By Leslie Haggin GearyBankrate.com 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 only 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 age 18 is slightly more than $37,300. That's far lower than the $42,400 median for households without a caregiver, research by AARP and the National Alliance for Caregiving shows.
That same study found that among caregivers who work outside the home, 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; 5 percent lose job benefits; 4 percent turn down promotions.A woman who quits a job to care for someone will lose $659,139 in wages, pension and Social Security based on an annual salary of $35,000, the National Alliance for Caregiving says.Of course, opting out of work has ripple effects on 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 person 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.Next: "7 ways for caregivers to tend their nest eggs" >Bankrate.com is the Web's leading aggregator of information on financial products including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Visit Bankrate.com to get the tools and information that can help you make the best financial decisions. Understand the challenges and rewards of caregiving in our workshop on caring for an aging parent. Are your parents showing signs of depression? Don't miss our depression guide for caregivers.What's more important than your health? From arthritis to brain fitness, sign up for our Health & Wellness Newsletter.
Source: Money & Work
