Tips for Keeping Your Own Retirement Plans on Track as a Family Caregiver

Tips for Keeping Your Own Retirement Plans on Track as a Family Caregiver
Costs of Being a Caregiver Can Derail Retirement: How to Make Sure it Doesn't Happen to You

The costs of being a caregiver can be overwhelming.  There is the extreme emotional turmoil. But there are also serious financial concerns– from money spent out-of-pocket and from time spent caregiving instead of earning income.

A study by AARP found that family caregivers spent an average of nearly $7,000 a year of their own money–more than $7,400 in 2019 dollars. Caregiving expenses can include out-of-pocket costs for medications, medical bills, in-home care, nursing homes and more.

While you may only be able to think about how to help the person you are caring for, there are steps you can take to protect your own retirement. You deserve the time it takes to care for your own self too.

Here are a few tips from retirement experts for family caregivers:

1. Join a Caregiver Support Group

Caregiving is an overwhelming responsibility.  Too many caregivers put others too far ahead of their own selves.  You probably feel that you have the time or resources to take care of your own financial needs.

If this is you, you might want to join a support group.  A caregiver support group can offer you an invaluable emotional outlet which may help you gain some perspective and be able to address your own needs.

Here are a few organizations providing caregiver support:

2. Plan Ahead

Many family caregivers have not done any planning for themselves with regard to life insurance, burial insurance, retirement, long-term care insurance, or senior living communities.

“Family caregivers, especially baby boomers, run the risk of derailing their retirement plans if they don’t prepare for the costs associated with caregiving,” says Caring.com CEO Andy Cohen, in the study. “Almost half of caregivers spend $25,000 on caregiving in just five years – that’s a significant chunk of money that could delay retirement by a couple of years.”

An online retirement calculator can be an easy starting point.  While a financial planner can help with more detailed issues.

3. Discuss Care With Your Loved One, Especially If You Are a Woman

“Having this conversation earlier [rather] than later is key,” says Spencer Hall, managing partner with Knoxville, Tenn.-based Retirement Planning Services, LLC. “Often times the husband will be a couple of years older than his spouse, and it’s heartbreaking to see the wife depleting their resources to care for him.”

In addition, couples should recognize that they will likely have different health needs as they age. And women’s life expectancy continues to surpass that of men.

4. Meet With a Financial Planner

Financial planners can help you and your loved one discover what options you have when it comes to providing care.  Financial planners are helpful to individual households planning for retirement.  So, they are particularly useful when you might be looking at the assets and resources of two different households that might be in the caregiving relationship.

When you’re presented with options within your means then you can take steps accordingly to best prepare for your own retirement.

“Financial planners are going to take a good look at where your expenses currently are,” Hall says. “If we have a couple and their expected spending is $130,000 a year in retirement, then they’re building long term care costs into that spending. If the expected spending is $40,000 in retirement, and you need nursing home care you can deplete those resources very quickly.”

5. Consider Everyone’s Housing Situation

Housing is a major cost and a significant asset as well as being a structural part of the caregiving process.  The good news is that this gives you options.  Moving closer to family or other supports can help to minimize the financial and emotional burden of caregiving. In addition, preparing for the future may also mean downsizing to a smaller living environment.

Less than half of caregivers (43%) have broached the topic of their elder loved one selling or moving out of their home, the survey finds.  However, the home may be able to help fund caregiving: a reverse mortgage, downsizing, and shared housing are all options.

If you are looking toward the future and your own living situation, Hall suggests couples ask themselves: “Will this home be optimal for us to live in?”  “You want to relocate while your health is still reasonably good. Once you have an individual whose health is failing, relocating can be much more difficult. Being closer to family can offer a tremendous amount of emotional support.”

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