Planning for Retirement as a Family Caregiver

The average age of a family caregiver is 49, meaning they are approximately 15-20 years away from retirement.

Providing they are able to retire when the time comes, that is, because the price for being a caregiver is not only physical and emotional, it is financial as well.

According to AARP, family caregivers dedicate approximately 20 percent of their annual income ($7,000 per year on average) to cover care services for their senior loved ones. There are other ways caregivers put their financial future at risk.

Caregivers Raid Their Retirement Accounts

A study by the Transamerica Institute reveals that, “Almost 18 percent (of caregivers) say that they have taken a loan, hardship withdrawal and/or early withdrawal from their retirement accounts as a result of becoming a caregiver.”

Caregivers Curtail Their Careers

Given the average age of caregivers, many would be at the peak of their earning power. However, the time and energy they devote to their senior often reaches a point where they feel they must reduce their hours or quit work altogether. This not only immediately reduces or eliminates income, it makes it almost impossible to earn future promotions and employment opportunities.

Take Stock in What You Want and Need

It is easy for a caregiver to become preoccupied with the challenges of being a caregiver and lose sight of protecting his or her own future. However there are some basic questions to ask yourself.

• What do you want your retirement to look like?
• At what age do you want to retire?
• Do you or your spouse require care for chronic illnesses?
• What resources are available in your community to assist you?

There are also financial considerations. For example:

• How much money will you need to retire?
• What funds have you accumulated through investments?
• What will your social security benefit be?
• Are you entitled to other financial or medical benefits?
• What are your current expenses and how will they change as you age?

Find Experts to Help

Arriving at a viable retirement plan can be a complex and confusing challenge. However, financial planners, elder-law attorneys, or geriatric care managers can help you sort through the process.

Financial advisors can create strategies for reducing your financial risks while caring for your loved one. As well as financial planning, they can assist with investments, taxes, and wealth management.

Elder law attorneys handle a wide range of legal matters for older or disabled people. Their services include retirement and estate planning, and Social Security and Medicare/Medicaid benefits.

Geriatric care managers have a wealth of experience and knowledge for people as they age, including expertise in health care, explanation of benefits like those provided by the Veterans Administration, planning for long-term care, and home health resources.

Aside from assisting the caregiver’s senior, all these professionals can provide recommendations for the caregiver’s future retirement while reducing the current cost of care for the senior loved one.

Protect Your Future

The emotional pressure and difficult decisions involved in being a family caregiver can be enormous and can lead the caregiver to sacrifice his or her own future.

If you feel you must reduce your work hours, see if your employer can provide a work-at-home opportunity. At the very least make your boss aware of your situation with your senior. Of course, during this COVID-19 pandemic, there are a staggering number of unemployed people in the U.S. and drastically reduced job opportunities, which adds to the pressure of trying to maintain employment.

AgingCare provides information on benefit programs for caregivers, including the U.S. Family and Medical Leave Act (FMLA) which allows for up to 12 weeks of unpaid, job-protected leave each year for qualifying workers to care for an immediate family member.

Not every employer or employee is covered by the FMLA. More information can be found on the U.S. Department of Labor website.

Also, outside home care services may be an option that can allow you to work and continue to contribute to your own retirement.

As everyone’s financial situation and family dynamic is unique, planning for retirement is unique to each family caregiver. But the basics are as follows:

• Be aware of the financial costs you are incurring as a caregiver
• Identify your situation and how you envision your retirement
• Enlist the help of an expert if you are overwhelmed
• Try to find ways to protect your financial future

To learn more about planning and preparing for the future, check out the Finance & Planning section of our blog.