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Don’t Let Family Caregiving Ruin Your Financial Future

8 ways to protect your money while caring for a family member or friend


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As a financial adviser who specializes in assisting caregivers and the son of a man who battled lung cancer, Elliott Appel is well-versed in trying to balance a loved one’s needs, work and home-life demands, and the desire to maintain your own financial stability.

“It’s challenging,” he says. “You have a bunch of competing priorities, and usually, there's just not enough money to go around for everything.”

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Millions of caretakers across the U.S. are familiar with this struggle. But the strain can be especially tough for those 50 and older.

If you are still working, you’re likely in your peak earning years, Appel notes. Taking time off or leaving the workforce entirely to care for another can mean missing out on substantial wages and employer-provided benefits, such as a 401(k) match. At the same time, caregivers can be saddled with expenses such as out-of-pocket prescription bills and medical appointment costs.

And if you’re retired and living on a fixed income, those extra expenditures can quickly dent even the most well-planned budgets.   

A just-released Employee Benefit Research Institute (EBRI) survey found that 55 percent of caregiving workers and 37 percent of caregiving retirees provide financial support to a caregiving recipient. Among both workers and retirees who provide this support, nearly 4 in 10 spent $5,000 to $14,999 over the previous 12 months.

A recent AARP report estimates that family caregivers across the U.S. provided $600 billion in unpaid care in 2021. That’s a whopping $130 billion increase over 2017, the last year studied.  

The cost of care can certainly be daunting. Yet you can take strategic steps to stay on track financially while supporting someone else. Here’s what to do:

Fortify your financial foundation. “You have to take care of yourself,” Appel says. “If you don’t put yourself in a good position, you’re not going to have the resources to care for others.”

Make sure you have an easily accessible savings cushion for unexpected expenses. Financial professionals generally recommend an emergency account with enough funds to cover at least three to six months of living costs.

If you’re working, contribute to a tax-advantaged retirement account like a 401(k). Put in enough to get the maximum match your employer offers; this is free money. If you are 50 or older and have the means, capitalize on the ability to sock away extra cash in catch-up contributions.

Create an advisory team. Assemble a group of experts who can help you navigate the emotional and financial demands of caregiving. The members can vary depending on your needs, but consider a skilled accountant, a financial adviser, an eldercare attorney, and possibly a care manager or eldercare consultant. 

Appel, a certified financial planner and the founder of Kindness Financial Planning, says hiring an experienced eldercare consultant was tremendously beneficial.

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“They do this day in and day out,” he says. “It’s nice to have an objective third party who isn’t family or intertwined in the situation.” 

Separate caregiving-related spending. Even if you live with the care recipient, it’s important to keep your finances separate, says Danielle Miura, a certified financial planner and founder of Spark Financials in Ripon, California. She recommends creating one monthly budget for you and one for your loved one.

An easy way to separate spending — and keep track of your outlays — is to use a specific credit card and checking account for all caretaking-related costs, Appel says. 

Small expenses can quickly add up to “a pretty good sum,” he says, citing examples such as buying gas to get to medical appointments, food when you’re on the go, and a charging cord or new phone if a care recipient misplaces theirs. 

Laura Vaillancourt, founder of counseling and care management firm Eldercare and Appel’s consultant, says having a care recipient’s income, such as Social Security benefits, deposited into a specific account is helpful. To simplify access, add your name or the name of whoever uses that money for expenses to the account. 

Solicit family support. If you’re providing the majority of care for a family member, “ask siblings or other relatives to pitch in with caregiving responsibilities or to provide financial assistance,” says Cameron Huddleston, author of Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances and a former 12-year caregiver for her mother. “They might not realize you need help until you ask. So be specific about what sort of support you need.” 

Professionals on your advisory team can counsel you on how to have productive family discussions, as well as how to bring up the topic if you’d like to get paid for caregiving.

“A third party that is not involved can be super helpful to lead the conversation, as a lot of emotions are often involved,” Appel says.

Put all financial agreements in writing. Clearly document who will pay for what expenses. Family caregivers who will be compensated by the recipient or others should consider creating an official caregiver contract, also known as a personal-care agreement, among other names.

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This contract clarifies the relationship between the caregiver and the recipient; establishes expectations; states when the caregiver will provide care; and outlines the rate and frequency of pay, Miura says. Such an agreement can mitigate potential money-related misunderstandings and conflicts.  A professional can help you create a solid contract.

Tap into all workplace benefits. Ask your employer about arrangements such as flexible schedules and paid leave so you can remain employed while meeting your caregiving duties, says Sandra D. Adams, a certified financial planner and eldercare financial planning specialist, and a partner at the Center for Financial Planning in Southfield, Michigan.

One-third of employers offer paid leave to care for immediate family members, while nearly 20 percent provide paid leave to care for extended family, according to the Society for Human Resource Management’s 2023 Employee Benefits Survey. In addition, more than half of employers offer flextime during core business hours. 

Lean on outside expertise. “Don’t try to do it alone,” Adams says. “Make sure you utilize all of your resources,” which can include community groups, religious organizations, government programs, and non-profits.

Many groups provide free and no-cost services to help you and your loved one, as well as offer free information and training on financial literacy for caregivers.

In addition to AARP's Caregiving site, resources include the National Association of Area Agencies on AgingEldercare Locator; the Family Caregiver Alliance; and the Caregiver Action Network. The Well Spouse Association addresses the needs of those caring for a spouse or partner.

Plan for when you may need care. The emotional toll of caring for a loved one often triggers people to reevaluate their own long-term care plans, says Pam Lucina, chief fiduciary officer at global financial services firm Northern Trust.

A financial expert can help you determine strategies to lessen the load on others if you need assistance in the future. Potential steps include buying long-term care insurance and putting aside enough savings to cover the costs of professional aid or assisted living.

You can also help future caregivers by keeping your financial documents organized, consolidating your financial accounts, and understanding the benefits of giving a trusted person power of attorney.

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