Ray’s Take It’s a conversation no one wants to have; however, it’s important to have at least an idea of how financially prepared your parents are for their retirement. People are living longer – much longer – and the costs for senior care are soaring. Many older Americans saw a large portion of their nest egg disappear in the last recession.
All these factors explain why the percentage of adult children providing some level of care for their parents has more than tripled in the past 15 years, including 41 percent of the baby boomer generation.
Your parents might not welcome inquiries about their financial situation. They could see it as none of your business, or an attempt to take control. It can help to involve a third party. Ask them to go with you to a financial seminar for retirees or set up a joint appointment with a financial adviser for a consultation.
By bringing in an outside professional you give everyone a greater sense of comfort when discussing money matters. Otherwise it’s too easy to revert to old “parent-child” roles.
If it turns out your parents are in good shape, all you need to do is make sure you know where all their important paperwork is – original wills, financial records, insurance policies, powers of attorney – or know who does know this. Plus, find out if there’s a lock box and where the key is.
If you learn your parents are not in good shape financially, you and your siblings might need to step in. There may be assets that can be sold to increase savings. It might be time to consider a reverse mortgage on their home, though this is usually a last resort. You might need to open your home to them.
You’ll want to do what you can to help, just be sure not to put your own financially secure retirement at risk in the process.
Dana’s Take Parents are always talking about setting up college funds for their kids, often giving that goal priority over saving for their own retirement. This can be a costly mistake for both generations.
When you take saving for your own retirement seriously, you’re freeing your children from what could be a tremendous financial burden later. The best gift you can ever give your children and grandchildren is your own financial independence.
If you run out of money in your senior years – or don’t have enough to meet basic needs – who will pick up the slack? Is that the legacy you want to give your kids?
Paying for a college education for your kids is admirable, but don’t let it sink your own future. Your kids would be much better off paying for their own higher education now and not supporting you at the same time they’re trying to raise your grandchildren.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at email@example.com.