Many baby boomers are finding themselves in the uncomfortable position of becoming parent to their parents. Research shows that caregivers caught off guard by an ailing parent may suffer almost as much vocationally and emotionally as they do financially. If you planned to withdraw 5% a year to support your lifestyle when you retire, and then have to increase that to care for an ailing parent, there goes your retirement plan.
What can you do?
- Plan far ahead by having proactive family discussions. Invariably, one child takes on the bulk of the care giving responsibilities. This can cause tension and resentment that can be avoided by discussion.
- Target specific scenarios so that it is easy to discuss difficult subjects such as when Dad can no longer drive.
- Consider Late-in-life care such as long term care insurance and in-home care insurance. Children can end up writing a check for the premiums or sharing costs with parents.
Joe Birkofer tackles the issue of negative inheritance in the Rice University financial planning class that he teaches. He asks a simple question: “What’s the Black Death for a financial plan?”
The answer: “it’s your parents“.
Coaching Question – How do you plan on taking care of your parents?