Tips for Protecting Your Financial Life as a Caregiver

Few tasks in life can be as rewarding and challenging as being a primary caregiver for your loved ones. And caregiving comes in a variety of forms, from looking after ailing relatives to raising children as a stay-at-home parent. Whether you purposefully chose the role or life’s circumstances required you to fill it, you face myriad responsibilities that can distract you from managing your own financial life. To feel secure in your future and the future of those you care for, you need to make sure you safeguard your finances.

Financial Tips When Caring for Children

A thirty-year-old woman making $50,000 a year can lose over $654,000 of total income— including wage growth and retirement benefits—by taking five years off work.

Having one parent stay home with the children is the right choice for many families. In fact, after declining for decades, the percentage of mothers who don’t work outside the home has increased to 29%. And men now make up 16% of stay-at-home parents too. For this option to work well, however, families not only need to plan how to live on one income but also address future financial responsibilities.

1. Plan for Your Retirement

Stay-at-home parents need to plan for their retirements as much as their peers who work outside the home. Without income to contribute to your Social Security and workplace provided retirement benefits, though, you need to look outside the most obvious solutions.

In addition to contributing to the wage-earning spouse’s 401(k), a family with a parent who stays home should also consider a spousal IRA. For married couples filing their taxes jointly, you can currently contribute $5,500 annually for the spouse who stays home if he or she is under fifty years old—and $6,500 if he or she is over fifty.

2. Stick to a College Savings Plan

The average cost for room, board, tuition, and fees is currently over $45,000 a year at a four-year private college and $20,090 for an in-state student at a public institution. With college costs continuing to rise, this number might be much higher by the time your children are in school.

You can get ahead by opening and continually funding a college savings plan as soon as possible—ideally right after your child is born. The earlier you start, and the more regularly you contribute, the better you will be able to take advantage of compounding interest and be a more effective saver.

3. Evaluate Your Insurance Coverage

When one spouse works, his or her income is absolutely critical to the family’s financial wellbeing. So protecting that income must be a major priority. Naturally, sufficient life insurance is a necessity, but you should also look to limit any risk to that income. From disability to illness to job loss, evaluate the life events that could threaten the wage-earning spouse’s income—and work with your adviser to create a strategy for preserving your family’s finances should the unfortunate occur.

Financial Tips When Caring for Adults

34.2 million Americans have provided unpaid care to an adult age fifty or older in the past twelve months.

As the population ages, more and more people are becoming responsible for their loved ones’ health and care—a job that few are trained to hold. So, it’s understandable that 84% of caregivers say they need more information or help with relevant topics.

Knowing which financial strategies are right for you is key when you are a caregiver. As you move forward in this role, the following guidance can help you preserve your financial health.

1. Determine Whether You Can Get Paid for Your Care

Depending on your loved one’s and your circumstances, you might be able to receive compensation for supporting him or her. You will have to research the opportunities that fit your scenario, but begin by exploring the following avenues:

  • Long-term care insurance: if your loved one has this coverage, it might be able to pay you for the care you provide.
  • Veterans’ benefits: if your loved one served in a war, you might be able to access financial support. Call 1-877-222-VETS to learn more.
  • State opportunities: your state might offer financial support for caregivers, and you can learn more by contacting your Medicaid office or the National Resource Center for Participant-Directed Services.

2. Seek Help from Loved Ones

Caregivers spend an average of 24.4 hours per week supporting their loved ones. And 23% provide more than forty hours of care each week. That level of commitment is exhausting—regardless of whether or not you have another job. Chances are, though, you don’t have to go it alone.

Talk to everyone who has a real stake in your loved one’s care and health, and find ways others can help contribute. Create a plan that shows who will give financially and who will give time, and have each person pledge to uphold the responsibilities he or she has agreed to. Often, people might not understand how much work you’re putting in or not know where you need help. So, writing out a specific care strategy can help them get involved, improve the care your loved one receives, and reduce the time and money you spend.

3. Explore Tax Deductions

Unpaid caregivers provided $470 billion of economic value in 2013—more than the value of paid home care and Medicaid spending in the same year. The work you provide has significant financial value, and you might also be spending more money on caregiving than you realize. Caregivers average over $5,500 in out-of-pocket costs in their roles each year. The time and money you spend can quickly add up and work against your other financial goals, so exploring tax deductions is critical.

You can work with your tax adviser to determine expenses you might be able to write off and whether you can claim the person you’re caring for as a dependent. By finding every opportunity to reduce your personal tax burden, you’ll be better able to use those funds to preserve your financial health for the future. No matter if you became a caregiver out of necessity or choice—or if it was early in adulthood or later in life— taking care of your own financial needs is essential.

By protecting your assets and future, you’ll be better able to focus on your loved one while managing your own happiness and comfort in the process.


National Alliance for Caregiving and AARP. (2015). Caregiving in the United States.

AARP Public Policy Institute (2015). Valuing the Invaluable: 2015 Update.

The MetLife Mature Market Institute, MetLife Study of Caregiving Costs to Working
Caregivers, June 2011

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on February 13, 2017 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.