for a person faced with cognitive decline can take anywhere from five to 15 years. On average, those providing care make an average financial contribution of nearly US$750 per month to support daily expenses and miscellaneous necessities. By the time the decline is in its most severe stages, those expenses can reach an estimated US$1,200 per month.
“A dementia diagnosis can be financially devastating, as Medicare and traditional insurance do not cover daily care costs,” Angie O'Leary, head of Wealth Planning for RBC Wealth Management, said in a statement.
Among the caregiver respondents in the survey, the majority cited financial mismanagement as a key risk and concern. The research found that 80% of people impacted by dementia have at some point seen signs of financial mismanagement and potential abuse among dementia sufferers, including unpaid bills, unusual spending, unopened statements, and multiple calls to advisors repeating the same concern.
“Advisors play an important role in helping to identify those early warning signs of dementia,” said Tara Ambrose, manager of Senior & Vulnerable Client Initiatives at RBC Wealth Management. “They can work with families to take early steps to protect finances and help prevent fraud and financial abuse.”
When focusing on the responsibility of caregiving and the associated costs, the study found that women tend to shoulder an outsized burden. Aside from starting to provide care earlier in the diagnosis, the typical female caregiver spends more time looking after someone going through cognitive decline than male caregivers.
That decision has implications on women’s career trajectories, with 44% of female caregivers in the survey saying they’ve adjusted their work patterns, including leaving the labour force or taking early retirement. One in eight said they devote at least 160 hours a month, equivalent to a full-time job, with no pay. Considering their reduced hours and departures from the job market, the study estimates women caregivers end up forgoing $35,000 in annual income.
