Caregivers—households that report any "infirmed, aged, disabled, or handicapped adults" supported by the household—have special financial challenges and needs. In the past decade, trended data show an increase in the number of Caregivers households, from 11.3 million in 2000 to slightly more than 16 million in 2010. Of the 16 million households, 26% (4.2 million households) are responsible for care of both one or more children and one or more adults.

Demographics

• The average age of Caregivers household heads is 56.
• Nearly half (47%) of Caregivers households have a primary head of household between 50 and 64 years old.
• Caregivers' average household income is $42K; over half (51%) have a total annual household income of less than $25,000.
• Twenty-three percent of Caregivers lack a high school diploma, and 82% failed to achieve a four-year college degree.
• Only 26% of Caregivers households have dependent children. Two in five Caregivers households have children older than age 18.
• More than half of Caregivers (56%) are single-headed households (never married, divorced, or separated).
• Caregivers and Noncaregivers households are equally likely to have a male primary head (61%), but Caregivers are more than twice as likely as Noncaregivers to be divorced or widowed (40%).

Products and Services

• Caregivers households are unlikely to own saving and investment products such as CDs, money market deposit accounts, mutual funds, stocks, and bonds.
• In addition, only 25% of Caregivers have an IRA, and only 21% own a salary-reduction plan (401(k), 403(b), or 457 plan).
• The incidence of business ownership for Caregivers is only 7%.
• Just 44% of Caregivers report using online banking services, and fewer than 6% invest online.
• Only two in ten Caregivers households name retirement as their most important saving and investing goal. Caregivers emphasize saving or investing to make a major purchase, buy a vehicle, provide for future medical needs, or provide for heirs, children, or grandchildren.
• Slightly more than half of Caregivers (55%) own their home; 25% have a first mortgage, and only 6% hold a second mortgage. Fewer than one in ten Caregivers households have a home equity line of credit (HELOC).
• Caregivers have relatively low total asset balances—a mean of $267K.
• Caregivers' low assets are somewhat offset by their low liability—a mean of only $50K.
• Almost nine in ten Caregivers households own any insurance products. They have relatively low insurance incidence rates for vehicle insurance, homeowner's or renter's insurance, and health insurance.
• The prominent exception is individual life insurance; the ownership incidence for Caregivers is 45%.

Financial Attitudes That Differentiate Caregivers

Few Caregivers feel satisfied and confident about their finances. For example, a high proportion expect to rely on Social Security and Medicare for their future well-being and worry about their financial future because of their constrained circumstances. Modest incomes do not provide sufficient cash flow for the majority of Caregivers households to take on risk—such as investing—to enhance potential financial rewards; a number of Caregivers' attitudes suggest that investing is actually quite intimidating.

Interesting Tidbits

• To the extent that their circumstances permit, Caregivers are financially responsible.
• Slightly more than half (54%) of Caregivers own their home.
• Caregivers are wary of credit in all forms, such as loans and credit-card debt. They are less likely to have a vehicle loan or consumer loan or to carry a credit-card balance than are Noncaregivers.
• Caregivers are highly distrustful of financial institutions. Recent events and headlines of misdeeds feed into their distrust.
• The demands of care giving, in addition to their usual list of responsibilities, leave Caregivers little time to learn about new technology. In fact, Caregivers express little interest in embracing online activities—even those, such as online banking, that would free them from trips to their physical bank.

Implications

Because of relatively high financial burdens and limitations, Caregivers are cautious and conservative. They are financially disciplined. Caregivers represent a good opportunity for some types of financial-services providers. For example, because the average age of Caregivers' vehicles is ten years, vehicle lenders and insurers can find opportunity by courting these consumers. Banks can leverage Caregivers' credit aversion to promote debit cards and automatic-savings features. Life insurance agents can promote products to Caregivers households such as individual coverage to meet their special needs. And because of Caregivers' low incidence of mortgage loans, in combination with their need for income, many Caregivers are excellent candidates for reverse mortgages.

For more information, contact CFD.