By Cynthia Ramnarace
NEW YORK, May 30 (Reuters) - Recently divorced and with her only child in college, Nancy Wurtzel made a life-changing decision.
She shuttered her public relations business, said goodbye to Los Angeles and moved back to Sauk Center, Minnesota -- the three-stoplight town of her youth -- to care for her mother, who has dementia.
It was not the exciting midlife change Wurtzel, 56, had imagined. But on her last visit, she realized that her 91-year-old mother was unable to cook, had lost weight and could no longer differentiate day from night. She was also having trouble paying her bills herself, making her vulnerable to swindlers.
Wurtzel says she was guided by one thought: Her mother needed her. How to manage without an income was an afterthought.
"Sadly, I hadn't thought out the financial part," says Wurtzel, who has now been unemployed for six months. "I'm living on my savings. I'm in OK shape now, but I can't continue like this, or I won't have anything for retirement."
Because she has no job, she is not paying into Social Security or making contributions to an individual retirement account.
Wurtzel is not alone. She is part of a generation of 50-plus caregivers who lose an average of $303,880 when they leave the workforce early to care for an aging parent, according to research from MetLife.
"Women are more likely to leave the workforce early than men are, and so the differential impact on them is quite dramatic," says John Migliaccio, director of research and gerontology for the MetLife Mature Market Institute.
Women lose an estimated $324,044 each in earnings, pension and Social Security benefits, compared with $283,716 for men, a 14 percent difference. The total loss for this group adds up to nearly $3 trillion, MetLife said.
Every hour per week devoted to helping Mom dress, get to doctor's appointments, or take her medication increases the chances by 3 percent that a caregiver will lose income, according to a recent study in the journal Community, Work and Family.
Despite those daunting numbers, caregivers are walking away from work for a variety of reasons.
Often, there is not enough paid leave or flextime at work to accommodate their caregiving schedules.
Sometimes they cut back on their hours because the pressures of caregiving have sickened them, too: The longer someone spends as a primary caregiver, the more likely it is that her health will diminish and that she will leave work, said both the National Alliance for Caregiving, a coalition of caregiving organizations, and AARP, an advocacy group for older Americans.
A decision that carries so much financial risk deserves an equivalent amount of deliberation, says Susan Fleischer, executive director of geriatric care management company Senior Bridge.
"Many times this becomes a very reactive decision, and it needs to be more planned, more introspective," says Fleischer, who advises caregivers on this topic.
She urges them to consider the financial implications of quitting: Can your family get by without your income? How will dropping out of the workforce affect your retirement savings? Are there other options? Would it be cheaper to pay for adult day care or assisted living than quitting?
And then consider: Can you handle the day-to-day obligations of caregiving? If your parent needs around-the-clock care, are you prepared to forgo vacations and dinners out with friends?
Also consider the impact on your career. You might think you are just taking a few months off until things settle down. But the average caregiver spends 4.6 years in that role, according to a 2009 National Alliance for Caregiving study. Would you be able to maintain your job skills and contacts over that time?
"Four years can be a professional lifetime in terms of the technology changes and new events in a profession," says Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards Inc.
Maybe your parent would rather pay you than a home health aide, and getting paid could make the difference in your ability to afford taking on that caretaker role.
If so, make sure you have a lawyer-drafted caregiver agreement that outlines what services you will provide and at what cost. Structuring that agreement legally also allows you to make contributions to a traditional or Roth IRA.
The fees must be reasonable: The average home health aide earns $19 an hour, according to the Genworth 2012 Cost of Care Survey. But if you get paid significantly more than that, your pay could be seen as an attempt to skirt Medicaid or gift tax rules.
"A payment of $100,000 for a week's worth of care would not be acceptable," says eldercare attorney Sharon Kovacs Gruer of Great Neck, New York.
Consider, too, the added economic burden on you. If you need to move, can you rent out your current home? Can you live with your parent? If not, how much would rent and utilities cost? How about transportation expenses -- would you have to buy a car, or get a new one that is easier for Mom to get in and out of?
If Mom cannot pay you, is there a chance your other siblings could? If you are relieving them of a burden, it makes sense for them to at least kick in money to make your life easier or help feed your retirement savings.
If you do work out a pay agreement, make sure you share that document with your siblings to avoid jealousy or suspicion.
Before you decide to quit, run the numbers to see how much, exactly, it will cost you. Calculators on the U.S. Social Security Administration website allow you to input different scenarios and see how much of a loss you will take retiring at 55 instead of 62, for instance. Your own 401(k) website should have similar calculators.
And do not make this decision alone. Turn to your spouse and your siblings and ask if, together, you can all pitch in and make the task doable.
"You don't want to have family members be angry and cause conflict," says Fleischer. "Talking together is the best kind of situation."
Wurtzel is working with her sisters on a way for her to return to the workforce and still care for her mother.
"I think I can go another year, but then I think I'd be in trouble," Wurtzel says. "Because eventually the money will run out."