Staying
home or cutting back hours to raise children or to tend to an aging parent is
a loving and noble thing to do. But it's also expensive. It's
not just income you're losing. Retirement benefits -- from employer-sponsored
savings to Social Security -- take a hit as well. If you're married, a working
spouse must work extra hard to make up funding gaps, while an at-home spouse puts
his or her financial future at the mercy of others. At the same time, you may
be digging deeper into your wallet to cover health care costs and other expenses.
What to do? No one can or should tell
you what's best for you or your family. But it's imperative
to make a fully informed choice that considers the
financial ramifications of caring for children full
time or taking on the responsibility of looking after
an older relative, says Cindy Hounsell, executive
director of the Women's Institute for a Secure Retirement.
"I
understand there are emotional reasons, but you have to understand you're making
a serious, life-defining decision, too," says Hounsell.
First, here are some statistics to mull over. Median income in a household where
someone is caring for an older parent or an individual over the age of 18 is just
over $37,300. That's far lower than the $42,400 median for households without
a caregiver, according to research by AARP and the National Alliance for Caregiving.
That same study found that among caregivers
who do work, 57 percent arrive late, leave early or
take time off during the day to look after someone.
One out of 10 switches from a full-time schedule to
part-time work. Five percent lose job benefits. Four
percent turn down promotions.
A woman who quits to care for someone
will lose $659,139 in wages, pension and Social Security
based on an annual salary of $35,000, according to
the National Alliance for Caregiving.
Of course, opting out of work has ripple effects that impact the entire family.
A married couple will have to rely on reduced retirement savings when one spouse
stays home. A widow who raised children at home may need to rely on them when
her own nest egg runs out. The unmarried sibling who scales back work hours to
tend to an older parent may not have anyone to help pay the bills.
Grim scenarios like these make it all
too easy to ignore the future. But here's some encouraging
news. It's not impossible to make up ground and to
minimize the impact on your retirement, should you
decide to take time off or scale back on work to care
for loved ones.
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| 7 ways for caregivers to
tend their nest eggs |
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Posted: April 23, 2007 | | 
