Navigating your role as a financial caregiver for a family member

Being a caregiver for a family member can be an incredibly rewarding experience, but the role can be financially stressful as well. Plus, if you’re retired or approaching retirement, you may be worried that the added responsibility of managing someone else’s expenses on top of your own could push your own goals and timeline off track. Financial caregivers often have to navigate tough decisions that could impact their family’s long-term financial stability. Fortunately, with thoughtful financial planning, there are practical steps that can be taken to make the journey more manageable for everyone involved. For many families, caretaking in retirement adds unique budget pressures, that can make proactive planning even more important.

How financial planning for families can help determine a financial power of attorney

One of the most important steps in becoming a financial caregiver is deciding who will take the lead in managing a loved one’s finances and the costs of caregiving. To help make this decision, financial planning for families is essential and allows everyone to come together and have an open conversation about who will act on behalf of a family member if they become unable to manage their own financial affairs. A key part of this planning is designating a financial power of attorney (POA). This is a legal document that gives someone the authority to be in charge of your financial matters. Without a POA in place, family members could face legal hurdles or delays when trying to access the money needed to help care for a loved one. Banks, insurance companies, and other financial institutions typically will not release account information or allow transactions without proper legal authorization. To help the process go smoothly, here are some important talking points to cover during a family meeting:

• What are the financial needs of the loved one? (e.g., monthly expenses, medical bills, long-term care)
• Who is most capable and willing to take on the financial responsibilities?
• What are the expectations and boundaries for the person taking on this role?
• Should the financial caregiver have sole authority, or should decisions be made jointly with others?
• What legal and financial professionals need to be involved to formalize the arrangement?

What is a financial power of attorney and what can I do with it?

A financial power of attorney grants a person (the agent) the authority to manage the financial affairs of another person (the principal), and make financial decisions on their behalf. This can include accessing bank accounts, paying bills, filing taxes, managing property, making investment decisions, or handling insurance claims. There are several types of POAs, including: 

General POA

has broad financial powers and has the authority to handle most, if not all, financial matters. 

Limited POA

has authority for specific tasks or a set time period. 

Durable POA

remains valid even if the principal becomes incapacitated following a medical emergency or if they experience cognitive decline. 

Springing POA

only becomes active under certain circumstances, like following a medical diagnosis. It's also important to understand the difference between a financial POA and a medical POA, which authorizes someone to make healthcare decisions, not financial ones, on your behalf.

Costs of caregiving for a family member

Whether you’re managing your loved one’s finances, providing hands-on support, or both, caregiving can take a toll on your own financial goals. If you’ve been named their financial power of attorney, you likely have a clear view of their financial situation and how they managed money previously. If you discover their funds are limited or already have outstanding debt, you may feel obligated to tap into your own savings to help fill in the gaps. That sense of responsibility can quickly lead to unexpected financial strain, especially when caregiving can often involve many out-of-pocket expenses, including:

• Helping pay for medical treatments or prescriptions
• Updating home to be accessible (e.g., wheelchair ramps, walk-in tubs)
• Hiring in-home aides or professional caregivers
• Providing transportation, groceries, or covering utilities

For those caretaking in retirement, these tradeoffs can be even tougher on fixed incomes and long-term savings goals. While these contributions can come from a place of love, they can quickly add up. Caregivers may be tempted to dip into their own retirement savings or push off financial goals to keep up with a loved one’s needs. This can be especially true for those in the Sandwich Generation, who are not only supporting aging parents but also raising kids or giving financial support to adult children. The financial and emotional tug-of-war can be exhausting, but thankfully, there are ways to help support a loved one without putting your own future at risk.

How to get paid for caring for elderly parents

If you’re a caregiver for a family member, you may be able to receive financial support through state Medicaid programs, long-term care insurance, tax credits, or paid family leave, depending on their eligibility and the parent’s financial situation. Many state Medicaid programs offer compensation to family members who provide home care through Cash and Counseling or Self-Directed Services programs. To qualify, a parent must meet Medicaid eligibility requirements, and their child will often need to become an officially designated caregiver through an agency or waiver program.

If a parent has long-term care insurance, their policy may include provisions that allow family members to receive benefits for providing in-home care, depending on the terms of the plan and whether home care is a covered benefit.

Some states offer paid family leave, which allows caregivers to take time off work while still receiving a percentage of their income to care for a seriously ill family member. Eligibility and benefit amounts vary by state, but this can be a valuable resource for someone who needs short-term caregiving support without sacrificing their paycheck. Tax credits or deductions can also be helpful in offsetting caregiving costs for an elderly parent, and reducing an overall tax burden. A caregiver may be able to claim the Child and Dependent Care Credit, for example, if they paid expenses for the care of a family member, like adult day care or in-home aide services, while they worked or were looking for work.

How to save money as a caregiver

Being a financial caregiver can feel like a juggling act, but there are useful ways to reduce costs while still providing quality care for a loved one. Here are some tips to help save money as a caregiver:

1. Knowing what benefits are available for financial caregivers can help

You can look into state Medicaid waiver programs, which may pay family members for providing in-home care. You might also explore if the loved one qualifies for Social Security benefits, such as Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI). Additionally, you could check with your local Area Agency on Aging for potential access to transportation assistance, meal programs, and respite care services.

2. Locating any long-term care insurance or a long-term care rider might help cover the costs of caregiving

Long-term care insurance is designed to help cover the costs of services like in-home care, assisted living, or nursing home care. Many life insurance policies and annuities may also offer long-term care riders, which allow policyholders to access benefits early to help pay for care-related expenses. These options might offer greater financial flexibility and help reduce the out-of-pocket burden on caregivers.

3. Taking advantage of any tax credits and deductions could be beneficial

Caregivers may qualify for valuable tax breaks, such as the Child and Dependent Care Credit, the Credit for Other Dependents, or deductions for unreimbursed medical expenses. If a loved one qualifies as a dependent, the caregiver may also be able to claim them on their tax return, which can lower taxable income and help free up funds for caregiving needs.

4. Sharing caregiving responsibilities with family can bring some relief

Splitting caregiving tasks and financial responsibilities among family members can help lessen the burden on one individual. You might consider holding regular family meetings to discuss costs, schedules, and support needs. Even small contributions, like covering groceries or taking turns driving to appointments, can help ease financial and emotional strain.

5. You may find free or low-cost community resources to be helpful

Many local nonprofits, faith-based organizations, and community centers offer free or low-cost services to caregivers, such as home-delivered meals, transportation to medical appointments, or adult day care programs. If your community has an Area Agency on Aging, they may have resources that can help reduce costs and stretch a budget further.

6. Planning ahead for medical expenses can help reduce financial strain

Anticipating medical and care-related expenses can help avoid financial surprises. Exploring whether a Health Savings Account (HSA) or Flexible Spending Account (FSA) is available to set aside pre-tax dollars for medical needs can help. Early planning can also help reduce reliance on credit cards or emergency savings when unexpected bills arise.

7. You might consider part-time or remote work options

If caregiving responsibilities make full-time work difficult, looking into part-time or flexible job opportunities can allow you to earn income while managing care. Many employers offer remote work arrangements or flexible scheduling for caregivers, which can help you maintain financial stability without sacrificing your caregiving role.

8. You could with a financial professional to balance your financial power of attorney status with your own financials

Managing financial responsibilities as a financial POA can be complex, especially when trying to align short-term care needs with long-term financial planning. You could with a financial professional or elder law attorneys can help ensure both the caregiver's and care recipient’s financial interests are protected. These experts can provide guidance on financial planning, tax strategies, retirement planning, and benefit eligibility.

North American provides annuity & life insurance options to ease the burden of caretaking in retirement

Navigating the financial responsibilities of caregiving, especially for those in or approaching retirement, requires careful planning and the right support. Midland National offers a range of life insurance and annuity solutions that can be added to your overall financial plan. These options are designed to help strengthen your long-term financial security, help protect your family’s future, and prepare for life’s uncertainties.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

Neither North American nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.

Sammons Financial® is the marketing name for Sammons® Financial Group, Inc.’s member companies, including North American Company for Life and Health Insurance® Annuities and life insurance are issued by, and product guarantees are solely the responsibility of, North American Company for Life and Health Insurance.

B4-NA-12-25