As our lifespans lengthen, many middle-aged adults are finding themselves becoming caregivers to their elderly parents. This role is consuming both in the physical, mental and financial spheres of life. Not only can it cause familial discord, stress, and an increase in daily responsibilities, it will also have a massive impact on your emotional and financial situation. The financial challenges that come with this role can add up over time and even those who feel like they are fully prepared, find themselves in shock of the financial investment it takes to care for an elderly parent. If you have unexpectedly been placed in this role, there are still ways that you can keep your retirement planning on track while being a caregiver.
Make Sure You Have the Difficult Conversation with Your Parents
If you aren’t already in the caregiver role, sit your parents down and talk to them about what their preferences are for their later years of life. Encourage your parents to think about whether they want to go into assisted living, whether they want to live on their own with a paid worker, or want you to take care of them. Figure out if they are setting aside payments for this and make sure to encourage all family members to get involved. Determine who can help, in what capacity they can help, and get a written agreement set up.
Determine the Costs of Care and Your Parents’ Financials
The first thing you want to do is determine the state of your parents’ financial situation. If they have any resources that can help with the cost of the caregiving, these should be noted. You will then want to determine the costs and create a budget based on these with an emergency buffer or overhead in case the costs are higher than estimated. You will also need to figure out whether you will need to dip into your own financials to help support them. If you do have to dip into your own financials, this is where budgeting becomes your friend. There’s no reason why you can’t still budget for retirement here.
Create a Household Budget for You
Unfortunately, caregiving will affect your daily and long-term financial and investment goals. If you already have a budget, try to tweak it to fit in the extra costs. But be aware that your income may decrease and certain areas of your budget may need to be trimmed if you have to take time off work to care for your elderly parent. This is why a lot of caregivers require paid help, but the trade-off here is that you will have another cost in exchange for less stress.
At All Costs, Do Not Leave Your Job if You Can Help it
This is incredibly important for individuals who have a retirement plan or pension through their employer. Rather than leaving your job, see what the minimum amount of hours is that you can take on while still maintaining benefits. Leaving your job does more than just cut your financials down, it also means a loss of skills and contacts which may not be available when you re-enter the job market.
Find Ways to Ease the Financial Burden
You will want to work with an expert on this point, as they will be able to help you find low-cost benefit programs for aging parents. You may be able to tap into your parents’ long-term care insurance, find an affordable respite care, or even find tax deductions that can make it easier. On the investment front, find growth stocks, social security options, and variable annuities that will help you strengthen your retirement income portfolio.
Other than the above, make sure you are paying debts down aggressively early on and budgeting within reason. If you are able to, save all of your pennies and rather than paying down any debt that your child has incurred, gift them a lump sum payment to help them when they are struggling. Gifting is a great way to avoid paying taxes on the lump sum. Otherwise, consult with a tax professional to see if you can get some caregiver expenses that are tax deductible. All of these options will give you more money for your retirement savings.
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