Q & A

Is There Any Hardship Allowance after Caring for an Ill Parent?

Full Question: I was an account manager in the building supplies industry, but was laid off in 2008. At the same time, my mother fell very ill with multiple sclerosis and required a lot of help. As her only son, and only living relative, I stepped up to the plate. I relocated across country and cared for her for five years. The only income I had was approximately $7,000 per year through a caregiver agreement that allowed my mother to pay me without penalty from Medicaid. She passed over a year ago.

Fast forward. I have not worked in over six years and the gap on my resume is killing my job prospects, but I’m still trying. I’m 52 and I’m sure I’ll be working into my 80s, which I actually don’t mind. I used the limited income to keep up the maximum contribution to my IRA, but as of last year with no income, no more contributions.

Question: Does Social Security take this hardship period into account? Does the book address any of this? I’ve read that the last years of employment determine your Social Security income and I’m wondering what effect this time in my life will have and if there is anything I can do.

Answer: Sounds like you’ve had a very hard road with parental illness, as so many people, myself and my siblings included, have. Unfortunately, the government makes no direct adjustment for this. The only indirect adjustment is that it doesn’t cut your benefit in proportion to the number of years you work; in other words, those with shorter work histories receive more benefits relative to what they contributed. This is due to the progressivity of the Primary Insurance Amount formula. Workers like you with short work histories also stand to increase their benefits substantially if they work additional years. The reason is that an extra year of work will replace a year of zero earnings in calculating your Average Indexed Monthly Earnings (AIME) amount on which you retirement benefit is based.

SourceLaurence Kotlikoff, Forbes Contributor

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