As average life expectancy continues to grow longer, more and more of us could be faced with the task of dealing with aging parents. There are many components to this type of care. And while you may have considered how to go about arranging care to help with your parents’ day-to-day activities, you may have overlooked the financial impact caregiving can have.
The financial cost of caregiving for you and your family depends on the level of care you give and your family’s status. According to the National Alliance for Caregiving and AARP (American Association of Retired Persons), there are over 22 million US households caring for a friend or relative over the age of 50, with 41 percent of those caregivers having children of their own, meaning that many caregivers carry out dual caregiving roles.
Your Finances
Your employment is the primary area in which you will almost certainly find caring for aging parents has the most impact. For starters, you may find that you have to reduce the number of hours you currently work. Furthermore, you may also find that you’re unable to advance any further at work because you simply cannot commit to a job that involves travel or working the odd weekend. In addition, even if you do remain in your job, you may still have to consider relocating to another office so that you can be closer to your parents to be able to provide the necessary care.
Changes to your employment status will almost certainly have an effect on your earnings. You may find that you have to dip into your savings to help pay for your parents’ care. This approach is likely to have a domino effect on other areas of your investments. For example, without any spare care to make necessary renovations to your property, or simply to maintain its current state and order, you may fail to realize the full resale value when you sell it.
Your Parents’ Finances
As for your parents’ finances, it’s important to know exactly what the overall picture is. To this end, you should ask your parents about bank accounts, investments, and life insurance policies they may have, as well as any liabilities such as mortgages, personal loans, and credit cards. It may not be particularly easy to talk to your parents about this issue, but you need to plan for all eventualities. This means that you should also discuss the preparation of a durable power of attorney, a document that acts as a principal’s, in this case your parents’, authorization for their agent – you – to act on their behalf in a number of financial situations. There’s also a healthcare power of attorney, which enables your parents to authorize you to make decisions regarding their medical treatment when they’re unable to make them for themselves, either temporarily or permanently.
Your parents should also have wills drawn up, if they don’t already, so that on their deaths their assets can be distributed according to their wishes. Having these documents in place can greatly relieve the stress for anyone involved in caring for aging parents, particularly if there’s the potential for interference or contestation from a third party.
Practicalities
When working out a budget for your caregiving responsibilities, find out whether your parents are eligible to receive any government benefits that may assist with the costs. For example, your parents may be entitled to receive Medicare, which could cover at least part of their healthcare and drug costs. These expenses can be a big part of a caregiver’s budget so it’s worth investigating your parents’ eligibility.
If you’re not going to be providing your parents’ care personally, then you should stay in touch with them to ensure that the care they are receiving is adequate and as agreed with the relevant provider.
Caring for aging parents need not be a huge burden. Provided you’re prepared, and that both you and your parents have communicated with each other about the issue, the change in role from son or daughter to caregiver can be relatively straightforward.
