It often starts with a phone call. A parent has fallen, a doctor has raised concerns about memory, or a sibling mentions that Mom has been skipping her prescriptions to stretch her budget. In a matter of days, you go from checking in on your parents to quietly covering some of their bills.
You’re far from alone. A 2025 report from AARP and the National Alliance for Caregiving found that 63 million Americans, nearly one in four adults, provided ongoing care to a loved one in the past year. Many of them are helping a parent while still raising kids, paying a mortgage, and saving for retirement.
Supporting a parent is an act of love. It shouldn’t cost you your own financial future. The families who handle it best usually plan before a crisis forces their hand, and the steps below can help you do the same.
Start With an Honest Conversation and the Right Documents
Money is one of the hardest topics to raise with a parent, especially when it touches on independence. Still, you can’t plan around numbers you don’t know. Try to learn the basics: what income your parents receive, what savings they have, what they owe, and what insurance they carry.
Just as important is finding out where things are. Who is the contact at their bank? Where do they keep their will, account statements, and insurance policies? Do they have a durable financial power of attorney and a health care directive? Without those documents, family members can struggle to pay bills or speak with doctors when a parent can no longer manage on their own.
If documents are missing or outdated, an estate planning attorney can prepare them. It also helps when a financial planner and the attorney work together, so the legal paperwork and the money behind it point in the same direction.
Understand What Medicare Will and Won’t Pay For
One of the most common surprises for families is learning what Medicare doesn’t cover. According to Medicare’s own guidance, it generally does not pay for long-term custodial care, such as help with bathing, dressing, and eating, when that is the only care a person needs. That applies to help at home and to most nursing home stays.
For many families, that care is paid out of pocket, through a long-term care insurance policy if the parent has one, or eventually through Medicaid once their assets are spent down. In Arizona, Medicaid’s long-term care program is the Arizona Long Term Care System (ALTCS), which has its own medical and financial eligibility rules.
Knowing this early changes the plan. A parent who still has savings may be able to set aside a portion for future care. A parent with an existing long-term care policy should review what it pays, how long it lasts, and what triggers benefits, before they need to file a claim.
Protect Your Own Retirement First
Flight attendants tell you to put on your own oxygen mask before helping anyone else. The same principle applies here. Your retirement can’t be financed later with a loan, and your children may one day face the same decisions you’re facing now if your savings fall short.
The AARP report notes that caregivers spend roughly $7,200 a year out of pocket on average. When those costs arrive, it’s tempting to pause retirement contributions or tap a 401(k). Both moves deserve a second look.
Taking a distribution of funds from a 401(k) or IRA before age 59½ generally triggers income tax and a 10% early withdrawal penalty. Even after that age, a large distribution raises your income for the year. That extra income can make more of your Social Security benefits taxable, may increase your Medicare premiums two years later, and can leave your withholding or estimated payments short for the year. One decision made under pressure can affect several parts of your finances at once.
If you’re thinking about cutting back your hours or leaving work to provide care, consider the long-term effect, too. Social Security benefits are based on your highest 35 years of earnings, so years with little or no income can lower your future benefit.
Give Caregiving Its Own Line in the Budget
Caregiving costs have a way of spreading quietly across your finances. A grocery run here, a co-pay there, a few months of a parent’s utility bills. Before long, it’s hard to tell how much you’re spending.
A separate checking account or budget category for caregiving can make the picture clear. It also makes it easier to share costs fairly with siblings. Some families agree that one sibling contributes money while another contributes time. Others split expenses based on income. Whatever you choose, put the agreement in writing, even informally, so expectations don’t turn into resentment later.
If you work for an employer covered by the Family and Medical Leave Act, you may be eligible for up to 12 weeks of unpaid, job-protected leave a year to care for a parent with a serious health condition. Check with your HR department about eligibility and any paid leave options before you need them.
Know the Tax Rules Before You Start Paying Bills
How you support a parent can affect what you report on your own tax return, so it pays to understand the rules before the money moves.
According to the IRS, you may be able to claim a parent as a dependent if you pay more than half of their support for the year and their gross income falls below an annual limit. Your parent doesn’t have to live with you to qualify. If you’re single and pay more than half the cost of keeping up your parent’s home, you may also qualify for head of household filing status.
Medical expenses deserve special attention. If you itemize, the IRS allows you to include medical costs you paid for a parent who would have been your dependent except that their income was too high. Only the total medical expenses above 7.5% of your adjusted gross income are deductible, so keeping good records matters.
When several siblings share support and no one pays more than half, the IRS has a multiple support declaration (Form 2120) that allows one sibling to claim the parent, as long as the group together provides more than half of the support.
These rules have fine print, and the right approach depends on your income, your parent’s income, and how costs are divided. Reviewing them with a tax professional before the year ends gives you the chance to plan, rather than discover options after the fact.
Review Insurance on Both Sides of the Family
Take stock of your parent’s coverage first: their Medicare plan, any supplemental policy, long-term care insurance, and life insurance. Make sure premiums are being paid and beneficiaries are current.
Then look at your own coverage. If someone depends on your income, including a parent you now help support, disability and life insurance become even more important. At the same time, more coverage isn’t always better. The goal is protection that fits your real responsibilities without paying for policies you don’t need.
Watching a parent go through this is also a natural moment to think about your own future care. Many people start considering long-term care coverage for themselves after seeing the costs up close.
When It Makes Sense to Bring in Professional Help
Supporting a parent touches nearly every part of your financial life: cash flow, retirement savings, taxes, insurance, and estate planning. Those pieces affect each other, which is why financial planning for this stage works best when someone looks at the whole picture rather than one account at a time.
Financial advisors can help you test how much support you can afford, which accounts to draw from, and how caregiving might change your retirement timeline. When comparing Financial advisor firms, it’s worth asking whether their services include tax planning and coordination with estate attorneys, or whether they focus on investments alone. For families in Surprise and across the West Valley, where many households include both retirees and working-age adults, that broader view can make a real difference.
The right financial advisor services won’t make caregiving easy, but they can make the money side more predictable, so you can focus on your parent instead of the spreadsheet.
The Bottom Line
Helping an aging parent is one of the most meaningful things you can do, and also one of the most financially complex. Start the conversation early, learn what Medicare and insurance will cover, protect your own retirement, and understand the tax rules before you write the first check. With a plan in place, you can be there for your parents without giving up the future you’ve worked hard to build.
About Biz Financial, LLC
Biz Financial, LLC is an Arizona financial planning firm serving individuals and families in Surprise, Prescott, and nearby communities. The firm is led by Jason Bisdorf, CPA/PFS, who brings together tax expertise and comprehensive planning across retirement, investments, insurance, estate, and family goals. To reach their team, call (602) 800-7864 or Find their office on google maps.
