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5 Ways for Caregivers to Build Retirement Savings

To plan for your own future, use these five ways to protect your finances and build retirement savings while still caring for your older adult

When caring for an older adult, it’s easy to put aside your own finances and focus on helping them. To plan for your own future, LendingTree shares five ways to protect your finances and build retirement savings while still supporting them.

Don’t forget about your own financial needs in retirement

According to AARP, approximately 1 in 5 adults in the U.S. are providing unpaid family care either full time or part time to another adult (often a senior parent or relative) or to a child with disabilities.

When caring for loved ones, it can be easy to put aside your financial situation to focus on those who depend on you. However, it’s important to plan for your own future as well.

Here are five ways you can prioritize your finances and build retirement savings while still supporting those you love.


1. Start with a plan 

Caring for an aging or ill loved one can be costly and time-consuming for a family caregiver.

For example, when caring for aging parents, it may be easy to forget about your finances altogether or even deplete your reserves to pay for their care needs.

According to a 2020 study by AARP and the National Alliance for Caregiving, 1 in 3 caregivers nearing retirement have used their own savings to fund care, jeopardizing their own long-term financial health.

Creating a budget to understand what you can afford to save for the future is a wise move.

Consider working with a financial advisor who may be able to advise you on how to structure your retirement plan and review it with you regularly.

Caring for an older family member who is struggling financially can also be a window into the importance of financial planning. Learn from their experiences to help you plan for your own future.

2. Fund your retirement account

A 65-year-old couple could need about $315,000, post-taxes, to cover health care expenses in retirement. This number doesn’t even include long-term care or over-the-counter medication.

That’s a hefty bill to stare down, but making retirement account contributions a priority can help you store funds for the future – with the benefit of compound interest, to boot.

Many retirement accounts offer tax advantages as well.

A lot of employers also match retirement funds, giving their employees access to free money. If you work full time, make sure you contribute enough to your plan to qualify for the match.


3. Take advantage of all savings opportunities

If you’re a stay-at-home spouse, opening a spousal IRA (if you qualify) is one way to save additional funds for your retirement. 

If you’re freelancing or running your own business, keep in mind that individuals who work for themselves can open a Simplified Employee Pension (SEP) plan.

Even if you don’t open a retirement-specific account, starting a savings account and setting aside a small monthly amount can build up cash reserves for unexpected expenses. 

Many caregivers need to pay out of pocket for unexpected costs their dependent might not be able to afford.

An ample emergency fund can help you pay these expenses without withdrawing money early from a retirement plan. This is especially helpful because there are often penalty fees for early withdrawals.

4. Seek assistance and benefits programs

It is essential for your future to try not to drain any of your retirement accounts while caring for a family member or friend.

If you care for a loved one, especially if they live in your home, it is a good idea to investigate every avenue for potential assistance, like Medicaid, Supplemental Social Security, or other benefits programs.

Another option is to look for tax breaks. 

For example, if your older family member lives with you, you may be able to claim them as a dependent on your tax return.

Caregivers may also qualify for other tax benefits too.

5. Make a plan for your own long-term care

Because of our longer life spans, a long-term care plan is extremely important. 

American men, on average, have a life expectancy of 76 years and women have a life expectancy of 81 years, according to the CDC. 

That’s why a well-constructed retirement plan will take long-term care expenses into account.

A long-term care plan might include insurance that pays for care services, like a home health aide, to help older individuals live independently for longer.

Making arrangements for your later years, whether setting aside funds to pay for a care community or remodeling your home to allow you to age in place safely, is part of creating a long-term care plan.

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Guest contributor: Joseph Muscente is a content analyst at LendingTree where he works to help people make informed financial decisions. He earned his B.A. from Penn State University.

This article wasn’t sponsored and doesn’t contain affiliate links. For more information, see How We Make Money.


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