PLANNING FOR “THE DAY”
Recently a close friend confided that she and her husband were having financial difficulties. Seven months of unemployment for both of them had wiped them out financially and since they both are in their early 60s, it was devastating. But even though they had depleted all of their savings, she was optimistic that within six months they would be back on solid ground.
She thought the worst was over when she got a tearful letter from her mother asking her only child for financial help. Her mother had loaned them money over the years so she couldn\’t tell her no even if she wanted to, and my friend was on the verge of panic. When her husband got a call from his mother saying she too needed money, (even though he was one of four sons, his mother came to him for financial help because he was “always the more ‘responsible\’ of the boys”), my friend was way past ‘verge\’ and well into totally freaked out!!
Sadly, I\’m hearing stories like this more and more often. Baby Boomers who are finding that hope really isn\’t a strategy and “The Day” they were hoping would never come just did! Baby Boomers – sandwich or otherwise – who are suddenly being called upon by their aging parents for financial support. If this could be you or someone you know, here are a few of the options you might want to consider:
- First and foremost, START EARLY. Talk with your parents now (as in way before there is a need) about their financial planning. Ideally they will be forthcoming but even if they\’re not, start saving. Just as you should put money away for your own retirement, start putting money away for your parent\’s later years, too.
But if, as in my friend\’s case, it\’s too late for that then . . .
- Before you panic, sit down and really talk with your parents. (Best time to plant a tree? 50 years ago. Second best time? Now!) Determine how much they need and for how long. Ask how soon they truly need the money – and if they need it now so you can get a sense of how much ‘breathing room\’ you might have. Unfortunately, most people are so embarrassed about asking for money that they wait until it\’s a crisis but in reality, the need may not really be immediate.
- See if you can make graduated payments – paying less now when the parent is relatively healthy and gradually more as the needs increase. This will give you time to put together a fund.
- Don\’t make any major decisions in the ‘heat\’ (or panic) of the moment. Look at their long-term needs and try to put the money where it will serve them best for the long term. For example, putting a “mother-in-law” apartment in your own home; satisfying private pay needs for assisted living or nursing home; etc.
- Together, look at all their options. For example, if they have a home, look into a reverse mortgage; suggest they talk with their insurance broker regarding the possibility of borrowing on their policies; check with your/their mortgage lender about the possibility of a home equity line of credit on either your parent\’s house or your own.
- But before they do anything, suggest they talk with a financial planner about ways to minimize expenses and maximize long term returns as it relates to their unique situation.
- If you have siblings, talk with them and determine how much each can contribute. A small amount from a number of people is more likely doable for everyone than a large amount from just one.
- If one or more can contribute immediately, but others need more time to make arrangements, suggest that those that can take the early months, do, while the others make arrangements to take a few months later on. Once everything is stabilized, you can then work out a plan – perhaps each taking a month or giving equally every month.
These are suggestions. It is neither a complete list nor necessarily the best ones for your situation so be sure to talk with a financial planner or other trusted adviser before taking any action. Oh . . . and remember to breathe!
© Copyright AgeWiseLivingTM 2001-2007 You can find information about Generational Coaching, AgeWiseLivingTM seminars and free teleseminars, and to sign up for Barbara\’s free monthly newsletter at http://www.agewiseliving.com/ or by calling toll-free (877) AGE-WISE. Barbara E. Friesner is the country\’s leading Generational Coach and expert on issues affecting seniors and their families. She is an adjunct professor at Cornell University, where she created and teaches “Seniors Housing Management” at Cornell\’s School of Hotel Administration.