Help your aging parents without hurting your financial health
When caring for parents, don't forget to consider your financial well-being, too.
Caring for an aging parent is difficult emotionally and financially. Caregivers spend hours out of their week on unpaid duties and incur out-of-pocket expenses that can quickly take on a life of their own. As worrisome as the upfront costs are, even more troubling is that there's a long-term impact on financial stability, including lost pensions, Social Security benefits and lost wages.
The following tips can help you keep your retirement and financial goals on track while tending to an aging parent.
Get your finances in order
You and your parent should have some cash on hand to cover unanticipated medical expenses, or in the event you need to take more time off from work. "You should have six months of living expenses in a savings account, and your parent needs his or her own rainy day fund — ideally another six months worth," says Jim Schaffer, Jr., principal with Waypoint Beacon Retirement Planners in Beachwood, Ohio.
Investigate financial assistance for your parents
Your parent may also qualify for assistance, so consider these resources:
- Benefitscheckup.org provides access to public and private programs that help defray the cost of prescription drugs and other health care needs.
- The caregiver section of AskMedicare offers help with the claims process, information on prescription drug coverage and more.
Update important documents
Part of caregiving can include helping your parents get their own financial documents in order. It can be an uncomfortable conversation on both sides, which makes it easy for estate planning to go by the wayside. If one parent has already passed away, the surviving spouse may not be on top of the paperwork. "They might not want to deal with paperwork — but it's essential," says Schaffer. With your parent, review and update the following:
- Titling of assets; consider titling them to living trusts to avoid probate court
- The named beneficiaries for IRAs, retirement plans and insurance policies
- Healthcare proxies
Caregiving can be all-consuming. "Caregiving can dominate your life if you don't draw a line in the sand and find time for yourself," says Schaffer.
Fast Fact: According to a Met Life Mature Market survey released in June 2011, the average amount in lost wages, Social Security and private pension for a typical caregiver who has to leave the workforce is $303,880. When multiplied by the 9.7 million people over age 50 who are caring for aging parents the total amount lost is nearly $3 trillion.
Talk to a financial professional
Juggling helping others with meeting your own retirement goals can be challenging.
Jim Schaffer, Jr. and Waypoint Beacon Retirement Planners are not affiliated with the Principal Financial Group or any of its member companies.