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Securing A Financial Safety Net For Caregivers

Your Turn To Care is excited to partner with the Women's Institute for a Secure Retirement (WISER,) a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance. Your Turn To Care will feature tips and resources that provide essential financial planning advice and assistance specifically targeting caregivers.

Caregiving and Retirement Security

Recently Working Mother Research Institute released a study of women caring for a loved one with Alzheimer's. The research showed that 55% are not saving for retirement and 44% are using their own income to pay for caregiving expenses. At the same time many have had to cut back on their hours at work and/or declined a promotion in order to care for their love one. In focusing on the care of their love one, many caregivers are jeopardizing their own future.

An earlier study by the National Alliance for Caregiving found that caregivers spend, on average 20.4 hours each week providing care, leaving them with less time for paid work. WISER has found that female caregivers forfeit pay and benefits, pensions, miss out on opportunities for compounded returns on 401(k) matching contributions, and experience reduced savings and investments. 70 percent of caregivers experienced disruptions in their jobs, including going into work late, leaving early, reducing work hours, leaving their jobs completely, and losing job benefits. These negative consequences are compounded by the reduced Social Security benefits available during retirement.

WISER offers some helpful tips to caregivers to facilitate and encourage them to plan for their current and future financial security.

  • Create a household budget and make realistic plans for how you will deal with reduced pay and benefits if you decide to stop working or reduce your hours. Focus on reducing your expenses and eliminating your debt. If you are a caregiver to another adult, you might find yourself paying small expenses out of pocket, without even realizing how quickly these expenses add up. Establish a budget for the person you provide care for as well.

  • Plan carefully before leaving a job or working part-time. Exhaust all other options first. Consult Eldercare Locator, sponsored by the Federal Administration on Aging/Administration on Community Living, which puts individuals in touch with local services and resources. Leaving your job will mean losing compensation and benefits, and maybe skills and contacts. If at all possible, try to stay at your job until you are vested in your company's pension plan. If you are cutting back on benefits, work enough hours to get reduced benefits.

  • Don't spend your 401(k) money. The loss of the compounding interest will be devastating to your retirement income. Budget for a regular contribution to an IRA.

  • While you are working, be sure to participate fully in any workplace retirement plan. Look into purchasing long-term care insurance if you are age 50 or older, so that when you are retired you can access a wide range of supportive services and living arrangements.

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