Caring for your older parents, siblings with chronic disease, or a disabled child can negatively affect your financial and mental health. AARP reports that approximately 48 million Americans face the reality of giving informal care daily. Most informal caregivers made some sacrifices by reducing their contributions to the retirement savings account. Suppose you are caring for your loved one and want to have enough retirement savings – you need to use some strategies. Below are a few strategies suggested by financial experts. Identify the financial impact of caregiving. According to a recent survey in the United States, about 50% of caregivers had one or more financial drawbacks; the major setback relates to their retirement savings. Caregivers with reduced retirement savings often have emotional distress because they usually struggle to make enough retirement contributions. The survey shows that white adult caregivers are less affected than African-American and Latino caregivers. It also reveals that women are the most affected since they earn a lower income than men and spend more time on caregiving. Thinking about low retirement savings, you need to identify how to save more. Before you start, it’s crucial to know your current retirement savings account status to have readily available data about your savings. You can perform the financial analysis yourself or work with an expert. Employ Financial Adviser Service Caregivers usually have limited time for retirement planning because they spend massive time taking care of their loved ones. Therefore, assessing your finances may look challenging, but with the assistance of a financial adviser, you can easily evaluate your retirement goals and current financial situation. The adviser can help you consolidate your finances, especially when you have various retirement accounts in different places. When you want to employ the service of a financial planner, it is good to work with advisers having previous financial experience helping caregivers. Minimize caregiving expenses According to financial planners, you should save about 10% to 15% of pretax income for retirement, and you should save this percentage every year. If the primary reason why you cannot save enough is caregiving, you should seek government assistance. You might also consider applying for tax deductions, SSI, Medicaid, and other assistance the person you are caring for qualifies for. There is assistance for caregivers too. If you are caring for a child with a functional need, you can apply for tax breaks. You can make tax-free payments for the care with the Health Savings Account (HSA). Depending on your HSA provider, you can also use your savings account for investment purposes. This implies that you can exchange-traded funds or invest the leftover balance to maximize tax-deferred fund growth. Combine your retirement accounts Couples with a disabled child should use one income source to make retirement savings contributions. When couples use one income, one of them will contribute to the plan instead of two people. Caregivers with a workplace retirement savings account should save enough amount that can make them qualify for their employer match. Self-employed caregivers should use a tax-efficient retirement plan. Roth IRA is another retirement plan option. With Roth IRA, your withdrawals are tax-free after retirement, and your beneficiaries can make tax-free withdrawals after your death. If you have paid taxes on your Roth funds, your designated beneficiaries can take distributions without paying taxes.
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