Prepare to be a caregiver

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Taking care of loved ones who can’t take care of themselves can take a big bite out of your retirement.

A recent survey of people age 35 to 75 with at least $100,000 in investable assets found that 33 percent of current caregivers are spending more than 10 percent of their savings on caregiving and 23 percent are spending more than half of their time.

These caregivers aren’t necessarily complaining: 36 percent of those providing care said “Caregiving for my loved one has given me a sense of purpose and fulfillment,” according to the survey by PNC Financial Services Group.

But that doesn’t diminish the reality that caring for a loved one can be a drain — on energy and financial resources — especially if you’re not prepared to accept the responsibilities.

Joanne Shallcross, a senior wealth planner at PNC, comes to the job circuitously. At 54, she is a registered nurse-practitioner, a lawyer, a trust adviser and a caregiver for her 90-year-old mother. “There are things that happen when you are a caregiver that you cannot anticipate until they are there, and some of them are financial,” she says.

How to prepare

She recommends that everyone prepare for the eventuality that they or their loved ones will need assistance by putting these safeguards in place.

Buy disability insurance. Long-term disability insurance can protect your income if you are no longer able to work. Here’s a primer on buying it. Don’t plan to rely on Social Security disability. It is only for people who can’t work at any job, plus the average monthly benefit is only $1,145, just slightly above the federal poverty level.

Talk with your older loved ones about money and incapacity. Make sure they are managing the financial resources they have, and that they have a plan should they need assistance with the activities of daily living. “It’s an awkward conversation,” Shallcross says, “but now I wish my parents had talked to me.”

Consider getting life insurance. If someone else is dependent on you for income, they’ll need a way to replace your income if you should die an untimely death.

Figure out a long-term care strategy. You not only need it for yourself, you also need it for parents or other older family members who could be your caregiving responsibility. If you have the means, but you don’t have enough to self insure, buying a long-term care policy for someone who may need your help — your parents, for instance — could be a money saver in the long run.

Sign the paperwork. Get a power of attorney for older parents while they are still healthy enough to give it, Shallcross recommends. “If you wait until you need it, you can’t get it.  The time to ask Mom for it is while she can think clearly,” she says.

Here are some alternatives to pricey long-term care policies.