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Many Americans aren’t prepared for retirement in general, but the issue is compounded now that people are living longer than ever. There are 76 million baby boomers in the US today and one-third of 65-year-olds will likely live past 90, but many are underfunded for that long a life span.
Which means that more and more, adult “children” are required to step in to support their parents. This generation, who are now in their 60s, are also trying to plan for their retirement and possibly still supporting their own kids. According to research from AgeUp, a new product designed to provide financial protection product for adults who worry their Boomer parents will run out of money, this concern is top of mind for many:
- 71% believe at least one parent or in-law will live longer than average
- 57% have a relative who lived to age 95 or beyond
- 35% think their parents will run out of money between the age of 90 and 100
Blair Baldwin, Founder & General Manager of AgeUp, says “Our research found that 64% of millennials and Gen Xers expect to financially support their parents or in-laws in their old age. At the same, this ‘sandwich generation’ is also focused on supporting their own families. What this means is that while many adult children recognize the role they will likely play, most are still financially underprepared for it.”
If you are one of the many who believe that their parents will be in need of support in their older age, the key is to prepare now. The first step is to start some basic financial conversations with your parents.
- Make sure their finances are organized: The goal is to know exactly how much they have saved, their retirement income, how much they owe and basic expenses. Map out exactly where their assets are, what type of financial and insurance products they have and how they are invested. Look at retirement, brokerage, savings, pensions, Social Security, life insurance, home value and any other assets.
- Plans for elder care: Have an open conversation with your parents about what they want during their older years if they need help or their health fails. Maybe they already have a nursing home picked out, or are adamant about staying in their home and prefer in-home care. Make sure you are on the same page on how to handle these situations before they happen.
- Family involvement: Talk now to other siblings and family members to understand who will contribute to supporting your parents. This may be financial support, or by providing a place for parents to live.
Baldwin says that although talking about money can still feel taboo, it’s important to have these difficult conversations now to avoid financial surprises later. He also recommends encouraging mom and dad to work with a professional financial advisor, which in addition to the above conversations, is another proactive step to make sure you and your family are on sound financial footing today so you are in a position to provide support in the years to come.
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