Caring for an elderly parent is challenging even under ideal circumstances. For many people, the emotional toll goes hand-in-hand with the financial toll of care, including the costs of food, medicine, in-home health aides, doctor visits and transportation. Whether you care for an elderly parent yourself or pay someone else to do so, there are several income sources you can consider to ease the financial burden.
Social Security Benefits
If your elderly parent worked and retired at an eligible age, Social Security benefits serve as a primary source of income for your parent's basic care needs. The amount of Social Security benefits depends on how much your parent earned while working, and the age at which your parent retired. Even if your parent doesn't have a pension through an employer or has exhausted retirement savings, Social Security benefits will continue to arrive throughout your parent's lifetime.
If you quit your job or retire early to care for an elderly parent you may need to seek part-time employment to keep your household income at a sustainable level. The type of work you seek or are qualified for depends on your background, but part-time income will likely place you in a lower tax bracket than you were in while working, which means more take-home pay. Working around your parent's schedule or sharing care duties with a spouse or sibling can mean that you continue to earn money instead or abandoning your career to care for a parent.
Dependent Card Credits
The IRS allows eligible taxpayers to claim dependent care credits, which reduce the amount of income tax they owe, when paying for an elderly parent's care. The credit is only available to taxpayers whose elderly parents qualify as dependents and receive care from someone other than a spouse so that the taxpayer or spouse can work. The dependent care credit allows eligible taxpayers to claim up to 35 percent of their care expenses and subtract the amount from the tax they owe, which can result in significantly more money at the end of the year to cover the cost of elder care.
If your elderly parent purchased an annuity to prepare for retirement, or if you are retired yourself while caring for your aging parent, recurring annuity income can provide an additional source of income for the duration of your or your parent's life. Annuities require one-time or ongoing payments during an accumulation period, followed by a waiting period and an eventual monthly payment that, like Social Security benefits, continues until the annuity owner's death. If you anticipate the expense of an elderly parent's care you may want to purchase an annuity to augment your own Social Security, pension and retirement savings income.