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.”
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.