Serving as the family caregiver for a senior loved one is a rewarding but challenging pastime. Many caregivers sacrifice time and money for their loved one and compromise their own retirement savings. According to a survey by PNC Financial Services Group, one-third of family caregivers have spent their retirement money on their aging loved one and one-fourth of family caregivers spend more than half their time performing caregiving duties.
Primary caregivers to a family member tend to put their personal needs and health last while caregiving. They often forego big purchases, plan to work longer and harder, and sacrifice their retirement plans. Caregiving duties are particularly intense for family caregivers who must care for their aging parent and raise children of their own.
However, according to the PNC Financial Services Group, almost half of the family caregivers report that caregiving gives their life a sense of fulfillment and purpose.
Economic Hardships of Caregiving
Caregiving can often disrupt work and career goals, and this has long-lasting economic consequences for family caregivers. Unfortunately, the U.S. provides no considerations for extended leave or absences from work due to family caregiving responsibilities.
According to the MetLife Study of Caregiving Costs to Working Caregivers, the estimated cost of parent care for men is more than $280,000 and for women is more than $320,000. This total accounts for caregiving costs, lost wages, and lost Social Security and pension benefits.
Long-term caregiving affects the physical, psychological, and mental health of caregivers and undermines their retirement options in the future. Many caregivers quit working or take early retirement to care for their loved one full-time and this leads to an increase in depression symptoms.
Caregiving and Working
Early retirement or common disruptions at work may decrease retirement benefits, which is concerning for family caregivers, especially those who are single and don’t receive spousal Social Security benefits. It can be difficult being the primary caregiver in the family, so the family caregiver should reach out to the rest of the family for additional help.
Seriously consider your financial situation before you make the decision to quit your job or continue working. If you quit a full-time job with a 401(k), you will sacrifice thousands of dollars in your retirement. That money could greatly benefit the quality of life for you and your elderly loved one in the future. If this is your situation, it may be worth looking into outside care from an in-home caregiver or another family member.
It is advised that family caregivers who aren’t passionate about their jobs or can afford to quit do so to better handle caregiving responsibilities. Family caregivers who love their work or can’t afford to quit should continue working and seek outside help for their caregiving duties.
How to Save for Retirement
Each caregiver has a different financial situation, but every one of them can benefit from these tips on how to save money for retirement. The simplest and perhaps most beneficial step is to create a budget. It may seem unimportant now, but creating frugal and thrifty habits will help you save money over time. Create a weekly or monthly savings goal and limit spending so you and your loved one both stick to it.
Take advantage of your savings pre-tax. You may be eligible for a health savings account, which allows you to save $3,500 a year pre-tax. This money can be helpful in medical emergencies and other health-related situations. For some families, this money makes a huge difference because it allows family caregivers to keep working and hire in-home care for their loved ones.
Finally, look into your loved one’s resources to save money. If your loved one is a homeowner, you may want to consider a reverse mortgage and if not, many home health benefit plans are now available through Medicare.
We understand that providing care to an elderly loved one can put a financial strain on the family caregiver. It may seem tempting to retire early to provide full-time care, but this choice can have economic consequences for the family. Carefully consider your options and don’t hesitate to reach out for help, whether to another family member or a home health care service.