Taking care of a loved one is no small responsibility. While some caregiving duties can be squeezed into your already busy professional and personal lives, there may come a time when you need to decide between caring for your aging loved one and keeping your job. Here's what you should consider.
Being a caregiver can be expensive
Hiring outside help for caregiving can range from about $21,000 per year for adult day care1 to upwards of $110,000 per year for a private room in a nursing home.2 Many families are both surprised by and unprepared for these expenses.
As a result, you might consider leaving your job to care for your loved one. But you should think carefully before you do this because the costs to you in lost income and future earning potential are not insignificant.
Leaving the workforce to be a caregiver costs more than just your salary
The high cost of caregiving often leads people to step out of the workforce unexpectedly or retire early. If you're thinking about leaving your job, be sure to do the math first. You may be surprised to learn it could cost you more than your salary, about 15% of what you could have earned.3 You might also lose a chance for:
- Potential raises and promotions
- Your own retirement savings
- Your employer's contributions to any retirement and/or health savings accounts (HSAs)
- Saving for other goals
- Health care coverage
- Social Security credits
These are important considerations, especially as you prepare for your own retirement. Additionally, you also want to consider what the impacts could be when you re-enter the workforce.
Re-entering the workforce after being a caregiver
Depending on how long you were out of the workforce, returning to the same income level may be challenging. This can be significant as you evaluate your financial security and ability to prepare for your own retirement.
Don't forget about your own health and financial security when becoming a caregiver
If you decide to go part-time or stop working altogether to care for a loved one, make sure you still have access to health insurance. It’s also important to try to keep saving for your retirement.
You should also consider creating your own estate plan if you don’t have one already. If you don't document your wishes, someone else may decide for you.
Caregiving laws and tax rules designed to help
Learn about federal and state family medical and caregiving laws. You may also be able to take advantage of tax credits and tax breaks based on your caregiving status. Here are some resources and programs to consider:
- Family and Medical Leave Act (FMLA): You may be able to take up to 12 weeks of unpaid leave a year to care for a parent, spouse, or child.
- State-based versions of FMLA: Many states have their own family and medical leave laws. See if yours is among them.
- Paid caregiving leave: See what states offer paid caregiving leave.
- Tax deductions and credits: From deducting medical expenses to claiming your loved one as a dependent, learn how the tax code can help.