At times it can feel like a juggling act—managing money for your household, trying to instill your children with strong financial values, and at the same time taking over more and more of the financial responsibilities from your aging parents. According to a recent AARP study, one out of every three adult investors is providing some measure of financial support to an aging parent or adult child; many are trying to support both.Disclosure 1
That’s three generations of wealth that you need to either directly manage or exert some significant influence over. But in each instance, there are very different needs. So where do you begin?
More than two-thirds of caregivers are female, with the average caregiver being a 49 year-old full-time professional woman who provides an additional 20 hours per week of unpaid care to an aging mother.Disclosure 2 While that general profile probably comes as no great surprise, the time commitment should.
With many of us so tethered to work by text, email and laptop, the physical 40-hour work week has quietly expanded into something closer to a 60-hour work week. Add care demands on top of that, and it’s a recipe for physical and/or emotional exhaustion.
You need to take care of yourself—because if you’re not around, who’s going to take care of everyone else? Sacrificing for others is admirable, but your physical and financial needs MUST come first.
The AARP study found that of those supporting a parent or adult child, 28% have stopped saving, 22% have depleted personal short-term savings, 12% have had to tap into long-term savings (like retirement or education accounts), and nearly one in four (23 percent) have been forced to take on more debt.Disclosure 1
Preparing the next generation
As parents, it’s our job to worry about our children—whether they’re four or forty. We want to give them the world, while also protecting them from its harsh realities. It’s about more than money. We want to help them become more fiscally responsible, ethical, and charitable; we want them engaging and connecting with the world and others in a way that’s both generous and prudent.
Make it your goal to pass on not just money, but your personal financial values to the next generation. Sit down and have an open, honest conversation about how you built your wealth, how you’ve used it to help others, and how you want your kids to perpetuate it.
Talk about the financial mistakes you’ve made along the way, the lessons you’ve learned, and the things you wish you had known when you were their age. Our Preparing Your Family to Inherit Wealth worksheet can help you facilitate this discussion.
Providing for aging parents
While it’s noble to want to care for your aging parents, it can be emotionally and financially draining. Women who decide to take time off from work—whether cutting back hours or requesting a leave of absence—not only see their income go down, the decision often has a ripple effect on their retirement plan savings, pension payouts and even their Social Security benefits.
Often, it’s a much smarter financial decision to seek out the services of professional caregivers to support your parents’ needs while you keep working. If you have the resources, you might also want to consider purchasing long-term care insurance for your parents. Don’t be shy about asking other family members such as siblings to chip in financially and with their time.
Your Truist Wealth advisor can help you create a budget that considers both present and future care needs, along with a system to record all costs to prevent any family disputes. They can also help you avoid common financial mistakes such as comingling your assets with your parents’ to make bill paying easier—only to find out that it left your parents ineligible for Medicaid benefits.
While it's natural to want to do all you can for those you love, the most important lesson to remember is that you can’t do it all by yourself. You need help from your immediate and extended family, from your employer, from your friends, and from a trusted financial advisor. With some thoughtful planning, not only can you provide support to your parents and adult children, but do so without sacrificing your own health or financial future.