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When Helping Your Aging Parent, Protect Your Own Retirement Assets

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Caring for an aging parent is a task more and more people are facing this days. A Pew Research study shows that over 40 million Americans provide care to someone over 65. The emotional and financial burden of being a caregiver for an aging parent can definitely come as a shock, sometimes resulting in the caregiver making some shortsighted financial decisions.

In our practice here at AgingOptions we see this situation very frequently. So we were extremely interested in this recent article on the Money website of US News. It strongly cautions caregivers against risking their own retirement savings to help out Mom or Dad. “This support [of an aging parent] can have a drastic impact on someone’s own savings,” warns the article, “leading to retirement troubles down the line.”

If you’re facing the challenge of being Mom or Dad’s caregiver, or expect to be there in a few years, you’ll need to make sure you plan well, both for your parent’s needs and for your own. This may require you to have some tough conversations about topics many families scrupulously avoid – like money, for example. In fact, that’s the first piece advice from US News: don’t shy away from financial conversations. The best way to protect your own finances as a caregiver is to help make certain your parent’s finances are in order, and that, say the experts, puts parents and their adult children into some emotionally difficult territory.

The article offers an excellent solution to this thorny communications problem: “Instead of discussing [finances] one-on-one, hire a third party.” In our practice, we have helped hundreds of families by bringing Mom or Dad to the table with all the adult children and facilitating an honest financial review. This conversation can also help ensure that important legal documents such as Durable Powers of Attorney are in place for the time when the parent can no longer safely manage their finances. US News adds that “Going through a third party ensures there’s an impartial point person that can handle any questions. This keeps everyone on the same page, even if one child takes the lead on caring for a parent.” We agree wholeheartedly.

The second recommendation from the article is that the caregiver must not neglect his or her own retirement plan while helping the aging parent. Peak earning years for most adults comes during ones 50’s, but the average caregiver, says the article, is just 49. The caregiver may be tempted to cut back on retirement savings in order to be able to provide greater financial assistance for the parent. The one word response from the experts in the US News article: don’t. Instead you will want to look into other ways to help meet your parent’s needs without leaving yourself high and dry when it’s time for your own retirement. (The article lists some senior service agencies and support groups for you to contact in your own community.)

Finally, US News says to avoid financial shortcuts such as merging your own finances with your parent’s accounts. “Keep them separate,” says one financial planner in the article. Blending accounts can create endless tax headaches later, not to mention potential complications with Medicaid. Another shortcut you may be tempted to take is to borrow against your retirement account or refinance your mortgage to help out your parent. Again, as well-intentioned as you might be, you will potentially be opening yourself to a greater financial burden down the line, robbing yourself of resources you’ll need in the not too distant future.

The US News article concludes with the observation that as a caregiver you may need to look long and hard at your own expectations about financially supporting your parent. Those expectations may have to be adjusted. “It’s not because caregivers shouldn’t care about their parents,” says US News, “but because the parents have other options. It’s the job of the caregiver, instead, to find the best options that a parent can utilize.”

As with so many aspects of retirement, the delicate issues addressed in this article – family relationships, personal finances, sibling connections and so much more – are often best handled in the company of a trusted third party. We would like to offer our services to you, both as your “family mediator” and as your personal retirement planner. When it comes to laying the foundation for your own retirement, we utilize a comprehensive approach we refer to as LifePlanning. Your LifePlan will cover all the important needs you’ll face in retirement, ensuring that your legal affairs are in order, your housing choices addressed, your medical coverage in place, your financial assets well protected, and your family thoroughly informed of your wishes. Your LifePlan is your blueprint to help you build the retirement you’ve dreamed of. To learn more about this unique and exciting approach to retirement, we invite you to attend a LifePlanning Seminar, offered without cost or obligation. For dates, times, and online registration, click on the Upcoming Events tab, or call our office.

The bottom line: whether you’re addressing the needs of an aging parent or planning for your own retirement future, don’t make the journey alone. We’re here to assist you, at any time.

(originally reported at

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