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  • Archive for 2013

    Working Together in Caregiving: The importance involving the entire family

    Tuesday, November 19th, 2013

    The truth is that for the most part a single person is “the” caregiver. This role can take a serious financial toll. As we mentioned in a previous blog for this month, caregivers often rearrange work schedules to meet caregiving duties and take on extra expenses related to caring for someone else. It is important, therefore, to talk to your siblings and other family members about the various costs accruing and how they can help you alleviate some of the financial burdens. It can be a hard conversation to have, but it is oftentimes acceptable to ask family for compensation for your hard work.

    Consider asking your family to pay you as an independent contractor for the care you are providing. Compensation from other family members will not only help you cover the day-to-day costs, but also help you to stay on track with your own retirement savings. If you are paid, you can set up a small-employer type of pension plan, such as a Simplified Employee Pension (SEP) and continue to save for retirement even if you had to cut your hours at work or had to leave your job completely. You can read more about SEPs on the Department of Labor’s website.

    To ensure the best financial future for yourself as the caregiver of a family member, WISER suggests creating a contract between you and the rest of your family. Yes, this step can seem a little formal and maybe hard to bring up, but we believe it is one of the best routes to take to avoid unduly taking on financial responsibilities. These “personal care agreements” are official contracts that state what care will be provided and how much the caregiver will be compensated. These agreements make the care and payment clear for the caregiver, the recipient, and also for other family members. Having a formal contract and discussion with family can help avoid conflicts in the future. Make sure you bring your budgeting information and the worksheet you did earlier to the meeting with your family so they can better understand the costs involved.

    What should be included in these agreements? They should be about services in the future and payment for those services, not for services already performed. When deciding on compensation, look into what is typically charged for the services in your geographic area. Payments must be reasonable and similar to this standard amount.

    Make these contracts as detailed as possible to avoid any confusion later. Include the following:

    1. Date care begins
    2. Detailed description of services
    3. How often services will be provided (and allow for flexibility with language such as “no less than 20 hours a week” or “up to 80 hours a month”)
    4. How much and when the caregiver will be compensated (i.e. weekly, monthly)
    5. How long the agreement is in effect for
    6. Location where services will be provided
    7. A statement that the terms of the agreement can be modified by mutual agreement (in writing) of the parties involved
    8. Signatures by the parties and date agreement was signed


    Want to know more about the costs of caregiving and how you can involve your family in the financial planning? Read our booklet for caregivers.

    Keeping a Budget as a Caregiver

    Tuesday, November 12th, 2013

    In this blog celebrating National Family Caregivers Month, we’ll take a look at another important issue for caregivers—budgets! Being a caregiver can have financial consequences, both long term and short term. As mentioned in our last update, caregivers pay an estimate of $5,531 out of their own pockets each year. It is therefore extremely important for caregivers to understand their budget and make sure they keep track of their spending and saving. In this post we discuss simple steps you can take as a caregiver to ensure your own financial future is not damaged.

    Step 1: Track Your Spending

    SpendingTake a notebook with you for a month and write down all of your expenses, big and small. Once you do this for a few weeks, organize your spending into categories like food, household items, transportation, and clothing. Make sure that you include bills you must pay on a regular basis, like insurance, rent or mortgage, and medical payments. Organizing your spending will help you understand on what items you spend the most and how much your necessary items cost you.

    Double check to ensure you included everything.

    We have a worksheet at the end of our booklet for caregivers that will also help you account for expenses that result directly from caregiving.

    Step 2: Compare Your Expenses and Income

    Now it’s time for a little math! But don’t be afraid. It is very easy to do with a calculator!

    Add up your expenses. Since you tracked them for a month, just find the total.

    Now, add up your total income, including salary, benefits, and any earnings form investments. This number gives you your annual income. Divide it by 12 to calculate your monthly income.

    Subtract the total of your month of spending from this monthly income.

    Step 3: Make Budget Decisions

    In the perfect scenario, you should have positive number when you subtract your spending from your income. Less ideally, these numbers will be the same and when you subtract them you will end up with zero. You may also end up with a negative number. If your income is not covering your expenses, or barely doing so, it is time to reconsider your spending.

    And my money goes to...Take a look at that itemized list of your monthly spending. Are you buying anything you do not need? Do you spend more money when you eat away from home? Is transport to and from your caregiving duties costing more than you thought?

    If you notice a trend in your own spending such as buying unnecessary items, or spending more when you are traveling, then consider ways you can reduce these expenses and reduce your debt.

    If you notice that you are picking up expenses for the person you are helping taking care of, consider talking to family members to help you offset these expenditures. Transportation can be a huge contributing factor to caregivers’ expenses. If some of those costs come from the fact that the person you care for cannot cover her/his own expenses look into ways she/he can save such as different plans for Medicare or see if she/he qualifies for dual coverage under both Medicare and Medicaid. If you’re not sure that the person you care for qualifies for assistance, the National Council on Aging offers a free services called Benefits CheckUp. Benefits CheckUp helps individuals determine if they are eligible for assistance with health care costs, food, utilities, transportation, housing, and other needs.  Check out the Consumer Finance Protection Bureau’s guides to managing someone else’s finances for more tips.

    Step 4: Save for Retirement

    pink piggy and hand

    Despite the added costs of caregiving, and likely the decreased income from rearranging your work hours, you cannot give up on saving for retirement! You will need a way to cover your own expenses as you reach retirement. Check out WISER’s Retirement Calculators fact sheet for easy-to-use calculators that can help you see how much you need to save for retirement. Use that result as a way to know how much you should be putting into your retirement funds.

    Stay tuned for more information this month to help caregivers manage their finances!

    What it means to be a caregiver, and why it matters

    Friday, November 1st, 2013

    womenNovember is National Caregivers Month, an entire month devoted to honoring those dedicated individuals who care for and support elderly, sick or persons with disabilities. The year’s theme, decided by the National Family Caregiver Association, is Family Caregivers: Now More Than Ever.

    Caregivers are most often family members taking care of their parents or close relatives as they get older, develop health problems, and can no longer take care of themselves. 66 million people in the U.S. provide unpaid care to a relative or friend. The large majority of these caregivers are women (61%). Overall, women caregivers provide more hours of care and are more likely to make career changes in order to fulfill this role. Caregivers are essential partners of those who need assistance. They attend important doctor appointments, buy groceries, drive loved ones wherever they need, perform complex medical/nursing tasks, manage multiple medications, provide wound care, and operate specialized medical equipment.

    Throughout this month, WISER will feature blog posts about caregivers and the issues they face. We hope through these blogs, caregivers and futures caregivers can feel confident that they have the information they need to make good financial decisions while still providing care. If you are interested in more information from WISER on caregiving, read our booklet, Financial Steps for Caregivers.

    It is important to remember that becoming a caregiver can happen at any time. If you are not currently a caregiver, there is a good chance you will eventually provide some level of care for another person at some point in your life. The typical caregiver is a 49 year old woman, caring for her widowed 69 year old mother who doesn’t live with her, while still trying to juggle her career and family. Often you may find yourself a caregiver as you are nearing retirement, which potentially creates financial hardships.

    Caregiving can be challenging and time-consuming. Nearly 50% of all caregivers spend more than 8 hours each week providing care, and more than 12% spend more than 40 hours each week providing care. Unfortunately, allocating that much time to caregiving means that 70% of individuals must rearrange their schedules. This adjustment often results dropping hours and forfeiting chances at promotions.

    weight of the worldThe Social Security Administration reports that women average 13 years of zero earnings between age 22 and retirement. Part of that is because they take time off from work to care for family members. Changes in work schedules trigger long-term financial losses because reduced wages and benefits results in missed opportunities for compounded returns on 401(k) matching contributions and less money in savings and investments. A 2011 MetLife study shows that caregivers lose $303,880 in wages, Social Security benefits, and private pensions. Additionally, caregivers pay an estimate of $5,531 annually in out-of-pocket costs for caregiving. For women, who are the primary caregivers in our society, these financial losses can be terrible. Women caregivers are 2.5 times more likely than non-caregivers to live in poverty, according to a study by Rice University in Houston.

    For more about the effects of caregiving, see our special report, and stay tuned all month for more information about caregivers.


    About Us

    WISER is 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 including fact sheets, booklets and a quarterly newsletter 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.

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