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The caregiving crunch: How to save for retirement while caring for an elderly or disabled family member

Preretirees can balance caregiving and saving Becoming a caregiver for a family member is rarely a responsibility that people are financially prepared to undertake.

Adult children of aging parents are often thrust into a position of taking parents to medical appointments, providing financial support for unexpected illnesses, or managing financial affairs amid declining abilities. Likewise, parents are often caught off guard by a child’s illness or disability and must scramble to adapt to a new reality.

Most of the care for aging Americans is provided without pay by family members, creating serious financial burdens. Those who provide care for an ill or disabled child also face enormous financial challenges. Research indicates that parents with ill or disabled children often need to leave their jobs, and even if they remain employed, they tend to earn less and accumulate less wealth over time than their peers with healthy, nondisabled children.

Caregivers face the risk of shortfalls in retirement, potentially placing similar financial burdens on family members in the future. Finding a balance between caregiving and saving for retirement isn’t easy, but caregivers can take steps to help secure their financial future while still providing support for their loved ones.

Read: Financial planning for children with disabilities is stressful — here are some resources for parents

Lead with your own needs

Caregivers may be tempted to deprioritize their retirement savings when focusing on their family’s immediate needs. This can lead to significant shortfalls, perpetuating a generational cycle of dependence. According to the Organization for Economic Cooperation and Development, the average U.S. worker must put 9% of their salary into their 401(k) to maintain two-thirds of their current income during retirement. A 9% contribution rate is difficult to reach for those without caregiving responsibilities. It can seem hopeless for those who have additional caregiving expenses. Caregivers should not give up.

Maintaining financial independence and saving for retirement are acts of self-care and self-preservation that allow caregivers to better focus on their aging parent or their child with a disability. While a savings rate that approached 10% may be aspirational in the near term, keeping the habit of retirement contributions, even if it is just a small percentage of your current income, can help psychologically and ensure you’ll have some resources required to fund your own care needs in retirement. 

Read: Doing my mother’s last tax return is the hardest financial task I’ve ever had

Set clear financial boundaries