Currently, more than 40 million Americans are providing unpaid long term care services to family members and loved ones. Dubbed as everyday superheroes, these individuals dedicate a big portion of their time, health, and financial resources to provide the best care possible to their aging loved ones. In doing so, they put themselves and their individual futures at risk. One of the biggest risks of being a family caregiver is the danger of losing financial resources to support their own needs. So what can family caregivers do to take control of their finances? In order to find fiscal security, while mitigating the potentially devastating financial impact, caregivers should think about long term care, seek out deductions and discounts.
How Much Are Caregivers Spending?
At this point, it is considered common knowledge that long term care services can cause a severe blow to anyone’s finances. In fact, AARP released a report stating that family caregivers dedicate approximately 20% ($6,954) of their annual income to cover out-of-pocket care services. Now that the increase in the cost of living has overtaken income growth by 13%, family caregivers find themselves in a tough position financially.
Consider Long Term Care
One of the many questions associated with long term care is this: is long term care insurance necessary or not? More importantly, will family caregivers benefit from securing a policy? To answer these questions, we need to get a good look at what caregivers go through in the process of providing care. Yes, they are often quoted describing the role as rewarding and fulfilling, but how has the responsibility impacted various aspects of their lives?
In a separate study, AARP shared the following data:
- One in five caregivers experiences financial problems and high levels of physical strain.
- Two in five caregiver experiences emotional stress, especially those who work a high amount of hours.
With this in mind, the long term care needs of these family caregivers may just be around the corner. As they shoulder a big portion of their care recipient’s expenses, they might find that they do not have enough money to fund their own out-of-pocket care expenses. Without proper coverage—one that was secured early while they were healthy—these caregivers might end up relying on their own adult children too, and thus starting a crippling cycle. Long term care insurance premiums may be daunting now, but with the sky-rocketing costs of care services, it may be better to be safe (and covered) than sorry.
Seek Out Deductions and Discounts
In a post by the Association for Long Term Care Planning on ALTCP.org entitled, Family Caregiver Duties: Effective Financial Planning, caregivers are advised to look into long term care tax deductions. Here are some tax tips, as well as benefits that maybe be available to Caregivers. To qualify, caregivers must be able to claim that their care recipients are their dependents and that they are either citizens of the US or residents of the US, Canada, or Mexico. Moreover, they must be able to prove that they are shouldering at least half of their parents’ expenses. The detailed list of requirements is indicated on the IRS website.
Utilize All Available Resources
Some family caregivers have had to leave their jobs to meet the high demands of care. Although some situations may call for this action, family caregivers must think carefully and consider all options first. Leaving a job does not just cut off a steady source of income; it also means putting a stop to a sizable chunk of employer-sponsored retirement plans and contributions to Social Security. Make sure you seek out all of the Caregiving Resources that may be offered through your workplace.
In order to make sure that care recipients still get the services that they need, family caregivers should also look into services offered for free or at a discounted price in their local communities, as well as their local faith communities (Find out How to Find Caregiver Resources in Your Area here). Services offered may include, meal delivery, transportation, respite, or day programs.
Also, don’t be afraid to ask for help in your own circle. Find out how the Caring Village app can make it easier to rally your trusted circle to engage in caring for your loved one.