Caring for an Elderly Parent?

5 Financial Tips for You


It can be rewarding to care for elderly parents and spend time together at a significant time in life; it can also strain the caregiver emotionally and financially.

Millions of people are caring for elderly parents or another loved one. In fact, 53 million Americans—or around one in five—provided unpaid care in 2020. That’s up from 43.5 million five years ago.1 The majority, or 61%, of these caregivers say it has impacted their work, while 45% say it’s affected them financially.

1 in 5
Americans provided unpaid care in 2020

Some caregivers may be able to save money by living with elderly parents. But many also decide to leave the workforce temporarily so they can devote their time and attention to provide help, especially as a parent’s health declines.

Unfortunately, the more time a caregiver spends away from the workforce, the less they may be able to save for their own future. If you think you may stay home to care for an elderly parent, or you’re already in that situation, here are some financial strategies to consider.

1. Contribute to Retirement Accounts While You Can

If you’re still working but anticipate stepping away, contribute to retirement accounts while you can, especially if you get an employer match. Lengthy time away from work could impact your future Social Security benefits.

To offset that, contribute as much as you can to a 401(k) or an IRA now. You might also want to sock away money in a more liquid account—one where you can more easily access the money, such as a money market—to cover living expenses while you’re not making an income.

2. Know Your Rights Under FMLA

For short-term caregiving needs (for instance, caring for a parent after surgery or before they move into a memory care facility), you might be covered under The Family and Medical Leave Act  (FMLA). Eligible employees are entitled to unpaid, job-protected leave for up to 12 workweeks in a 12-month period to care for a parent who has a serious health condition.

FMLA

The Family and Medical Leave Act (FMLA) allows eligible employees up to 12 weeks of unpaid, job-protected leave each year.


You would continue to receive group health insurance coverage and have a job to return to at the end of the 12-week period. Private-sector companies fall under the FMLA if they have 50 or more employees. Some employers may also allow for unpaid leaves that extend beyond 12 weeks, so consider talking to your human resources or benefits department about your options.

3. Earn Money As a Family Caregiver

Some government programs  pay family members who help with certain tasks such as giving medicine or cleaning the house. Programs include Medicaid Self-Directed Care and the Veteran-Directed Home and Community Based Services program.

Long-term care insurance may also allow family caregivers to get paid for their time, although the caregiver doesn’t always qualify if they live with the person they care for. Depending on your previous work, the hourly rate you earn as a caregiver could be a pay cut. Still, it may be better than nothing.

4. Research Dependent Care Tax Credits

The IRS allows caregivers to claim their elderly parents  as a dependent for tax purposes under certain circumstances. For instance, if you paid more than half of your parent’s support for the calendar year and your parent’s gross income for that year was under $4,200, then you may qualify.

If your parent qualifies as your dependent and you itemize deductions, you may also be able to deduct the cost of medical services you paid that were not reimbursed by insurance and that exceed 7.5% of your adjusted gross income. This can get complicated, so you may want to consult your CPA or tax preparer to find out if you qualify.

5. Stay Connected to Your Professional Network

If you’re a caregiver, you may not have time for a full-time workload. But you may still want to attend a professional development seminar or networking event to keep your skills and your network current. This also gives you some time away from caregiving responsibilities and helps smooth the transition back into the workforce. 

Caregiving can be challenging. But with a little preparation, caregivers can reduce the financial impact of pausing their career as they help aging parents. 


Let Us Help You Keep Planning for Your Future

We can help review your financial needs and those of your loved one too.

1National Alliance for Caregiving (NAC) and AARP, Caregiving in the US 2020, May 2020. 

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