When we were children, our parents were there to nurture us, and later they became our mentors and guides. With time another change in the parent-child relationship occurs, and as an adult, you may find yourself financially providing for your parents.
Naturally, this presents both practical and emotional challenges. How do you care for your aging family members without sacrificing your own financial stability? We’ll explore this question in greater detail and offer some advice on how you can prepare for the financial needs of your parents.
How Many Adult Children Are Financially Providing for their Parents?
If you’ve read this far, it may be because you’re already financially providing for your parents in some form. You’re not alone. Pew Research Center refers to these individuals as part of the “sandwich generation,” referring to those who shoulder the burden of both their children’s and parents’ finances.
According to research from the AARP, roughly one in three adults over the age of 40 had given their parents money within the last year. Roughly half of these respondents had given their parents at least $1,000 or more.
Age and Your Parents’ Finances
Your parents’ financial needs extend beyond a few bills and other immediate expenses. The most recent data from the Urban Institute reveals that as many as 70% of adults 65 or older will need some form of long-term care.
The costs of long-term care can be daunting. The private insurance company Genworth reports that nursing home costs exceed $100,000 per year, a price that can place considerable strain on a family’s finances.
Others have opted to support their parents by having them move in, maybe even by renovating their home to create an “in-law suite” for an older relative. It’s not uncommon for adult children to help pay for their parents’ housing, costs that can accumulate considerably over time.
Practical Steps to Prepare for Aging Parents
Every family must make their own decisions about their finances, but here are some practical steps to consider when financially providing for your parents:
Be Proactive
Most parents prefer to remain private about their finances until a time of significant need or until they receive an unfavorable medical report. At this point, it can be challenging to devise a financial plan that amounts to more than damage control.
Instead, try to create a plan for your parents’ future. This approach might mean asking some difficult questions about their own financial plans and discussing options.
Be prepared for resistance. Your parents may not be eager to open up to their grown children about their financial stability. However, it’s important to plan as early as possible for future financial needs before they become serious concerns.
Find Strength in Numbers
You’re not in this alone. It’s possible that you have siblings who can also help provide for your parents. You might also find support in your spouse or even extended members of your family.
This assistance not only helps you coordinate your financial efforts but can also form a support network that can help you when crises arise, or your family falls ill.
Set Boundaries
As much as you might feel obligated to financially provide for your parents, you have a family of your own who also need your presence and support.
Decide early on what needs you’re willing to help with. In some cases, you may need to create a financial strategy that helps your parents utilize their existing assets and rely on additional financing options to cover the rest.
Pursue Your Options
Medicaid can provide assistance with long-term care, but it’s important for your parents to speak with an attorney to help them protect their assets while still taking advantage of this program.
Many seniors thrive with a combination of long-term care insurance and life insurance products that contain provisions for prolonged illness and care.
Help Your Parents Find Meaning
Your aging parents need more than money. You can help your parents reclaim their sense of purpose and meaning by helping them seek out volunteer opportunities or spend time with their grandchildren. Not only does this build stronger family ties, but it can also improve their quality of life, especially if they have to receive long-term care.
Finding Balance
We hope this article has offered some practical advice on financially providing for your parents while managing your own household. Understandably, these are difficult decisions to make and hard conversations to have. If you would like to learn more about our unique approach to financial planning, please get in touch with our team today.
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Sources for Stats:
https://www.cnbc.com/2021/11/08/aging-baby-boomers-raise-the-risk-of-a-long-term-care-crisis-in-the-us.html
https://www.pewresearch.org/social-trends/2013/01/30/the-sandwich-generation/
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