Thank you for joining us for Episode 30 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is, “How do I financially take care of my aging parents, or what if my elderly parents have to rely on me for financing?”
Take Care of Your Finances First
This is a really big deal right now because our parents are living longer. For many people approaching retirement or even just starting out in retirement, they have this squeeze, right? They may have even paid for college education for their children and now they’re realizing that they might have an expense to help their parents out. Maybe even have their parents live with them in their later years. This is a real challenge for some. The first step is you need to get a financial plan that makes sure you’re going to be OK. It’s really important to make sure that you’re taken care of personally. Once that’s done and you make sure based on your goals and objectives for retirement income, then you can look at well do I have extra money and how much extra money do I have?
Can Your Parents Contribute Anything Financially?
If you really have a desire to take care of your elderly parents and you don’t quite have enough, then we can start talking about what we do to make up that shortfall. Can you parents’ chip in a little bit? Did they maybe own a house and if you want them to live with you, can they sell that house? Also, there are several different gifting strategies to protect assets.
Are You Going to be OK First?
Can I take care of my elderly parents? What if I have a desire to? Can I afford to? The important part of all those questions is getting your own financial projection first. Your projection that shows what your income is going to look like in retirement. It will show how long your money will last and what interest rate you need to earn on your money. Once you have that, then we have an amount that we can work with to say, “Are you going to be OK first?” And if so, what surplus do we have to make sure your parents are taken care of?
It’s a tough issue that a lot of people are feeling. I think about it from time to time with my own parents who are in their 80s. I would encourage you to get a financial analysis. Get a retirement income projection based on the money that you have saved and also your guaranteed sources of income to make sure that you have an accurate picture of how much you can help.
Thanks for joining me and I hope you found this information helpful!
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