November Is National Family Caregiver Month: What Do Caregivers Need to Know About Retiring Early?

November is National Family Caregiver Month, an opportunity to honor the physical, mental and emotional effort caregivers put into their role every day. When looking after a loved one, it’s important to understand the financial challenges this life milestone can create.

Whether by choice or necessity, many caregivers may find themselves retiring early. If you’re exiting the workforce to care for a family member, there are a few things to consider to make sure you and your family are supported. 

How to Plan for Becoming a Caregiver

As part of the “sandwich” generation, you have a lot on your plate. You may be raising children, taking care of aging parents and managing your other personal responsibilities. For many people, juggling all of these tasks might include retiring early to become a full-time caregiver. People chose to become family caregivers for a variety of reasons, often stemming from a sense of love, obligation and the desire to provide the best care possible for their loved ones. In some cases, family caregiving is the most affordable or accessible option, but it can come with an impact on your retirement. Here are a few things to consider if you find yourself leaving the workforce to care for a loved one. 

1. Understand Your Resources

When faced with the responsibility of becoming a full-time caregiver, you might think that your only option is to leave the workforce. But there are a few other resources available that may be useful in your situation. 

The Family Medical Leave Act allows for “eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons.”¹ Check with your company if they offer this coverage. 

You may also be eligible to receive Medicaid, which can allow qualified individuals to manage their own home-care services. Medicaid differs by state, so contact your state’s Medicaid program to see if you or your loved one qualify.²

There are other resources available from the U.S. Department of Veterans Affairs (VA) Veteran-Directed Care program and Aid and Attendance program, state-sponsored paid family leave programs and long-term care insurance policies. 

2. Have an Income Plan

Planning for retirement takes careful strategizing and becoming a caregiver adds a wrinkle to your plan. By retiring early, you may miss out on ongoing contributions to an employer-sponsored retirement plan. In addition, you may not have access to Social Security, Medicare or pensions yet. You may also be hit with withdrawal penalties if you want to access your retirement funds early. However, even with these additional complications, it’s still possible to prepare ahead for any income gaps. Working with a financial professional on your retirement planning is key to making this transition a smooth one. 

3. Consider Your Future

Every caregiving situation is different, but it is important to consider both your short-term and long-term goals.

• Do you plan to take on a part-time job if you have the time and capacity?
• Do you want to re-enter the workforce once your family member recovers, passes away or requires a higher level of care than you can provide? 
• Are there other options available, such as hiring a part-time home health aide, so you can still work while your loved one is taken care of?

Having a clear sense of what you want for yourself and what your financial needs are can help you plan for your financial situation in the coming years. 

4. Plan for the Emotional Changes, Too

While it’s important to plan for the financial changes of becoming a caregiver, it’s equally important to consider the emotional implications as well. Being a caregiver can be hugely rewarding but can also take a toll on your physical and mental health. 

Consider ways to maintain your connections to your community while being out of the workforce. This could include joining a support group with other caregivers, picking up a new hobby or making time to connect with friends and family more often. There are also mental health professionals who specialize in working with caregivers. Caregivers often find it difficult to maintain a regular exercise routine and sleep deprivation is common among caregivers. You don’t need to trade your own physical or mental health for the health of your loved one. Prioritizing physical health through exercise, healthy eating, sufficient sleep and respite care can help. After all, a healthy, happy caregiver is a confident caregiver.

You’ve Got This, and We’ve Got You. 

There’s a lot to consider when becoming a caregiver, especially if you plan to retire early to focus on your new role. Be sure to consider all your available resources to help close any income gaps and account for the financial and emotional changes you’ll likely undergo, from income planning to finding a support system. 

We are here to help with life’s big transitions like this. If there’s anything we can do to support you, please reach out.