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Kirby Hamilton—2012

Providing care for a loved one is a job that many Americans will one day take on. But the steep cost of this help may take you by surprise. And the unexpected time and money you're devoting can potentially put a dent in your retirement plans and even damage your career.

According to a new report from, 46% of family caregivers—defined as someone who takes care of a family member or friend for no pay—spend more than $5,000 a year on medications, medical bills, in-home care, nursing homes, and other health expenses. More than one in ten spend between $10,000 and $20,000 annually, while 7% go through $50,000 or more each year.

Spending that kind of money can have a huge effect on your finances, especially your retirement funds when you are suddenly tasked with taking care of elderly parents. The extra work can also set back your career. A third of family caregivers spend more than 30 hours a week looking after a loved one, and 60% of all caregivers say their duties have a negative effect on their job.

What can you do to keep caregiving obligations from shattering your own financial future? Andy Cohen, CEO of, has a few suggestion on how to plan ahead.

1. Spend your parents' money first

It might seem counterintuitive, but when you're providing care it's smarter to use your parents' funds before your own. "Most adult children want to help their parents, but it's a better financial decision to spend their parents' assets first," says Cohen.

By doing so, you can trim the size of your parents' eventual estate, reducing the chance of facing estate taxes. If your parents have a modest net worth, spending down that money can qualify them for Medicaid benefits, including help with long-term care.

2. Don't overlook benefits

Make sure your family member is getting all the financial help he or she is entitled to. As a veteran, for example, your parent may be in line for help with health care.

Use the U.S. Administration on Aging's Eldercare Locator to find local programs that could help ease your burden. BenefitsCheckUp, run by the National Council on Aging, can help you identify services your parents may qualify for.

3. Look at your own benefits as well

It's bad enough that unexpected caregiving can put a dent in your retirement plans, but it can also hurt your career by forcing you out of the office. "One of the problems of caring for an aging parent is that it impacts your own work," says Cohen. "Make sure you check with your company before you make a rash decision to take time off unpaid or go part-time."

If you need to take time off, know your rights. Under the Family and Medical Leave Act, if your company has 50 or more workers and you've been on the job for a least a year, you're entitled to 12 weeks of unpaid leave to take care of a family member.

Luckily, says Cohen, an increasing number of companies are including caregiving under their paid family leave policies, making it possible for you to take time off and still collect a salary.

4. Talk to your loved ones—sooner rather than later

A conversation about aging is difficult, but it will be easier to have when your family members are in good shape. Planning how you'll handle care, including the costs, is one essential topic to bring up, but it's not the only one. You should also make sure your parents and other relatives have proper estate planning documents in place, including a power of attorney, health care proxy, and living will.

Should your loved one's health start to fade, says Cohen, "the adult child has to step in and make decisions, and if they don't have financial or medical power of attorney they won't be able to do that." Making arrangements that will enable you to care for your elders both medically and financially, if that becomes necessary, should give peace of mind to everyone.

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