How to Pay for Caregiving Without Derailing Your Retirement

If you’re part of the “sandwich generation,” you know the pressure. You’re saving for your own retirement (and possibly your kids’ college) while also helping care for aging parents. And it’s not just your time and energy being stretched thin. It’s your money, too.

The cost of care adds up fast, according to a Genworth survey. A home health aide can cost over $75,000 a year. Assisted living? More than $70,000. A private nursing home room? Over $125,000.

Even if you’re not paying for full-time care, out-of-pocket expenses for things like transportation, home modifications or medical supplies can chip away at your financial goals.

At Advance Capital Management, we help clients navigate these real-life challenges with a personalized approach to planning.

If you’re supporting a loved one now or expect to in the future, here are ways to plan for caregiving without sacrificing your retirement.

1. Know the Language of Long-Term Care

Understanding the basics can help you access resources and make better decisions. Start with these key terms:

• Activities of Daily Living (ADLs): These include basic self-care tasks like bathing, dressing, eating and moving around. Why is this important? Many care services and insurance coverage are triggered when someone can no longer do two or more ADLs without help.
• Continuing Care Retirement Communities (CCRCs): These offer a range of care, from independent living to assisted living and skilled nursing, all in one place. While buy-in fees can be steep (often over $400,000), they provide long-term flexibility and peace of mind.

2. Understand What Medicare and Medicaid Actually Cover

Many people assume Medicare will cover long-term care. Unfortunately, it doesn’t… at least not in the way most think. It may pay for short-term skilled nursing or hospice, but not ongoing custodial care.

Medicaid can help with long-term care costs, but only if your parents’ income and assets fall below certain thresholds. Each state has its own rules, so it’s important to understand the eligibility requirements where your loved one lives.

Learn more about Using Medicaid for Long-Term Care.

3. Help Your Parent Understand Long-Term Care Insurance

If your parent is still relatively healthy, it may not be too late for them to consider long-term care insurance. These policies can help cover the cost of services like in-home care, assisted living and memory care. Coverage typically kicks in when someone can no longer perform two or more activities of daily living, like dressing or bathing, without help.

That said, long-term care insurance can be expensive, and premiums often rise with age or health issues. If your parent already owns a policy, now is a good time to review what it does and doesn’t cover so you can plan accordingly.

Another option to explore: life insurance policies with long-term care riders, which allow the death benefit to be used for care if needed. This kind of hybrid coverage can be especially helpful for those concerned about “paying into” a policy they may never use.

A financial adviser can help walk through the pros and cons of each option based on your family’s situation.

4. Don’t Overlook Respite Care and Other Free Resources

Even part-time caregiving can feel like a full-time job. That’s where respite care comes in. It’s short-term care that gives you a much-needed break.

Some options include:

• Adult day care programs
• Short stays in assisted living facilities
• Paid in-home help for a few hours a week

Check your parent’s Medicare Advantage plan, long-term care insurance or veterans’ benefits. You may also be able to claim up to $5,000 in dependent care expenses through a workplace flexible spending account if your parent qualifies as your dependent.

For local programs, the Eldercare Locator and the ARCH Respite Network can connect you with affordable care options near you.

5. Don’t Go It Alone – Coordinate Your Plan

This is where comprehensive financial planning can make a big difference. Together, we can:

• Evaluate whether you can support caregiving costs without delaying your retirement.
• Look at tax-smart strategies, such as using flexible spending accounts or tapping certain retirement accounts without penalty if eligible.
• Explore insurance options that fit your long-term goals.
• Build a plan that balances caring for others with protecting your future.

The reality is, caregiving will touch most of us in some way. It’s an act of love, but it shouldn’t come at the expense of your financial well-being.

Let’s talk about how to care for your loved ones – and yourself.
If you're feeling stretched, financially or emotionally, we’re here to help you put a plan in place that gives you more clarity and confidence about what’s next. Schedule a FREE financial consultation with an Advance Capital adviser today.