Each year over 43 million Americans provide unpaid care to a family member, usually a parent. But caregivers should carefully consider their own financial situation before they chose to leave the workforce to care for a family member.
Most of the time adult children can manage medical appointments and financial obligations. Often, the caregiving required extends beyond this investment. What most caregivers usually don’t consider is the financial impact caregiving has on their own monthly budget and retirement funds.
“Many people jump into caregiving because there is an immediate need,” note Leah Eskenazi MSW, Operations Director, The Family Caregiver Alliance: National Center on Caregiving. “They can swing the work-family-caregiving responsibility for a few weeks. But when it lasts longer is when they realize there isn’t enough time or resources to do it all.”
Some caregivers turn down training opportunities or take on smaller roles at the office while others miss out on a promotion due to the time away from work. If the responsibilities of caring for another impact career and success at work, some caregivers may feel tempted to quit altogether. But choosing to leave the workforce to care for a family member can dramatically affect their own financial situation.
Loss of Income and Retirement Benefits
It may seem that it doesn’t pay to work while caring for a loved one. But consider how a work-place absence can impact future earnings, promotions, pension, and even Social Security benefits. The financial fallout can be considerable.
The National Alliance for Caregiving (NAC) estimates that adult children who take time off from work to care for parents can expect to lose $659,000 in pensions, Social Security benefits, and wages. Caregivers anticipate they’ll only be away from work for a few months, but the average duration of caregiving is five years. The loss of income occurs not only during the period of care, but can extend into a loss of future earnings as it can be difficult to return to full-time employment at a comparable salary after being absent from the workforce for several years.
Alternatives to Being a Full-Time Caregiver
Short-term in-home care or less permanent alternatives may be an option in lieu of leaving the work force all together while caring for a loved one. Consult with a geriatric care manager who is knowledgeable about optional workplace benefits and programs, or visit with a financial planner who specializes in elder care issues. For example, some insurance programs may cover home health care to lessen the financial burden.
“We often assume caregiving responsibilities with the best of intentions, including the investment of our time and financial resources.” says Eskenazi, “But there’s nothing wrong with balancing your parents’ needs while considering the impact on your own financial future.”