More than 11 million Americans care for an adult family member while raising children at home. This sandwich generation, primarily comprised of Generation X couples, faces the task of balancing multigenerational family responsibilities, while catering to their own retirement planning needs.
Kiplinger’s recent article, “What Gen X Needs to Know About Their Aging Parents' Finances,” says that caring for aging parents takes planning ahead and patience. That is why Gen X needs to understand their parents’ finances intimately. Here are some practical steps Gen X should take, ideally while their parents are still living independently, to empower themselves and their aging parents while helping to avoid unpleasant financial surprises in the future.
- Know what assets they have. The first step in understanding your parents’ finances is to know their assets, such as retirement accounts, investment portfolios, real estate, and other assets. You should also get a sense of their debts, including mortgages, credit cards and other loans. This information can help you understand their financial situation and plan for their future needs.
- Understand their income. Know your parents’ income sources, including Social Security, pensions, and any other sources of retirement income. This can help you plan for their future expenses and ensure that they have sufficient income to support their needs.
- Discuss their estate plan. This includes talking about their will, any trusts and other legal documents that outline their wishes for their assets after they die. Understanding their estate plan can help you prepare for potential inheritances and ensure that their wishes are fulfilled.
- Plan for healthcare costs. As your parents age, they may require more healthcare support, including long-term care, which can be expensive. Planning for these costs in advance is essential. Talk with your parents about how they plan to pay for potential healthcare costs and help them develop a plan to ensure that they can afford the care they need.
- Be aware of potential financial abuse. Senior adults are frequently targeted by scammers and fraudsters who try to exploit them for financial gain. Therefore, it's critical to be aware of the signs of financial abuse and take steps to prevent it from happening to your parents. This may include monitoring their accounts for any suspicious activity or helping them avoid scams and fraudulent ploys.
- Work with an elder law attorney. Finally, working with an experienced attorney specializing in retirement planning and intergenerational wealth transfer is a good idea. They can help you navigate the complex financial landscape of caring for aging parents, while also managing your own retirement savings.
Reference: Kiplinger (June 5, 2023) “What Gen X Needs to Know About Their Aging Parents' Finances”
