Is it time to take over as “parent” to your parents?
When driving your parents to the grocery store or doing their yard work turns into cooking their meals and helping with tasks like showering and dressing, you've turned the corner from occasional helper to caregiver. Becoming a caregiver can not only affect your family, but your job and even your health.
One thing you might not think of right away is the effect that leaving your job at an earlier stage than you planned can have on your retirement. In fact, research conducted by the AARP revealed that family caregivers who are at least 50 years old and leave the workforce to care for one or both of their parents will forgo, on average, $304,000 in salary and benefits over their lifetime. These estimates range from $283,716 for men to $324,044 for women.
Fortunately, there are things you can do to make the situation more workable for all concerned, beginning with understanding your parents’ finances so that you can better assess how much of your own life you need to sacrifice for their care. For instance, do you need to give up your job completely, even for the interim, and be a caregiver around the clock? Or do they enough financial resources to hire part-time help?
Here are tips to help you, the new caregiver, get the support you need so that caregiving does not consume your life, as well as tips on both preparing and paying for your loved one’s potential move to a nursing facility in the future.
1. Understanding your parents' finances
Although they might be reluctant to share the information, knowing your parents' financial situation can help you make decisions about their care. Ask them for a list of their assets, including bank and investment accounts, retirement plans, home equity, and insurance policies. Make sure your parents each have a power of attorney giving someone authority to handle financial matters and that they've signed advance directives expressing their wishes for health and end-of-life care.
2. Teaming up
Line up siblings or other relatives to assist with caregiving duties, or you might ask those who live elsewhere if they would be willing to contribute financially to care for your parents. You might also consider paying a neighborhood resource, which can be found on community social networks like Nextdoor, to help out with chores or even supervise your parents when you’re not with them.
3. Learning about community resources
Many communities offer daily eldercare, transportation to and from medical appointments, prescription drug programs, discounted meals, and other benefits that can help families with caregiving. Find out if your parents are eligible for services that are available in their area.
4.Preparing -- and paying -- for the future
The day might well come when it’s time to find a nursing home facility where one or both of your parents can age with dignity and safety. There are often waiting lists for desirable facilities, so it is advisable to research multiple options well before moving day. In fact, an application for the desired nursing home should be submitted at least a year in advance of the anticipated move-in date.
Once you find the best facility for your one or both of your parents, what are your financing options for long-term care in lieu of private insurance? Unfortunately, the government offers little help. Limited financial support is available through Medicare. Medicaid is only available to those with very limited resources. However, there are federal and state programs, which may provide assistance with healthcare-related costs for your parents.
If you claim your parents as dependents on your income tax return, you might be eligible for a federal tax credit allowing you to take up to $3,000 off the cost of in-home care or day care. Additionally, you may be able to use funds from a flexible spending account (FSA) to pay for certain medical expenses of your parents each year with pre-tax dollars.
With elder care costs continually on the rise, financial planning has become ever more crucial to the economic well-being of adult children responsible for the care of their elderly parents. As a caregiver, you will want to avoid waiting until the time has come to pay out sizable sums for elder care. Start planning now by meeting with a wealth advisor to ensure the future well-being of your parents – and yourself.
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This information is not intended as legal or tax advice and should not be treated as such. You should contact your estate planning and/or tax professional to discuss your personal situation.
Wealth planning strategies have legal, tax, accounting and other implications. Prior to implementing any wealth planning strategy, clients should consult their legal, tax, accounting and other advisers.