Financial Planning Considerations for Business Owners with Aging Parents

As a Sacramento business owner, balancing multiple priorities is part of the job — but when your aging parents require more care, it can unexpectedly strain both your personal and professional life.

It’s a situation that’s becoming increasingly common, with over 4.4 million caregivers in California alone providing 4.1 billion hours of care each year— a contribution valued at $81 billion. These numbers underscore the importance of having a financial plan to support your family’s long-term care while minimizing the impact on your business.

The High Cost of “Free” Care: Financial Impact of Caring for Aging Parents

The “free” cost of caregiving for aging parents can quickly add up. The financial burden can be heavy, from medical bills to lost income due to time spent caring for your parents. A study by the AARP found that family caregivers spend an average of $7,200 per year on out-of-pocket costs related to caring for a loved one.

These costs may include: 

Healthcare Expenses
Medical bills, prescription drugs, and over-the-counter medications.

Long-Term Care Costs
Nursing home care, assisted living facilities, or in-home care services.

Home Modification
Adapting the home to accommodate aging parents’ needs, such as installing ramps or widening doorways.

For business owners, the financial impact extends beyond out-of-pocket costs. Taking time off from your business can result in lost revenue and missed opportunities, potentially straining customer relationships. Careful financial planning is essential to balance caregiving with running your business.

Planning for Healthcare and Long-term Care Costs

Healthcare and long-term care costs can be significant as your parents’ needs increase. To manage these expenses, assess their current and future healthcare needs and available resources.

Long-Term Care Insurance
This can help cover in-home care or assisted living, reducing the financial burden. Premiums are lower when purchased early, so plan ahead.

Medicare and Medicaid
Medicare covers a range of healthcare services for those 65 and older; however, it may not cover long-term care, which can result in significant out-of-pocket costs. While Medicaid is the primary payer for long-term care services, it requires individuals to meet specific income and asset criteria, which can vary by state. Review these options carefully to avoid unexpected costs.

Health Savings Accounts (HSAs)
If your parents are dependents on your tax return, you may be able to use your HSA for their medical expenses. Contributions are tax-deductible, and withdrawals for medical expenses are tax-free.

Balancing Business Responsibilities with Caregiving

Beyond navigating the finances, juggling the demands of your business and your responsibilities as a caregiver can be overwhelming. Having a plan that helps support your company while you support your aging parents is crucial. Some suggestions to consider include:

Delegate and Outsource
As a business owner, it’s tempting to handle everything yourself. However, delegating tasks, such as hiring an administrative assistant or outsourcing payroll, can free up time for caregiving.

Time Management
Consider adopting time-blocking strategies to separate your workday from caregiving hours. This might include scheduling caregiving tasks in the evening or on weekends and reserving weekdays for business operations. Communicating with your team and clients about your situation can also help manage expectations and reduce stress.

Create a Caregiving Support Network
In addition to professionals, build a network of friends, family, or local caregiving groups to share responsibilities. The Sacramento area offers many resources for caregivers. Tapping into these resources can alleviate some of the pressure.

Utilizing Financial Planning Tools to Support Aging Parents

Caring for aging parents introduces complex economic variables that often require specialized expertise. An experienced financial advisor can provide an invaluable perspective and help identify blind spots in your planning that may otherwise get overlooked. Here are some areas your advisor can help you address:

Budgeting and Cash Flow Management
Your advisor can help you track caregiving expenses and develop spending strategies to preserve cash flow. They can work with you to identify opportunities to optimize resources across both business and personal accounts that help prevent financial strain on your business while providing for your parents’ care.

Investment and Retirement Planning
A professional advisor can help you balance caregiving needs with long-term goals by exploring insurance options to safeguard your wealth. They may assist with adjusting your retirement plan and uncovering potential income streams, allowing you to focus on both your financial future and caregiving responsibilities.

Tax Planning
It’s always important to consult with a tax expert to ensure you maximize deductions and comply with tax laws. However, a financial advisor can help you explore tax-saving strategies to offset caregiving costs. Taking a proactive approach to tax planning can help you retain more of your hard-earned money to support your business growth and family care needs.

Create a Financial Plan That Balances Business and Caregiving

Ready to align your financial plan with both business and family needs? Schedule a free consultation with Capital Wealth Planners to explore how we can help create a strategy that works for you.

Investment advice offered through Capital Wealth Planners, an investment advisor able to provide investment advice in states where it is registered, exempt, or excluded from registration.  Content contained herein should not be construed as an offer or solicitation for investment advice or for the purchase or sale of any security, insurance, or other investment product.  Investments involve the risk of loss, including possible loss of principal.  Please consult with a qualified financial, tax, accounting, or legal professional before implementing any ideas or strategies discussed here.  Content provided is obtained from sources believed to be reliable but cannot be guaranteed as to its accuracy or completeness.