Are you a caregiver for your aging parents? What you are doing out of love and a sense of moral responsibility comes at a price, yes? That price is paid in emotional, physical and financial capital.
Speaking of the financial aspect, a 2011 study found that women who leave the workforce at age 50 to become caregivers "give up" more than $300,000 in wages, Social Security payments and retirment benefits.
Fortunately, there are some strategies to consider that may help you mitigate this financial impact as related in a recent article in Oprah Magazine titled “Sanity-Saving Secrets For Caring For Your Aging Parents.”
Here are some of the practical pointers from the article:
Look into tax breaks. Did you know an elderly parent may be claimed as a dependent on your tax return if his or her annual income is less than $3,900 and you provide more than 50% of his or her financial support? Their medical expenses may also be deductible.
If you’re a full-time caregiver, don't use your 401(k) or IRA for living expenses. Why? There is a 10 % penalty for an early withdrawal before age 59.5!
If your employer is not helpful, then you may be eligible for up to 12 weeks of unpaid time off through the Family and Medical Leave Act. This could allow valuable time to explore and make other arrangements.
If you have to quit work or go part time, talk to your siblings and other family members about reimbursement for your services. Once you have analyzed what you stand to lose in lost wages, then negotiating a salary needs to be a top priority.
At a minimum, you should have enough for basic expenses, including housing, food, insurance, and IRA contributions.
However, if your parents are helping you financially, then danger Will Robinson! Doing so could jeopardize their potential future Medicaid eligibility if such financial help is not fair compensation for your services. If deemed "gifts," then you could be setting them up for a whopping penalty period.
Alternatively, ask for a salary that offers you financial stability and peace of mind, both of which are critical for every caregiver.
Confused, perplexed, frightened? Consult an experienced elder law attorney without delay. Find one near you at the website for the National Academy of Elder Law Attorneys.
Reference: The Oprah Magazine (December 19, 2014) “Sanity-Saving Secrets For Caring For Your Aging Parents”