More Tips on Avoiding Senior Scams

ABC News and USA Today report on the costs of caring for elderly parents.

When it comes to helping to pay for your elderly parents' expenses, should you spend down your assets before tapping into theirs? Hobson: Generally speaking, you should do everything possible to avoid tapping into your own retirement savings in an effort to defray your parents' costs. I cannot stress this enough -- you need to make your own retirement savings a priority. If you are not saving for yourself, it will create a vicious cycle for your family, continually shifting the burden to your children and their children and so on. As I have said before, there are no scholarships for retirement.

So, are there other ways besides tapping into your own savings to help pay for your parents' retirement and health care needs?Hobson: Yes. If your employer or your spouse's employer offers a dependent care or flexible spending account, you should sign up immediately. These accounts allow you to defer up to $5,000 in pretax dollars -- meaning your taxable income is lowered by the amount you contribute -- to put toward the costs of care for a child or other qualifying person. An elderly parent would qualify if they were physically or mentally unable to care for themselves and if they met certain other criteria similar to those for the dependent care credit.

You also say the Internal Revenue Service can actually help with elderly care?Hobson: They do, but it can get a little tricky. But, depending on your income and the income of your parent, the IRS can actually provide some financial relief. If you are caring for an elderly parent and you declare them as your dependent -- much like would any child who is living in your house -- you could receive a credit for $3,300.

Additionally, the IRS allows you to deduct medical expenses you make toward your parents' care as well as the cost for a caregiver. Again, there are a number of restrictions, so the best thing to do is go on the IRS Web site to learn more about the qualifications.