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7 Tips to Managing Your Finances as a Caregiver

weathered elderly hands

By: Lucy Lazarony

My mother Jean had Alzheimer’s for more than 10 years before she died in the summer of 2015 at the age of 83. My father David, 84, was diagnosed with vascular dementia in autumn 2009, and I continue to visit and care for him at his assisted living home on a regular basis. Caregiving deepened the love I have for each of my parents, but the challenges were bigger than I could have imagined.

Because of the length of my parents’ illnesses, my finances became strained. It was easy to push aside and ignore my own financial worries because of the more pressing physical and emotional demands of caregiving.

At first, having a little less in your bank account as a result of caregiving doesn’t seem like a big deal, but small deficits can grow over time. Research shows that caregivers often deplete their own financial, mental and emotional resources. Many caregivers sacrifice wages due to lost work time and tap into their own savings to ease stress on others, sometimes threatening their own financial security.

Denial and depression are common side effects of caregiving. I wish I had read an article like this when I began to care for my parents. The advice I wish I would have heeded most was my parents’ happy and loving voices before they were sick, reminding me to take care of myself and to give more thought to my own future.

If you are starting a journey as a caregiver, my advice to you is to remember that the people who love you most, the very ones you may be caring for, would never ask you to sacrifice your own well-being.

Who are caregivers?

An estimated 43.5 million adults in the United States provide unpaid care to an adult or child, and about 34.2 million of those Americans provide unpaid care to someone age 50 and older, according to a 2015 study from the National Alliance for Caregiving and AARP.

A typical family caregiver is a 49-year-old woman who takes care of a relative, but the study also finds that caregivers are becoming as diverse as the U.S. population. Sixty percent of caregivers are female and 40 percent are male. Eight in 10 take care of one person.

Nearly a quarter of America’s caregivers are Millennials between the ages of 18 and 34, and are equally likely to be male or female. I was 34 when my mother was diagnosed with Alzheimer’s disease.

And, with an average household income of $45,700, caregivers also report feeling financial strain. Thirty-four percent of caregivers juggle full-time jobs with their caregiving duties, and 25 percent work part-time.

According to the study:

  • 85 percent of caregivers provide care for a relative, with 49 percent caring for a parent or a parent-in-law.
  • One in 10 caregivers provide for a spouse.
  • Caregivers spend 24.4 hours per week helping with activities like bathing, dressing, housework and managing finances.
  • 32 percent of caregivers provide at least 21 hours of care a week, on average providing 62.2 hours of care weekly.

Women Caregivers at Higher Risk

A Rice University study found that women who are caregivers are 2.5 times more likely to live in poverty after retirement than women who are not family caregivers.

And women are more likely than men to miss work or sacrifice earning power to be caregivers. According to the Social Security Administration, among new retired worker beneficiaries, women average 13 years of zero earnings after age 22.

Misconceptions About Caregiving

According to a study by Northwestern Mutual, people with no caregiving experience expect their role as caregivers to be focused around chores such as grocery shopping (78 percent), cooking (73 percent) and laundry (72 percent).

But experienced caregivers know a different story. Chores are a big part of the job, but emotional support ranks equally high, taking up an average of 83 percent of the total duties. Providing financial support and helping with personal hygiene to a loved one cause the most anxiety.

Key Takeaways for Caregivers

  • Recognize when you need help as a caregiver and when your loved one needs more help than you can give. Research local, national, government and nonprofit solutions. Be honest about your capacity and in what areas you and your loved one may need more assistance.
  • Take time to care for yourself while caring for others. You can’t help others in a sustainable way if you are physically, mentally or emotionally stressed.

A Financial Self-Care Checklist for Caregivers

  1. Your financial stability comes first. Create a budget for you and your loved one. Look for ways to cut expenses and boost saving, even if it is just a little bit each month or each week. Tuck away what you can in your retirement plan.
  2. Don’t take on unmanageable debt for yourself. With your earning power cut as a caregiver, it may be very tempting to put expenses for a loved one or yourself on a credit card. If you do so, keep balances low and take advantage of low-interest offers. Rather than run the risk of high-interest credit card debt, look to community resources for help with lowering caregiving expenses. Look up your local Area Agency on Aging (N4A.org) or call 2-1-1 to research services available in your area that could cut costs.
  3. Consider the pros/cons before cutting or changing work hours. Before leaving a full-time position, explore ways of working reduced hours or part-time hours with your employer. And keep an eye on your benefits. Will you lose benefits by leaving your job or changing your hours?

    A part-time job with lower pay and lower benefits may be easier for you to juggle, but you’ll also need to rein in your budget quite a bit. Denying yourself too much can have consequences too. If possible, keep a small, just-for-fun fund to help keep your spirits up and give you quick cash for stress release.
  4. Maintain and replenish emergency funds. In the day-to-day stress of caregiving, dipping into savings is easy, but you may regret it when you are on the other side of caregiving and looking to rebuild your own life.
  5. Prioritize your own retirement savings. Keep contributing to your retirement accounts as a caregiver, even if it is just a small amount each month. If you dipped into a 401(k) or individual retirement account to pay for caregiving expenses, work on rebuilding your fund. Many caregivers take hardship withdrawals and loans from retirement accounts to cover gaps, but the penalties often are not worth the money. Unless you really don’t have other options, leave your own retirement savings alone.
  6. Plan for the long haul. Get the maximum out of retirement vesting from an employer and other benefits before leaving a job or cutting back hours. Set up an IRA (or myRA, myra.gov) and continue to contribute.
  7. Prepare now for your own aging. Purchase long-term care insurance for yourself. Make sure you have a medical power of attorney, a will and a living will, and that a trusted ally knows where and how to access all your account information (numbers, passwords, bill pay) in case you become suddenly incapacitated.

Above all, look for support, and ask for the help you need. Prepare for a transition to caregiving by taking one of SAM’s Money Basics or in-depth free online courses, or read more about how to prepare for financial changes as a loved one ages in SAM’s Aging and Money topic.

[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]

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