When parents fall ill, many children take them into their own homes so that they may provide care around the clock. The scenario is common across the U.S., and helps families mitigate the costs and emotional burden of placing loved ones in a nursing home or other assisted living facility. However, the costs of bringing in a family member that requires a great deal of healthcare can still present a heavy financial burden to children and divert resources away from their retirement goals and other long-term savings plans.
Data from the MetLife Mature Market Institute reveals that nearly one-third of individuals who take on a caregiving role to elderly parents or loved ones either cut their hours or leave the workforce altogether. This scenario results in an average loss of $303,880 in wages and reduced Social Security and pension benefits. A loss that significant can make it more challenging for households to adequately prepare for retirement and accrue enough savings to cover the costs of their own potential healthcare needs.
The good news is adults don’t have to choose between caring for relatives and their own future financial well being. Those who are diligent about researching cost-cutting measures can still provide quality care while easing their own financial burdens. One of the first actions individuals should take after taking on a caregiving role is to contact their tax preparer.
Medical expense deductions can be extensive and provide relief to families who spend thousands in medical costs, transportation, equipment and medicines. As long as qualified medical costs exceed 7.5 percent of the caregiver’s adjusted gross income and ill or disabled family members qualify as dependents, there are several related expenses that can be written off during the tax year. This includes everything from medical treatments and procedures to insurance premiums, rehabilitation services and even home alterations made for medical purposes.
Caregivers should also seek out government agencies, nonprofits and state organizations that provide financial aid and home care resources that may help lower costs. Programs may vary on a state-to-state basis, so adults should expand their search to the federal level as well.
Lastly, individuals who try to manage their new financial situations alone may feel overwhelmed by their circumstances. Speaking with a credit counselor may help adults reorganize their money management plan to free up additional income.