How to financially cope when taking care of family

In 2015, about 14 percent of Americans over the age of 18 — that’s 33 million people — were involved in caring for another adult, according to a study by AARP.

What’s more, a 2016 AARP study also found that more than three-quarters (78 percent) of American caregivers over 18 were incurring out-of-pocket costs as a result of caregiving —averaging out at about $7,000 per year ($6,954).

And many of those in the “sandwich generation” are stretched even further, as they support both their children and their aging parents at the same time.

Caring for someone else is never easy, especially when it’s unexpected. Here are some tips on how to deal with it financially.

1. Gather your information
2. Know what you can afford
3. Get other people involved
4. Keep track of everything
5. Make a care plan
6. Tap available resources
7. Take care of yourself

1. Gather your information

Evaluate and understand the situation. Will your caretaking likely be a short-term or a long-term situation? The social worker assigned to your loved one’s case may be able to provide more details.

“The more information a caregiver can get, the better,” says Christina Irving, a family consultant for the Family Caregiver Alliance.

Throughout the process, be your own advocate. For example, physicians have an ethical responsibility to provide a safe discharge for their patients. If you refuse to have the patient discharged to your home because you’re uncomfortable with the situation or don’t think it’d be safe, the physician is supposed to seek out your input and respect your concerns when possible.

In addition, know when the follow-up appointments are, and “make sure there’s a very clear discharge plan,” Irving says.

If you’re not getting the help you need, look for a patients’ rights advocate within the hospital or an outside advocacy organization.

2. Know what you can afford

There’s no “right” amount to chip in when someone you love is in need. But here are some steps for figuring out how much you can handle.

• Step 1: Calculate your discretionary income

Some of your expenses, such as rent, utilities and student loan payments are probably nonnegotiable, whereas others are more discretionary, such as cable or dining out. Subtract all your “nonnegotiable” expenses from your income, and see what’s left over.

• Step 2: Try not to drain your emergency fund

A family crisis might be an emergency worth dipping into a rainy-day fund for, but you don’t want to be unprotected against other emergencies, such as having your own unexpected medical costs.

“Don’t bring your emergency fund down to zero — you need at least some for yourself. If you have three months of savings, I’d say don’t take out more than one,” says Marguerita Cheng, a certified financial planner and CEO of investment advisory firm Blue Ocean Global Wealth.

• Step 3: Stop before committing to less-desirable financial options

In extreme cases, you might contemplate more-drastic ways to access cash — but you should think carefully before taking these measures.

Cheng recommends against using money earmarked for another goal, such as a down payment on a house, unless you’re comfortable delaying that goal. She also recommends against withdrawing retirement funds early to support a family member because you could incur penalties; it could leave you financially vulnerable and could compromise your future retirement.

Similarly, she says, try to avoid racking up credit card debt or failing to make minimum payments on any of your current loans.

3. Get other people involved

Even if other family members aren’t willing to contribute to the patient’s care, Cheng recommends getting them on board with decision-making.

Remember, though, each of your family members has the right to say “no” to helping out. By the same token, there may come a time when you must say no, too — especially if caregiving is such a financial or emotional strain that you can’t take care of yourself.

It might help to invite a social worker or therapist to facilitate a family meeting, especially if he or she can provide necessary information and keep the conversation moving forward, Irving says.

4. Keep track of everything

“If possible, open a separate checking account to help you track what you’re spending on care-giving,” Cheng says.

It’s also a good idea to write down your agreements with other caretakers so that you have a record of the conversation later.

And clarify expectations with the person you’ll be caring for as well: Will you be reimbursed if providing financial support, or is there a set time limit if your family member moves in with you? Putting all of these expectations in writing can help make everything clear.

5. Make a care plan

Some caregiving services can be covered in part or in full by Medicare, Medicaid or veteran benefits. If the person you’re caring for has long-term care insurance, that could also help you pay for at least some of these costs.

What are the main caregiving options?

• Home health aides: The cost varies depending on where you live, but the national average in 2017 was about $135 per day. The average cost for a full-time home health aide was over $49,000 in 2017.
• Visiting nurses: It could costs around $25 to $60 per hour for a nurse to make a home visit.
• Adult day health care: This is a daytime solution for adults who need some supervision but not round-the-clock care. This can cost anywhere from $25 to more than $100 per day, depending on where you live.
• Assisted living: Some patients may qualify for financial assistance for subsidized senior housing. The average cost for assisted living nationwide was about $3,700 a month in 2017.
• Nursing homes: The average cost of a semiprivate room in a nursing home was about $6,844 per month in 2016; the average cost for a fully private room was $7,698 per month.
• Hospice nursing: About 85 percent of hospice costs are covered by government entities, such as Medicare, Medicaid and healthcare programs with the Veterans Administration and the Department of Defense. Otherwise, you can look into private medical or long-term health insurance for help with pay.
• Respite care: Respite care providers are pinch hitters who can take care of your loved one if you’re on vacation or if you simply need a little time away. Costs vary widely (depending on your location and the level of care required), but in-patient respite care can cost on average about $307 per day or $9,222 per month.

6. Tap available resources

Reach out for help as early as possible.

“It’s better to tap into supports early on, before you’re burnt out,” Irving says. Remember, if one organization can’t help you, request a referral to another that can. Our experts recommend these resources as a place to start.

• Family Care Navigator
• National Council on Aging
• National Association of Area Agencies on Aging
• Meals on Wheels
• National Alliance on Mental Illness

7. Take care of yourself

Your health and financial security are just as important as that of the person you’re caring for, Irving says.

She suggests seeking as much support as possible, such as joining a support group, going to individual counseling or working with a disease-specific advocacy organization.

Bottom line

The steps above may help you manage the burden of caring for a loved one.

This experience could also inspire you to get your own affairs in order.

“Think about who could make financial decisions if you were incapacitated,” Irving says.

Additionally, long-term care insurance doesn’t make sense for everyone, but think about whether it might be a good option for you.

No matter how old you are, now’s the time to take action, Irving says.