How to Balance Your Retirement Savings While Being a Caregiver

Caring for a loved one is one of the most selfless and rewarding things you can do, but it often comes at a personal cost. For many caregivers, caregiving’s emotional and physical demands are only part of the challenge—financial strain is the other.

Leslie took care of her husband for many years, but as his dementia worsened, it started to take a serious toll on her health. Eventually, her children insisted on moving to a long-term care facility so that he could get the care he needed and she could recover physically and mentally. The cost was $9000 a month.

Nearly one in four family caregivers nearing retirement are dipping into their savings to support a loved one’s care, putting their financial future at risk while fulfilling caregiving responsibilities. Between medical expenses, time away from work, and other caregiving-related costs, it’s easy to let your financial goals, such as retirement savings, fall by the wayside.

“Neglecting your retirement savings while caregiving can lead to long-term financial insecurity” advises David Beckerman, Senior Vice President, Investments at David Lerner Associates, Inc. “Striking a balance between providing for your loved one and safeguarding your future is critical. With careful planning and the right strategies, you can manage your caregiving responsibilities without compromising your retirement goals.”

Strategies to Ensure Caregivers Don’t Neglect Their Own Financial Future

1. Start by Understanding Your Financial Picture
   Before making any changes, it’s essential to know where you stand financially. Begin by taking a close look at your income, expenses, savings, and debt. Create a budget that accounts for caregiving costs, such as medical bills, transportation, or hiring extra help when needed.If your caregiving responsibilities have affected your ability to work full-time, calculate the impact this will have on your earnings and retirement contributions. Understanding these numbers can help you determine how much you need to save or adjust to maintain your financial health.

   Additionally, be aware of any government programs or financial assistance available for caregivers. Medicaid, veterans’ benefits, or state-level assistance programs may ease some of your financial burden, allowing you to allocate more to your retirement.

2. Prioritize Your Own Retirement Savings
   It’s natural to want to put your loved one’s needs first, but neglecting your retirement savings could mean becoming financially dependent on someone else down the road. Remember, there are no loans available to fund your retirement.If you’re still working, take advantage of employer-sponsored retirement plans like a 401(k) or 403(b). Contribute enough to earn any available employer match—it’s essentially free money. If you’re self-employed or working part-time, consider opening an IRA or SEP-IRA to continue building your nest egg.

   Even small contributions add up over time, thanks to compound interest. The key is consistency. If your caregiving responsibilities make it difficult to contribute the same amount as before, adjust your budget to ensure that saving for retirement remains a priority.

3. Explore Tax Benefits for Caregivers
   Caregiving often comes with unexpected costs, but there are tax benefits that may provide some relief. For instance, if you’re supporting an elderly parent or another dependent, you may qualify for the Dependent Care Credit or be able to claim them as a dependent on your tax return.Additionally, certain medical expenses you cover for your loved one may be tax-deductible. Keep detailed records of all caregiving-related costs, as this can make a significant difference when filing your taxes.

   Consult a tax professional to ensure you’re maximizing these benefits and using the savings to bolster your retirement fund.

4. Don’t Be Afraid to Ask for Help
   One of the most challenging aspects of caregiving is feeling like you have to do everything alone. However, asking for help—whether from family, friends, or professional caregivers—can ease both the emotional and financial strain.Family members might be able to contribute financially or share caregiving responsibilities, freeing you to focus on your career or savings goals. Professional caregivers, though an added expense, can provide much-needed respite, allowing you to maintain your work schedule or pursue additional income opportunities.

   Local nonprofit organizations and community groups may also offer free or low-cost services for caregivers, including counseling, support groups, and respite care. Utilizing these resources can help you strike a better balance between caregiving and planning for your future.

5. Reassess and Adjust Your Retirement Plan Regularly
   Your financial goals and caregiving responsibilities will likely change over time, so it’s important to revisit your retirement plan regularly. Life events, such as changes in your loved one’s health or your employment situation, may require you to adjust your savings strategy.Work with one of our experienced investment counselors who understand the unique challenges caregivers face. They can help you create a personalized plan that accounts for your current caregiving responsibilities while keeping your long-term goals in focus. Whether it’s reallocating your investments, increasing contributions during certain periods, or considering long-term care insurance for yourself, having a clear plan will keep you on track.

Caregiving is a demanding role, but it doesn’t have to mean putting your financial future on hold.  Remember, planning for your retirement isn’t selfish—it’s essential to ensuring you can continue providing for yourself and others in the long run.

David Lerner Associates is here to help caregivers navigate their financial journeys with confidence. If you’re balancing caregiving responsibilities and retirement planning, let our team provide the guidance and strategies you need. Contact us today for a free consultation and take the first step toward achieving financial security for both you and your family.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.