The Caregiver Cliff: An Economic Threat Almost Nobody's Talking About

Just a couple of months ago, it was the fiscal cliff getting all the press. Now, the media is focused on fiscal cliff, part two -- the sequester, and all the troubles it is bringing with it. But through it all, another "cliff" that's looming large on the horizon is being forgotten -- one that has the potential to be much more damaging to our economy over the next 10 to 20 years.

Washington Post reporter Michelle Singletary named it the "caregiver cliff." It's what will happen as a result of tens of millions of caregivers "taking time off from work, and thus risking their jobs, or tapping into their limited resources to provide care."

A Look at These Caregivers

Right now, 65 million people in this country spend their time and money caring for a sick or disabled relative. That already has massive economic consequences: The monetary value of "free" care directly administered by family members equates to roughly $450 billion a year, twice what is directly spent on home care and nursing home care. Nearly half of those who do work say this decision has depleted their savings.

Add that all up, and you're looking at around $675 billion a year spent on caregiving -- a number that will only continue to rise as baby boomers retire and transition from caregivers to those in need of care.

Millennials as Caregivers

Millennials, the children of baby boomers, surely aren't going to leave their parents neglected. In fact, "helping others in need" is one of the most important facets of their life, third in priority to "being a good parent" and "having a successful marriage," according to Pew Research.

We can reasonably assume that many millennials will sacrifice work, time and money to look after their aging parents -- and this choice and its effects will happen just as they begin entering into their peak earning years.

So the big questions then become: What happens at this point? Where will the money come from? What will they decide?

It's reasonable to guess that the government won't be much help. It's already cash-strapped, and unless serious changes to the political landscape take place, will continue to be for the foreseeable future. So change will have to come from somewhere else.

But Where?

That change will have to come from the private sector -- specifically, from innovative companies sympathetic to their workers' struggles, and unwilling to lose valued employees who make taking care of their parents a priority.

Given that a huge chunk of the workforce will be dealing with the issues related to caring for their parents, and will be forced to decide between losing work hours or spending great deals of money on outside help, companies will be forced to find an alternative.

What will this look like? It could come in a variety of ways. Perhaps it means flexible work arrangements or comprehensive teleworking abilities, so employers can count on their employees to get their work done when they're able and employees can be at the bedside of their parents as they're needed.

Or perhaps it comes in another form. Much like many companies pay for group health insurance plans, companies in the coming years may pay for group caregiver help. Employees could pay into a similarly run program that ensures quality care for their parents with costs heavily subsidized by their employers.

These ideas are all speculation, of course. But something will have to be done -- a middle ground must be found in which workers aren't forced to choose between a paycheck and taking care of those who have cared for them. And as more and more baby boomers begin to retire, this decision becomes more and more urgent.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's report detailing one tactic to boost your Social Security payment by as much as 76%.

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