In our last blog article, we discussed The Slippery Slope Of Financially Supporting Your Adult Children.
But what about our parents?
For many of us, our parents have been a source of love and support for our entire lives. It’s only natural that we would want to return that compassion when our parents reach an age when they can no longer care for themselves. However, jumping into the role of a full-time caregiver for an elderly parent is not something to be taken lightly. That’s especially true if you’re in your 50s or 60s and haven’t yet reached retirement age.
Negative Impacts Of Being A Full-time Caregiver To An Elderly Parent
If you personally haven’t reached retirement age, the biggest negative impact you’ll face with caring for an elderly parent is the financial cost.
If you quit working so you can take care of someone else, the most obvious hit to your finances will be your loss of income. But the decision can also affect your expenses. Most working adults get their health insurance through their employer. If you quit your job to care for an elderly parent, those benefits are gone. If you don’t have a working spouse who can add you to their health plan, you’re likely looking at a substantial hike in monthly premiums, deductibles, and co-pays that come with private insurance plans.
Quitting work early can also affect your own retirement plans. First, there’s the obvious loss of contributing to your social security benefits. If you’ve been contributing part of your paycheck to a 401(k), you’ll lose that retirement momentum as well. That can be even more impactful if your company also contributes to your 401(k).
You may be lucky enough to have a spouse who earns enough that you can financially afford to quit and take care of a parent. But what would happen if your spouse unexpectedly loses their job or becomes injured or sick and can’t work?
Financial Tips For Caring For An Elderly Parent
If you’ve decided you’re in a financial position to care for your elderly parent, there are several things you can (and should) do to minimize the negative financial impacts.
Evaluate The Housing Situation
First off, take a good look at the house your elderly parent(s) currently live in. There’s likely a good chance your parents will want to stay in their current home. But given the current housing market, selling their home and moving into something smaller could relieve much of the financial burden on you. It could also go a long way toward paying for an assisted living facility. I understand that’s not always an easy conversation to have with a parent. But remember, you’re giving up your financial freedom. You deserve to have a say.
Consider Payment For Your Efforts
I get it; if discussing assisted living is an uncomfortable conversation, getting paid for your caregiving efforts could be downright gut-upwrenching.
But it’s a major lifestyle change for all parties involved, and nothing should be off the table.
There are several ways for a caregiving child to be paid. The obvious method would be for the elderly parent to pay them directly. This only makes sense if your parent has the means, though. If they don’t, you should look to your siblings, if you have any.
If you have siblings, it is absolutely within reason to have a discussion about them helping you out, financially. Ideally, this would be in the form of a regular payment. How much will, of course, depend on the individual family’s situation. But at a minimum, siblings should consider covering at least the cost of the caregiver’s health insurance costs. Regardless of the level of sibling contributions, I HIGHLY recommend engaging the services of an attorney who specializes in elder law to clearly define all roles and responsibilities.
The last method of “payment” for a caregiver to consider is a reverse mortgage. If your parent owns their home, a reverse mortgage could make up for your loss of income and cover any additional health insurance costs you might face. However, reverse mortgages come with a robust list of pros and cons, so meeting with an experienced financial advisor is a must prior to going down this path.
Make Time For You
Caring full time for elderly parents can not only take a financial toll, but it can also take a toll on your mental health. It’s imperative that you take personal time for yourself. Establish, up front, with your parents and siblings how many hours each week you expect for yourself. Then, use them! Get out of the house to exercise, meet up with friends, etc. You should also make every effort to give yourself at least a week’s vacation each year.
Giving up your own work to become a full-time caregiver for an elderly parent isn’t something that should be taken lightly. But with proper planning and clear expectations, it can be done. If you’re considering this important life decision, a FREE WEALTH BLUEPRINT from Tremblay Financial Services can make the choice easier.