October 24, 2019, Market Watch - As though preparing for your own retirement isn’t enough, some people may need to start saving for their parents’ old age too, a recent study suggested.
More than half of people age 40 and older have not discussed aging with their parents, and 84% have nothing saved for their parents’ future should they need it, according to a study conducted by Mavencare, a home care provider. Still, nearly six in 10 respondents said they’re worried about their parents aging and another 58% said the cost of care, in terms of a caregiver, is a major concern. “Saving for parents old age is extremely challenging since most people have enough trouble handling their own retirement savings and health care concerns plus requirements from their children,” said Rand Spero, president of Street Smart Financial in Lexington, Mass. “One might ask, how many generations can we support?”
Health care in retirement is a major expense, and it only gets more expensive as a person ages. A 65-year-old couple retiring in 2019 can expect to spend $285,000, out of pocket, for health care in retirement, according to Fidelity Investments, but that figure does not include long-term care, such as having an in-home aide or going to a skilled nursing facility.
Many American adults today are in the middle of two generations that may rely on them. Someone in their 40s or 50s could still be assisting children through college or the first few years of adulthood, while simultaneously caring for elderly parents, financially, emotionally or physically, if they live nearby. Generation X is currently the generation caught in the middle — known as the “sandwich” generation — but they also need to focus on their own retirements, or they risk having too little stashed away for their own futures.
Family members should be open about their expectations for care and financial assistance in old age, said Howard Pressman, partner at EBW Financial Planning in Vienna, Va. “Increasingly, the success of one’s financial plan is dependent on family members being financially prepared as well,” he said. “If a relative needs money, this could put tremendous pressure on my client’s plan and in extreme cases, blow it up.”
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