Don’t Neglect Your Own Finances When Caring for Aging Relatives
July 1, 2014
As the number of seniors in the U.S. population continues to increase, so does the number of people taking care of an aging parent. In 2011, an estimated 10 million adult children over the age of 50 were caring for an aging parent. Having to take on this type of responsibility, especially during your prime earning years, can take a toll—not only emotionally and physically, but financially as well. Research has shown that working Americans who must reduce their working hours or leave their jobs to care for an aging parent can sacrifice their own financial stability to do so.
Ideally, before you step into a caregiver role, you should have a discussion with your parent(s) or the relative who needs your help about their wants and needs and how finances will work. You should you also determine in what situation you will become responsible with the legal power to make decisions for them. While this conversation may be uncomfortable, it is critical.
Balancing your own financial needs with the need to care for your aging relatives can be stressful and challenging, so consider the following tips to help you manage both of these priorities:
- Think long-term before you give up a job. While it may be difficult to hold down a full-time job when you need to be able to take your relative to doctor appointments or tending to their well-being, the time you gain may come at the cost of your long-term financial security. Be sure to think long and hard before you cut your current income and reduce or eliminate your retirement savings. Also consider if you will need to get another job at some point and if your skills will still be sharp if you exit the workforce completely.
- Create a caregiving budget. Before making any caregiving commitments, create a budget with your own expenses in light of potentially becoming a full-time caregiver. In addition, make a list of the resources that your relative has available to help you support the needed caregiving expenses.
- Research the public benefits available. Do some research online and in your community to identify what public assistance may be available to help you reduce the costs of caregiving services. Websites such as The National Council on Aging (www.ncoa.org) have extensive information available that can help caregivers find help in their local area.
- Know the limits of Medicare and Medicaid. It is important to know that Medicare and Medicaid offer only partial solutions to the financial burden of long-term care. For example, Medicare does not pay for caregiving services on a long-term basis and Medicaid will only cover long-term care services after the individual in need has exhausted most of their assets and qualifies for the program’s nursing home benefits. Therefore it is important to factor into your financial decisions what kind of Medicare and other medical coverage your parent or relative has and what kind of out-of-pocket expenses you may incur.
- Don’t sacrifice your own retirement. Another piece of the financial picture that you need to consider before committing to caregiving is your own retirement plan. While it is noble and sometimes necessary to give up your own livelihood to care for a sick relative, make sure that you consider the impact this may have on your own retirement plans—and even the ability to pay for your own care should you need it in the future.
Having a parent or other relative with health problems is stressful, and the burden of taking on the role of caregiver or finding affordable long-term care solutions only adds to the challenge. While it may be difficult to do so, talking through the situation and potential options with the individual needing care is critical before you make decisions that could impact your own financial future. Our trusted advisors can help you look at the financial implications of caring for your loved one. Please contact us if you would like to talk.