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Managing Finances From the Middle

Tips for Sandwich Generation Caregivers

When a friend is having a tough time, do you prefer to bake cookies, instead of buying some at the store? Have you ever experienced a Pinterest fail attempting to make a Baby Yoda birthday cake for your seven-year-old instead of relying on a boxed cake mix? Or (gasp) just picked up a ready-made cake at the store? You’re not alone. 

A recent article in the Wall Street Journal mentioned a study that found that the more effort a caregiver puts into taking care of someone, the better they feel about themselves. In fact, this study asserted that doing things to reduce the amount of effort caregiving requires actually makes caregivers feel worse about themselves. 

This has profound implications for women who are taking care of children and elderly parents simultaneously. (And yes, there are many men who provide the gift of caregiving, but this article will focus primarily on women.) In the United States, there is a long history of women, particularly women of color, providing caregiving services and dealing with the financial ramifications of low-paid or unpaid work.

Women who have dedicated their time and energy to caring for loved ones may look back at this time as being hard but worthwhile. There are real costs for caregivers, both emotionally and financially. A 2021 AARP study found that on average, caregivers spend $7,242 annually out of pocket on caregiving expenses. Women who take time off of work to assume caregiving duties sacrifice, on average, more than $142,000 in lost wages, which doesn’t include lost future Social Security payments, 401k matches, etc.

Caregiving doesn’t just have a financial cost. For many caregivers, there’s a real emotional cost that can persist even after the individual they have cared for passes away. Caregivers are more likely to suffer from depression. estimates that rates of depression are twice as high in the caregiver population versus the general population. This may be because caring for someone is exhausting. There is often little respite for caregivers, and if you feel guilty about your feelings of anger, exhaustion, and frustration, you may be less likely to allow yourself to outsource caregiving duties.

How can caregivers work to mitigate the very real financial and emotional costs of caregiving? Let’s talk through ways you can reduce the mental and financial load of caregiving. 

 Let’s start with the money stuff.

First, make sure you have the documents you need in place. If you are caring for an aging parent, you need copies of their will, any trust documents that may be in existence, power of attorney, and an advanced medical directive or healthcare power of attorney. If you are a parent caring for young children, you need these documents in place for yourself. Reach out to an estate planning attorney to review these documents and make sure they are well-drafted. If your parent or loved one does not have these documents already drafted, you need to make this a top priority before mental or physical capacity declines. You may be wondering who you should turn to for this kind of legal work. Be sure to select an attorney that specializes in estate planning. 

Second, make sure you use any tax credits or savings tools available to you. You may be able to claim the Child and Dependent Care Credit on your tax return if you have to pay someone to look after a loved one while you work or search for work. There are other requirements to qualify for this tax credit. Be sure to consult with your tax advisor. 

You may be able to claim someone as a dependent on your tax return if you paid for more than half of their support for the calendar year, their gross income is less than $4,300 in 2021, and they meet certain citizenship requirements. Talk to your CPA to see if you qualify.

If you claim a dependent on your tax return and they have extensive medical expenses, you may be able to deduct those costs to the extent they exceed 7.5% of your modified adjusted gross income. Review IRS Publication 502 to see what healthcare costs may be deductible. In addition to these options, a bipartisan proposed bill in Congress called the Credit for Caring Act would offer up to a $5,000 nonrefundable tax credit for family caregivers. Talk to your CPA or tax preparer about your options.

Finally, but just as important, some ideas on how to handle caregiver stress. 

Recognize you may first need to give yourself permission to acknowledge how hard caretaking is and to prioritize your health and wellbeing. Talking to a counselor can give you a safe space to share your emotions, fears, and frustrations without any anxiety about judgment. Think about what you could get help with, either directly for the person you are assisting, or within your own life.

If you have siblings, sit down in a face-to-face (Zoom counts if cameras are on) conversation to talk about how to share this caregiving load. Send out an agenda in advance and ask your siblings to send in items they want to discuss as well. You may need to commit to a series of meetings. Clearly state the impact of caregiving on you and what you specifically need in terms of support. We can’t assume that others will be able to simply know what we need. It may be helpful to engage a geriatric manager, counselor, or clergy member to help facilitate the meeting.

As you navigate through your caregiving journey, it’s critical to seek the support you need, even if it doesn’t come from family or friends. Open communication is crucial to receiving help. Engage a team of experienced professionals to help you navigate the myriad of decisions that need to be made. 

Photo: Robert Kneschke

Lauren Zangardi Haynes, CIMA, CFP (R) is a fee-only financial planner and founder of Spark Financial Advisors. She has three young children and a rambunctious puppy. Learn more about Lauren’s services at Spark Financial Advisors.
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