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What Gen X Kids Need to Know About Aging Parents’ Finances

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If you were born between 1965 and 1980, plus or minus a few years, congratulations: you’re a part of Generation X. Most Gen X kids grew up in the shadow of their baby boomer parents and for decades have had to listen quietly as their parents, born in the late 1940s to mid-1960s, traveled an endless road of self-discovery.

But now the boomers are aging – the leading edge of the baby boomers turns 80 in just a few years – and their Gen X kids are stepping into uncharted waters as caregivers for the folks.

We’ve featured plenty of articles here on the Blog about the challenges of caregiving. However, this article published last year on the Kiplinger website, takes a more down-to-earth approach and talks about money. The article, written by certified financial planner Sara Stanich, answers an important question: as Gen X kids step up to care for aging parents, what are the basic facts they’ll need to know about mom and dad’s finances?

Stanich comes up with half a dozen topics to clarify with the parents. Let’s take a closer look. After we review what Stanich suggests, we’re going to hear from Rajiv, who says that – while some of this approach is valid – the author of this article may need a reality check.

Aging Parents and Finances: Many Kids Are Clueless

We’ve written before about the “sandwich generation,” a term describing adult children of aging parents who are also raising young children. According to a report from the National Caregiving Alliance, this group comprises more than 11 million Americans, most of them couples in Generation X. 

“Parenting is neither cheap nor easy,” Stanich writes. “When you layer in the unplanned expenses that can come with supporting elderly parents, the situation can quickly derail or delay a couple’s retirement plan. Yet, according to a Wells Fargo survey, over a third of Americans with aging parents have not discussed their parents’ current or future financial situation.”

For this reason, the article says it’s imperative that Gen X have an intimate understanding of their parents’ finances. Stanich provides the following practical steps that Gen Xers can take—preferably while their parents are still living independently—to prepare for the financial future. For the Blog, we’re referring to these steps as “financial building blocks.”

Building Block #1: Know What Assets Your Parents Have

Stanich begins at the beginning: you should know what the current landscape of your parents’ finances looks like, and that starts with their assets.

“This includes any retirement accounts, investment portfolios, real estate and other assets that may be part of their estate,” she writes. “You should also know their debts, including mortgages, credit cards and other loans. This information can help you understand their financial situation and plan for their future needs. The website eForms offers a simple, complimentary form to assist with this process.”

She adds that if you want a more custom and comprehensive audit, it really is worth consulting with an estate attorney or financial planner.

Building Block #2: Understand Their Income Picture

Stanich says that you also need to know what’s coming in, and what your parents have to work with, “such as Social Security, pensions and any other sources of retirement income. This can help you plan for their future expenses and ensure they have enough income to support their needs.”

It’s important to note that this also includes any additional income from part-time or freelance work, so make sure to be thorough.

Building Block #3: Discuss Mom and Dad’s Estate Plan

As awkward as the conversation can sometimes be, Stanich is clear: your parents’ estate plan is a critical area to discuss. Moreover, it’s an area that’s often overlooked. According to Caring.com’s 2024 Wills Survey, less than half of Americans over the age of 55 have their estate planning documents in order. It’s all the more reason to make this an area a top priority.

“This includes their will, any trusts they have established and any other legal documents that outline their wishes for their assets after they pass away,” Stanich writes. “Understanding their estate plan can help you prepare for potential inheritances and ensure their wishes are fulfilled.”

Building Block #4: Help Them Plan for Healthcare Costs

Healthcare costs as people age can become increasingly burdensome if they don’t plan for it, especially if aging parents eventually need long-term care for any reason – and the majority will. Careful advance planning is essential to be able to withstand skyrocketing costs of care.

“You should discuss with your parents how they plan to pay for any potential healthcare costs and help them develop a plan to ensure they can afford the care they need,” Stanich writes.  Don’t just assume that mom and dad have it covered, because they likely do not.

Building Block #5: Protect Parents from Financial Abuse and Scams

It’s sad, but true: older adults are often the targets of scams and fraud, especially the financial kind. (We’ve published a related article about scams on this week’s Blog.)

“According to the FBI’s Internet Crime Complaint Center,” Stanich explains, “elder fraud cost Americans over the age of 60 more than $1.7 billion in 2021. Therefore, it’s important 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 schemes.”

Building Block #6: Work with the Right Financial Adviser

Sometimes, there really is no replacement for consulting an expert, especially one who specializes in retirement planning and intergenerational wealth transfer. “A financial adviser can help you navigate the complex financial landscape of caring for aging parents while also managing your own retirement savings,” Stanich writes. “In addition, they can provide guidance on estate planning, retirement savings, tax implications and other financial matters that may arise.”

At the same time, if your parents already have a financial adviser, it’s a wise idea for you to form a relationship with them, too. With their help, you can be assigned as a trusted contact on your parents’ investment accounts or insurance policies.

“As the trusted contact, you can be alerted if an elderly parent changes behavior, such as makes requests for large withdrawals. You can also be contacted if a parent misses payments — such as on a long-term care insurance policy — or simply does not respond to requests,” Stanich explains.

Rajiv’s Take: You Need a Reality Check

We asked Rajiv Nagaich to take a look at this list and he (as expected) has strong opinions.

“Look,” he says, “this article is all well and good, except for one thing: why should your parent who raised you suddenly start sharing all this highly personal financial data just because you asked them to? It’s just not realistic. While some parents might be willing to provide you with all the information this article suggests, a lot of people I know would tell their adult kids, ‘None of your bloody business!’”

As Rajiv argues, the data this article talks about is extremely confidential and sensitive, and just because you ask doesn’t mean your folks are going to be comfortable sharing it all with you. “They might think you’re just being greedy, and waiting for them to die,” Rajiv warns. “Is that your intent? Of course not, but that’s how they may see it.”

A far better approach, Rajiv recommends, is to become your parent’s partner. “Invite them to come to a LifePlanning Seminar,” he suggests. “Get them talking about what concerns them as they grow older. Then when you feel the timing is right, suggest a family meeting with an attorney to facilitate. We do these all the time at LifePoint Law. Having a trusted, objective, professional third party showing your mom and dad the best way forward is far easier and more effective than you as a son or daughter launching into the conversation!”

For more on how to plan a family meeting, and who and what to include, contact us and we’ll gladly assist you. Meanwhile, check out this article from Rajiv on family meetings from our website.

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at www.kiplinger.com)

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