Important Facts about Caregiving

• In over 20 million households across the country, an adult is providing full or part-time care to an older family member or friend. In millions more, a women is home caring for young children. Most of the time, women are the family caregivers, providing 80% of elderly long-term care services.

• Caregiving has serious financial consequences and it is important for women to understand the consequences and to take steps, whenever possible, to protect their retirement security.

• Caregivers often will decide to work part-time, quit their jobs, decline a promotion requiring longer hours or pass up a training opportunity requiring travel. Women making these compromises forfeit pay and benefits, pensions, miss out on opportunities for compounded returns on 401(k) matching contributions, and experience reduced savings and investments. They may even experience an inability to pay for home improvements that could increase the resale value of a residence.

• A recent study by Rice University sociologist quantified the economic costs of caregiving to women and found that women who assumed caregiver roles were 2.5 times more likely than non-caregivers to live in poverty and five times more likely to receive SSI. Women caregivers with less than a high-school education were 3 times more likely to live in poverty and 10 times more likely to be SSI recipients. Unmarried caregiving women were four times more likely to live in poverty and 46 percent more likely to rely on SSI in later life than were married women. The probability of living in poverty for nonwhite caregivers was 29 percent, compared to only 9 percent for white caregivers.

Steps for Family Caregivers

• First, 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, which puts individuals in touch with local services and resources. (Call 1-800-677-1116 or log onto www.eldercare.gov) 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.