While caretaking has long been a factor to consider in retirement planning, longer lives add a layer of complexity - increased longevity mean more years of healthcare to afford. The average couple is expected to need $285,000 in today’s dollars for medical expenses in retirement, excluding long-term care1. While costs for healthcare continue to rise, Americans’ understanding of how much healthcare will cost them is not keeping up. The average pre-retiree aged 50 and over underestimates their healthcare costs in retirement by approximately 30%.

These costs that weren’t planned for can eventually fall to other family members, and while Americans tend to underestimate their own retirement and healthcare costs, they also underestimate their relatives’ healthcare and caretaking expenses. The average non-professional caretaker spends $7,000 a year in the U.S. on their loved one who needs care. This money often comes out of the caretakers’ retirement funds to cover these unplanned costs. AARP estimates that caregivers are spending approximately 20% of their income on caring for loved ones.2

These are just the obvious direct costs of caretaking. The indirect costs can have an even more drastic impact on financial well-being: Caretaking can require time away from work, which usually means missed opportunities for promotions and pay increases. These missed pay increases turn into missed investment earnings, as this income could have been growing wealth in a 401(k) or other retirement plan.

While it can feel like a lot of pressure being sandwiched between caring for your own financial needs and the caretaking needs of your elders, it is possible to navigate caretaking roles while staying on track towards your own retirement. Here are some tips for getting started:

Start the Conversation Early

Many people wait for a crisis before they talk to their parents about their preferences for healthcare or their financial situation. Waiting until this moment can lead to more reactionary decision making, rather than methodical decision making that takes other important life details into account.

Here are a few prompts and guidelines to help prepare for this conversation with your parents or elders:

Decide ahead of time what you would like the goals of the conversation to be. What would a good outcome for the conversation look like? If you’re feeling too overwhelmed to define goals, focus on answering three questions: Where would they like to receive care? Who would they like to provide care? How will care be paid for?

  • Most people respond to the ‘where’ question by saying “at home.” Exploring alternatives, such as adult family homes and assisted living facilities in your area, can be worth their consideration, however. Your loved ones may be surprised to find vibrant communities with shared gardens, engaging activities, and wonderful people.
  • There should be more than one care provider to fill the role of caretaker. Families commonly make the mistake of only designating one individual, typically a spouse or daughter, to do the bulk of caregiving. The burden of caring for an aging parent can fall just as heavily on time and health as it does on financial resources. There should be a team of caregivers who can step in for one another consistently. All healthcare providers, informal and formal, function better, and provide better care, as part of a team.
  • When it comes to paying for care, there are three common options: out of pocket, long-term care insurance (LTC) and Medicaid. AARP currently estimates that 52% of retirees will need LTC, so it is important to know if your parents already have this in place.

Think through the parts of the conversation that you believe will be most difficult, and try to find some non-threatening ways to frame or introduce these topics. For example, you can use an article, news item, or your own financial planning journey to prompt the talk: “I just read an article about making sure you know where your family members’ important papers are. Could you show me where all this information is sometime?” or “I’m starting to learn about estate planning. I’d love to get your perspective.”

When thinking through this potentially difficult conversation with your parents, you have an opportunity to ask specific questions that could have an impact on your own financial planning.

Inquire into whether or not your parents have Medicaid or long-term care insurance. Caretaking costs may be eligible to be covered under either of these. You may also be eligible for tax breaks for time and money spent caretaking.

Make sure you learn the status of the following:

  1. Outstanding loan
  2. Bank accounts and investments
  3. All forms of insurance coverage

Finally, meet with your parents’ financial professional to find out where things really stand. Inquire into whether or not your parents have Medicaid or Long Term Care Insurance. Caretaking costs may be eligible to be covered under either of these. You may also be eligible for tax breaks for time and money spent caretaking.

Work With A Financial Professional

Following the conversation you have with your parents, an financial professional can help you determine what the most immediate priorities are, the largest caretaking costs, and the ones you weren’t anticipating prior to the conversation. From these priorities, they can help you determine a financial strategy that would support both your short- and long-term needs. If you or your loved one aren't comfortable with actively managing their investments, talk to a financial professional about professionally managed products, such as an annuity.*

Even if it won’t be perfect, the best thing you can do is start the conversation now. As you head into the conversation, makes sure your thoughts and feelings are in the right place – If your parents become defensive, this is the time to be patient and listen. Keep in mind that this conversation will evolve over time, and you don’t have to get all the answers in one sitting. Try to set a target, such as defining a plan within a year, and check in with your family’s financial professional to make sure you’re all on track.




1. Reshma Kapadia, “How Much Healthcare Will Cost You in Retirement, According to Fidelity,” April 2, 2019

2. AARP, "Surprising Out-of-Pocket Costs for Caregivers," October 1, 2019. 


*What is an annuity?

Annuities are long-term, tax-deferred investments designed for retirement. Variable annuities involve risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. 

Annuities are not for everyone. And, it’s important to remember that these products are meant to be long-term investments designed for retirement, so there are restrictions in place to discourage you from withdrawing all of your money at once or taking withdrawals before age 59½. However, most annuities do allow for exceptions based on specific circumstances such as a terminal illness or other emergencies.

Investing involves risk including possible loss of principal. 

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.

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