Caregivers are often so focused on managing their parent’s health and financial needs that they don’t even think about their own future needs. Although your focus is on providing care for your loved one, it’s important to think about and prepare for your own future financial and caregiving needs. If you haven’t done it already, now is the time to start planning for own your retirement.

“It’s hard to find the time, but planning for your financial future is a necessity,” says Erika Mielke, a Wells Fargo Private Bank senior wealth planning strategist. “Thinking about the dollars and cents of your own retirement is the best way to ensure you have the funds you need as you age.”

Mielke suggests these tips to help caregivers plan for their own financial future.

Take full advantage of employer programs

If you or your spouse is employed, make sure you are taking full advantage of the financial programs your employer offers. Some examples:

• 401(k) – The 401(k) is set up by your employer and is designed to help you save (and build) money for retirement. The money you contribute to your 401(k) is pooled and invested in stocks, bonds, mutual funds or other types of investments. You choose the type of investment from your company’s list of options. Usually your contribution is deducted from your paycheck before taxes and goes directly into your 401(k) account.
• Company matched contributions – Many companies will make a matching contribution to your 401(k). Your employer might match 10 percent, or even 100 percent of your contribution to your retirement account. This is like getting a bonus, so it pays to put in as much as you can afford. Understand how your employer is matching contributions. Some will match your contributions with company stock. As a result, a large portion of your investment will be in company stock. “Diversification is important. As a general rule, you don’t want more than 10 percent of your net worth in any one asset,” Mielke says. Check with your HR department on rules and restrictions for re-balancing your funds, which would enable you to sell some company stock and re-invest it.
• Flexible Spending Accounts (FSA) – Depending on the type of health plan you have, you may be eligible for a flexible spending account. An FSA lets you set aside money, and the funds are taken out of your paycheck before taxes. You can use the account throughout the year to get reimbursed for eligible health care and dependent care expenses (including elderly parent care expenses) However, FSAs are set up and owned by the employer, so how much you can contribute is determined by your employer. If you change jobs, you can’t take your FSA with you. Also, you must use all the money in the FSA by year-end, or you lose it.
• Health Spending Accounts (HSA) – If you have a high deductible health plan, you are eligible to create an HSA. An HSA has different rules than an FSA. The maximum a family can contribute annually is capped by the IRS at $6,250. It is a bank account that you own and you can invest it as you choose. You can only access the amount of money that’s in your account. When you start contributing – in January for example – you will have less money than you’ll have later in the year. An HSA is not “use it or lose it” meaning if you don’t spend all the money in the account by year-end, it rolls over to next year, and you can take it with you if you change jobs.

Explore alternatives

The IRS caps the amount you can contribute to your retirement plans at $16,500. That includes 401(k), 403(b), IRAs, etc. Once you have contributed the matching amount to your 401(k) and if you are able to contribute more, then you will want to explore whether to add more to your 401(k) or whether an IRA might be good for you. Depending on your income, a Roth IRA might be a good choice because the money goes in after you’ve paid taxes. The money grows over time, and when you take it out, you don’t pay taxes on it again.

Don’t “set it and forget it”

Whether you have your money in 401(k), IRA, company stock or any other investment option, keep tabs on where your money is being invested. Too many people make a choice when they sign up for the plan, then let it ride, and never make changes to it. “Don’t set it and forget it,” Mielke advices. “Be involved in how your money is allocated. In most cases, as you get closer to retirement, your portfolio should be shifted to include less risk.” She recommends having a conversation with a financial advisor. If your plan is administered by a financial firm, find out if they have advisors you can speak to. If not, hire one yourself. It’s a critical step in financial planning.

Think about long-term care now

“Caregivers are on the front lines of seeing first-hand how much long-term care facilities cost,” Mielke says. However, too many don’t think about their own long-term care needs. Long-term care is an insurance policy that covers costs that arise when a person needs on-going care including home care, hospice care, nursing home care or care in an assisted-living facility.

Mielke says the best time to buy long-term care insurance is usually in your 50s. That’s when the prices are the best, but it can still be affordable after that. Before you buy, know the terms, and fully understand the policy you choose. Some questions to ask about any long-term care policy you are considering: What are the maximum daily benefits? How long will coverage last? Is coverage transferable between spouses? If you don’t use it, does it turn into life insurance? Does the policy take inflation into account?

Insurance

Another aspect of financial planning is insurance. Do you have the right type of life insurance? There are many different options, such term or whole life available, and finding the right type depends on your personal situation.

Property and casualty is another insurance caregivers should consider. If other caregivers are caring for your parent inside the home, how are they insured? What if they are injured? What is the liability to the homeowner? “Getting umbrella coverage with your property and casualty that is equal to your net worth is relatively cheap, and it prevents against your net worth being wiped out due to an accident,” Mielke suggests.

Legal documents: Key to financial planning

In addition to building a solid financial base, caregivers must have legal documents in place, such as financial power of attorney, healthcare power of attorney, and a will. Each document serves a specific purpose. For example, POA indicates what will happen if you are incapacitated and unable to make decisions for yourself while you are alive. A will covers how your estate is handled when you die. The various financial documents work together to ensure your wishes are carried out.

Legal documents coordinate with financials – which is why they are a key part of good financial planning. Make sure you work with an expert to ensure everything is titled appropriately and that the POA, will, and life insurance documents are examined in conjunction with financial planning documentation.

Not all financial planners are created equal

When it comes to financial planning, don’t go it alone. Every state has different rules; IRS regulations are constantly changing; and legalese can make even the savviest consumer’s head spin. It’s best to work with a professional who will take the time to understand your goals and individual situation and advise you accordingly.

However, not all financial planners are created equal. Some financial planners are tied to specific companies, products and services. These organizations tout “free financial planning assistance.” However the financial planner you work with is incented to sell you that company’s products and services. They are being compensated for the products they sell. A better option might be to find an independent financial planner that is not tied to a particular financial firm. They charge a fee for their services, but you will get unbiased advice, and find the right products for your needs.

Article courtesy of AgingCare.com, a leading website that connects people caring for elderly parents to other caregivers, personalized information and local resources. AgingCare.com has become the trusted resource for exchanging ideas, sharing conversations and finding credible information for those seeking elder care solutions.

Like many successful companies, WAHVE (Work at Home Vintage Employees) was a business created to solve a specific problem. Founder and CEO Sharon Emek had been mulling over the conundrum her industry, insurance, had been facing for years: the imminent loss of a huge segment of the workforce through retirement. Fifty percent of workers in the insurance industry are baby boomers.

“There had been many articles written over the last number of years, saying that the industry is going to face a big crisis with all our baby boomers retiring, that we’re going to lose all this institutional knowledge,” Emek said. “We did not have young people come into the industry over the last 10 years. They went to Wall Street or elsewhere. No one sees the insurance industry as a very sexy industry.”

Emek, an Upper East Sider, has a long and distinguished career in insurance and knows the industry inside and out. She had been the chair of the Independent Insurance Agents & Brokers of New York and started her own firm in 1988. She regularly spoke at industry events and networked with other agents and brokers, and saw firsthand that everyone was facing the same hurdle.

“We’re all fighting over the same qualified people,” she said. “I woke up with the idea one day.”

The idea—to utilize newly retired professionals at a lower cost by having them work remotely—became WAHVE, a company that Emek believes can help not only the insurance industry but the seniors it employs. The company only hires people with 25 or more years of experience—no exceptions. Emek said that she settled on calling them “vintage employees,” evoking the category of fine wines or cool cars, after tossing out other names that just pointed to old age.

“We’re vintage. We’re not retiring, we just want more life-work balance and to work in a different way,” Emek said. “I’ve always been very technologically advanced in my industry. I’d already been working remotely at home for 10 years.”

The company hires contract employees, most of whom have been working in the industry for their entire career and want to either return to work after retiring or who are transitioning from full-time office work. They get matched with insurance companies on assignments of varying lengths, full time or part time, and work from home or wherever they want to set up. Emek said that they’ve developed software that matches employees with clients based on very specific criteria, not unlike a dating service system.

“It’s unbelievably simple,” said Frank Sentner, the company’s chief operating officer. “The hardest thing is to get it through the heads of the business people that there’s really no difference between managing personnel in your office or managing personnel who you’ve never met who work remotely.”

When he talks to potential clients, Sentner focuses on the cost benefits of hiring virtual vintage employees through WAHVE.

“It costs about 40 to 50 percent less. [Employers save on] office space, heat, light, electricity, computer systems, bandwidth. Pretty much every cost in an insurance firm is directly related to personnel, to headcount,” Sentner said. “Our people are all of a certain age, they are working to supplement a retirement income, so they’re willing to take less because they’re working from home.”

Emek said that many of their employees are happy to trade the higher salaries for the flexibility to live near family and take on the amount of work they want to at any given time. She also said that many of the clients, forced to cut costs somehow, are thrilled to be able to hire older Americans.

“Brokers win because they get amazing talent at a lower price and they don’t have to outsource overseas—a lot of them feel terrible in this economy outsourcing overseas,” she said. “The retiree feels wonderful because instead of having to work in a local hardware store, they’re actually a real insurance professional. Many of them have designations and licenses, and so they feel that they’re still important, they’re still involved in the industry, they’re supplementing their retirement income.”

Statistics show Emek’s observations are right on the nose. This summer, AARP and the Society for Human Resource Management conducted a survey of workers over age 50 to find out what they’re looking for in potential employment. The survey found 78 percent of respondents plan to continue working for financial reasons, like money and health insurance, as opposed to working solely for enjoyment or the desire to remain productive. The survey also found that 52 percent of those who are currently unemployed would prefer to find a job in their professional field instead of changing careers or starting their own business. In addition, 62 percent of workers rated alternative work arrangements as “very important” in considering jobs, and 44 percent rated telecommuting as “important.”

Emek hopes that WAHVE will soon be expanding into other white-collar industries, like law and accounting, and she’s committed to the model of sticking with vintage employees. For one thing, she said, hiring people with over 25 years of experience means that they don’t need extensive training. She’s also convinced that every industry needs to take another look at how they define and utilize older workers.

“The word isn’t ‘retirement.’ People say, ‘I don’t see myself as sitting on my porch in a rocking chair,’” Emek said. “We need a new lexicon to define what’s happening. Because we’re living longer, the definition of work is changing. I don’t know what will replace retirement. That’s why I’m using the word ‘vintage.’”