Pets have become a significant part of financial decisions in American homes, according to a new survey from the American Institute of CPAs (AICPA), which reveals that 62 percent of American pet owners, those who own a dog or cat, have a specific budget for spending on their pets.
According to the latest data, 57 percent of Americans own a dog, while 40 percent own a cat. Among those pet owners, 95 percent consider their pets to be members of the family, and devotion to pets runs deep. Sixty-nine percent of pet owners said they would be more likely to cut spending on themselves than on their pets if they had to make cuts, highlighting the important role pets play in American households.
The survey also revealed that older pet owners may be especially devoted to protecting their pets’ well-being. Among pet owners aged 65 and older, 81 percent say they would be more likely to cut spending on themselves than spending on their pets if they had to make cuts. That compares with 64 percent of pet owners ages 18-34, 63 percent ages 35-44, 71 percent ages 45-54, and 73 percent ages 55-64.
“These findings show that Americans view pets as a member of the family and that the money spent to care for them is not an afterthought but a core household expense,” said Cary Sinnett, director of personal financial planning for the AICPA. “For many families, pets provide companionship, emotional support and stability, so it’s not surprising that some would prioritize their pets’ needs over their own, even during times when budgets are tight.”
The love for pets is also showing up in Americans’ estate planning, according to the report. The interest in including pets in a will or trust reflects the trend of treating pets as family members. Of the 73 percent of pet owners who report having a will or trust, 40 percent of those individuals have included provisions for their pets in those plans.
Among those who have a will or trust but do not have provisions for their pets, 40 percent said they hadn’t thought of adding their pets to their will or trust, while 38 percent said their family or friends would figure out what to do with their pets if needed.
Additionally, 25 percent feel that wills and trusts are only meant for people, not animals, and 18 percent noted they haven’t updated their will or trust since getting their pets.
“Many people overlook what would happen to their pet(s) if they became incapacitated or pass away,” said Erin Itkoe, CPA/PFS, member of AICPA’s PFP Champions Task Force. “Discussing long-term care arrangements for your pet(s) and documenting those wishes in your estate plan benefits not only your pet(s), but the people you’ve selected to care for them.”
The report offers several tips for pet owners to ensure they have the funds in place to deal with a pet emergency.
● Make sure your budget includes recurring expenses such as food, grooming, medication and routine veterinary visits. Set aside extra money for unexpected expenses, including veterinary bills, emergency boarding or temporary care needs. Keep in mind that costs may increase as pets age and require additional medical attention, similar to human health care. Larger veterinary expenses can occur unexpectedly.
● Evaluate pet insurance and determine whether coverage makes sense based on your pet’s age, health and breed, as well as your budget. According to the survey, 41 percent of pet owners have pet insurance. Consider whether you would be comfortable paying for significant unexpected veterinary expenses out of pocket. Pet insurance policies vary widely in terms of coverage, deductibles and exclusions, so review the details carefully before purchasing.
● Review your estate planning documents. The report noted that pets generally cannot inherit assets directly, but you can create a plan to provide for their care. Identify who would care for your pet and how that care would be funded if something happens to you. Depending on your circumstances, a pet trust or other legal arrangement may provide additional protection. Be sure to update your documents following major life events, including adopting a new pet, moving, retirement or other changes in financial circumstances.
● Create a pet care plan for emergencies, including written instructions for your pet’s care, feeding routines, medications, veterinary contact information, behavioral notes and emergency contacts. Consider keeping this information with your important documents so a family member, friend or caregiver can quickly step in if needed.
