When it comes to retirement planning, planning for yourself and your kids is rarely enough. According to Pew Research, 10,000 Baby Boomers reach age 65, the traditional retirement age, every day. However, nearly half of them will face their golden years with less than $10,000 in savings. That means that a large portion of that generation is likely relying on Social Security as their main source of income. This becomes an issue when healthcare expenses exceed those covered under Medicare, particularly in the case of long term care. Driving around Jacksonville you see a number of senior living facilities, especially in Mandarin and the Ponte Vedra area. In Nocatee alone there are multiple senior living communities, such as Del Webb, as well as assisted living facilities, such as Starling. The reality is that this country has plenty of baby boomers who are at or near retirement, with a large percentage who haven’t put any plans in place for that phase of their lives.
This becomes an issue for members of Gen X, Gen Y, and Millennial generations when their parents may rely on them financially to meet their needs. Most children feel an obligation to help their parents when called upon, but feel uncomfortable bringing up the issue ahead of time. Without discussing this important matter in advance, it can create a problem for both the children and the parents. Many older adults simply assume that they’ll continue to work and fill in the gaps with Social Security income. That assumes that healthcare and other issues don’t change their plans, which unfortunately happens with frequency, as referenced below. The fact that healthcare costs have risen dramatically in recent years has put even more pressure on families, as usually savings just aren’t enough to pay the costs that insurance doesn’t typically cover.
This creates the need to begin the conversation between generations as early as possible to come up with a clear plan surrounding the long term living and healthcare needs of the older generation. Often a third party can aid in starting this difficult conversation. Having everyone understand the bigger picture helps to guide the conversation.
A number of children, especially physicians and other high-income professionals, find themselves being asked for financial help when they have just started to plan for their own retirements and/or college education for their children. Before you can help others you need to make sure your financial foundation is solid. This will prove both beneficial for yourself and your parents in the long run, especially if things go south and expenses for healthcare, etc. increase. One thing to look into to help avoid having major issues shake your lifestyle and/or your own retirement plans is long term care insurance for your parents. Whether premiums are paid by the children or the parents, such policies can help tremendously, should a parent need more care than they or their children can easily afford. There are now multiple ways to insure against a cost that can prove devastating to most retirement plans.
Remember that communication is the key to retirement planning. There is no sense in making money an ugly word, especially when communicating within your own family. Take advantage of people being in good health and in solid financial situations to make plans that can account for changing circumstances. If you’d like help from a professional please visit our website at www.capanjax.com and schedule a free consultation with one of our financial advisors, or call us at 904-730-7433.
Disclaimer: This content was developed from sources believed to be providing accurate information. The information in this material is not intended to provide legal or tax advice. You should consult your legal or tax advisor for information concerning your individual situation.