How to Protect Your Finances When You Are the Caregiver for Your Aging Parent
As people move further into the latter years of their lives, they often need at least some assistance with certain activities of daily living. The majority of caregivers for older Americans are relatives. More often than not, these caregivers are adult children of seniors. If you are an adult child providing caregiver assistance to your aging parent, you cannot neglect essential elements of your own life in the process. This includes protecting your own personal finances as you serve as the primary caregiver for your aging mother or father.
There are six key financial strategies you need to implement for your own financial well-being when you become the primary caregiver for your senior parent:
- Prioritize your own financial stability
- Refrain from taking on additional debt
- Create an emergency fund
- Think twice before you cut down on work hours
- Explore your own healthcare options
- Continue to prepare for retirement
Prioritize Your Own Financial Stability
Male Standard offers a pithy, direct statement about the importance of prioritizing your own finances when you become the primary caregiver for an aging parent:
Being a caregiver is a selfless job, but the world doesn’t run like this. You have your stomach to fill and bills to pay. So, be a little selfish and prioritize your financial stability.
You are likely to experience at least some level of income reduction when you begin to assist your mother or father as his or her primary caregiver. There are ways to lessen this income reduction, which will be explored later in this article. However, because it is apt to happen, at least to some degree, there are some adjustments you should consider making to prioritize your financial stability.
Regarding prioritizing your financial stability and security, you need to create and stick with an intelligent budget. You need to make your budget as detailed and as comprehensive as possible. The budget you prepare for yourself when you take on the role of caregiver for your aging parent should include both short-term and long-term elements.
You more than likely should rule out luxury or unnecessary purchases when you have taken on the role as your parent’s caregiver. As time passes and you have stabilized your financial status after becoming a caregiver for your mother or father, you can circle back and reconsider whether or not making a larger dollar purchase of some sort or another makes sense and is practical.
You will also want to look at different ways to tighten the proverbial belt, economize, and reduce expenses. Even if you find ways here and there where you can cut a few dollars each week, consider how that really can and does add up over the course of a year.
Refrain From Taking on Additional Debt
Turning to Male Standard again for a quote, it offers another concise statement about the goal of taking on additional debt when you have become the primary caregiver for your mother or father:
“Taking on an additional date to purchase something as a treat to yourself or your loved one to push tension and gloom out of the window may sound like a great idea but refrain from implementing it.”
The costs associated with debt add up. Indeed, with interest rates on the rise like we’ve not seen in decades, the costs associated with borrowing and using credit cards could end up exceptionally high (or at least comparatively so, compared to what we’ve experienced as a country over much of the past 30 years).
The wise course to take in regard to debt when you take on the role of caregiver for your aging mother or father is twofold:
- Avoid taking on new debt
- Work at lowering debt your already have in place (like paying down credit card balances)
Create an Emergency Fund
Creating an emergency fund can be highly difficult, if not impossible, once you start providing caregiving assistance to an aging parent. Therefore, if you reasonably think that you will become the primary caregiver at some juncture as your parent or parents move further into their Golden Years, you should consider creating or beefing up an emergency fund.
The reality is that we all should have emergency funds available to us as needed. This becomes more imperative when we are put in a position of becoming the caregiver for someone else.
Think Twice Before You Cut Down on Work Hours
Once again, we turn to Male Standard, this time in regard to the matter of cutting back up work hours in order to provide a wider amount of time to address issues associated with caregiving for an aging parent and other matters:
When you are responsible for taking care of someone you love dearly, maintaining a balance between your personal and professional life seems like an impossible task. Many caregivers succumb to the pressure and cut down their working hours to cater to the needs of their loved ones.
You need to give very serious thought to maintaining your normal amount of work hours. You need to take the necessary steps to ensure that you are able to keep your earnings at the same level you enjoyed before you took on the role of being the caregiver for your parent.
You very well may have other family members beyond yourself for whom you provide financial support (spouse and children). You cannot sacrifice their overall well-being, financially or otherwise, as some sort of tradeoff when you begin providing assistance to your mother or father.
Explore Your Healthcare Options
When you are contemplating assuming the role of primary caregiver for your senior parent, the time is right to take a look at your healthcare options and health insurance. (As an aside, if you have employer-provided healthcare, becoming a caregiver for a family member is not the time to consider adjusting work hours downward to jeopardize the availability of your health insurance.)
If your employer doesn’t provide health insurance, you should explore what other options might be available to you. In this regard, you may want to look for health insurance coverage options that are more affordable. However, you will also want to be on the lookout for similarly priced health insurance options that actually provide you with more extensive coverage or enhanced coverage.
Continue to Prepare for Retirement
One place in which individuals who take up providing caregiver assistance to their own parents make cuts is in regard to their own retirement. Do not do that. Continue to prepare for your own retirement. This needs to include:
- Continuing to contribute money to your own retirement fund or account, even if you need to reduce that amount each month as a result of the impact of caregiving on your overall financial situation.
- If you do not have one, create a will or a trust to deal with your estate.
- Additionally, consider creating a living will and durable power of attorney for healthcare to ensure that your own healthcare decisions and preferences are protected.
- Consider the purchase of long-term care insurance for yourself to provide an additional layer of financial protection when you reach your own Golden Years.
By applying the practices and strategies shared with you in this article, you place yourself in the best position to protect your own financial stability when you become a primary caregiver for your senior parent. You will defend against jeopardizing your own financial security as you provide needed assistance in the life of your parent or parents.