When You are Your Parents’​ Retirement Plan

Sandwich Generation

With an aging population and a generation of young adults struggling with finances, the responsibilities of middle-aged Americans are increasing. Adulting is set to be even harder. Nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). And about one-in-seven middle-aged adults (15%) is providing financial support to both an aging parent and a child (The Sandwich Generation: Rising Financial Burdens for Middle-Aged American, Kim Parker and Eileen Patten). People aren’t saving enough on average so you might want to get ahead of the struggle.

Since I’m screwed I may as well plan ahead

Not too long ago, realizing this, I panicked and called my mom (cuz she doesn’t text). As a single parent, she was already stuck in a tough situation and over the last 30 years; she never made north of $28k.

Financial Planning? What’s that? Future?

She had to play the role of both parents. She was merely existing (as MLK stated) and doing a stand-up job considering the circumstances.

Your parent/s might be in a different case altogether but for most minorities, this will be the reality. My mom’s plan was likely not to die early and going to church most of the time. It leads me to understand one important truth, “Dang it, I’m my mom’s retirement plan or lack thereof.” Well at least I know, so I can do something sooner than later. Get a head of the struggle, with these simple steps and considerations.

You are your parents’ retirement plan.

3 Crucial Points, but slowly creep towards the old folks for they will be spooked with any mention of finances

• Talk Finances: You need to know where they stand with their finances. Thread lightly since some of these conversations are uncomfortable and will trigger PTSD, shame and etc. People got issues and money often reveals it. Stick to hard numbers and facts. I suggest grabbing all usable information during the holiday vacation and putting that sucker on Mint. So you can see the glory or likely upcoming travesty.
• Gently push your parent/s to front-load their Estate planning documents (if they have any). Goal: figuring out if this is a GoFundme situation waiting to happen. Who has the Ppwer of Attorney? What are the outstanding debts and liens against any assets? Is the house in decent shape? Do they even own the house, or did they do some bad refinancing moves?
• Talk to them about their Health and Health insurance. This is the moment you find out what aches them (really aches them). You can even get insight into family medical issues that might not be on your radar. This is a moment to talk it all out. All on the table.

7 Financial Resources to Check Off

1. Power of Attorney to manage their finances and establish primary control.
2. Guardianship of your Parent/s. Tag who is it? If you have multiple siblings, it is best to devise a plan today. Plan as a family and succeed as a family. Who’s filing with mom/dad?
3. Financial Documents. All of them. Where are they? Which banks or institutions? This part frustrates me to no end.
4. Mortage(s), and/or Business(es): Great Opportunity to sale, establish a rental home, or even owning a pseudo family vacation home overseas. The key is to downsize and upsize your family values. This might mean selling the parents home and remodeling an in-law suite.
5. Expenses: firmly consider all the costs. Bills and Bill Payment Plans before, during, and after. Anything you are not considering today will be considered with your bank account tomorrow.
6. Monthly Income: Pension check? Dividends? Disability or alimony? Medicare, Medicaid or Social Security (check out this link to find out your anticipated SS benefits)?
7. Health insurance: long-term care insurance? Pay-outs and funerals.

How Sway?

Take your time. Focus on what works. Gather all the information you can, especially if they don’t have a plan at all. It will likely cost $800k to keep the parents alive and kicking for 25 years. If you don’t run the numbers now, they will run you.

As always, share, like and definitely begin having the conversation about money before it is too late.