The costs of care
Advice for adult children who may become financial caregivers to their parents
A woman wrote me about her parents, who are nearing retirement without much saved. In her email, she told me, “If something happened to them, it would be me taking care of them.”
She asked whether long-term care insurance (LTCi) might be an option to protect her parents and her family.
LTCi can be a very smart part of a plan for parents and their adult children. It’s part of a broader discussion of what you can do today to plan for the possibility that your parents may need nancial assistance as they age.
Here are my suggestions for how to work toward a multigenerational plan:
Start the money conversation(s). Yes, you are the kid. But you are also now an adult, who at some point will likely be the caregiver to your parents. The sooner you have a grip on the situation, the more you can work as a unified family to make wise choices.
Mom and Dad may want to stay in their current home. The question they need to answer is: Can they afford to? All parents should do this hard thinking about their future on their own, but often it falls to their children to start the conversation about how they can create more security by moving (to a smaller home and/or a less expensive area, or moving in with family) so they won’t be a financial burden on their kids.
Stay on track with your goals. The woman who wrote told me she and her husband have term life insurance that can cover their mortgage (their only debt) and future college costs for their baby. And she assured me they were on track with their retirement savings and saving for their child’s education. The goal for every adult child facing a similar situation is to not shirk on building their own financial security.
Yet the instinct often can be to take care of your aging parents first, before taking care of yourself. However, if you use money today to support your parents, it might be possible that you will not have enough saved for your later years, and will put your kids in the same situation you find yourself in today.
Consider professional help. Many certified financial planners work on an hourly basis or charge a project-based fee. Adult children should encourage their parents to hire a financial planner to take a deep dive into their situation. A planner will be able to lay out various options for how to boost their retirement security, including whether LTCi might be a smart move.
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