Deborah Adeyanju, CFA, Senior Advisor & Impact Strategist
An important part of the financial planning work we do for clients, particularly Gen X ones, often involves helping them plan to financially support aging elders. Usually this means parents. When there are inlaws or remarriages in the mix, it can involve two sets of elders with vastly different needs – financial and otherwise.
Whatever the specific circumstances, among the challenges caring for elders presents are determining what type of help is needed, when and for how long it might last, the most effective way to provide help, and how to work that into your financial plan. For our Black clients in particular, this can take on an extra layer of complexity, because it often comes on top of other financial assistance they are providing to family members. And thanks to the racial wealth gap they may be the first, and/or only member of their family to have achieved affluence, and so don’t have family assets to draw on. We’ve compiled a checklist of things to do and know to help you anticipate and manage the challenges.
Your checklist for support planning
✔Talk about your elders’ wishes, needs, and fears. This can be the hardest step to tackle because it requires communicating openly and honestly about money, physical decline, finances, dependency, and death. These are precisely the topics that can be particularly uncomfortable for elders to acknowledge, let alone discuss, with their adult children.
✔Make sure your loved ones have an estate plan in place. To avoid future nightmares (legal, financial, emotional) you need to understand what their plans are, including where to find key documents and what’s in them, while everyone is healthy and capable of making decisions for themselves
✔Decide how you want to provide support. Whether it’s helping manage their finances, supplementing their cash flow, moving them in with you, or mainly providing emotional support, build it into your budget and make room for it on your calendar. This might mean negotiating with your partner, if you have one, and/or siblings if you have them, to make sure you’re all on the same page.
✔Plan as far ahead as you can, if circumstances allow. A 2021 Vox piece laid things out pretty starkly. In 2019, roughly 41.8 million people (16.8% of the U.S. population), were providing care for an adult over 50. That’s up from 34.2 million (and 14.3%) in 2015. Women typically bear the brunt of the physical, emotional, and financial weight of caregiving in the U.S. According to AARP’s 2020 Family Caregiving Report:
women make up 61% of caregivers for elderly adults;
the average age of an adult caregiver was 49, with members of Gen X accounting for around 30% of them.
At one point or another, many of us will have elder caregiving responsibilities, whether directly or indirectly. The farther in advance and the more comprehensively you can plan, the more likely you may be to at least anticipate, and hopefully reduce the worst financial impacts.
✔Avoid completely stepping back from your career. Caregivers often dial back their paid work in order to cope with the demands. Beside the obvious disadvantages – loss of income and potentially savings, foregone retirement contributions, and for singles who can’t be covered under a spouse or partner’s insurance, loss of healthcare coverage, caregivers also face another more insidious impact. Often caregiving needs kick into high gear just as women are entering their peak earnings years.
Keep in mind too, that even though you might plan to spend only six months away from work, life has a way of throwing curveballs. Six months can easily turn into a year or two. During that span your lost income could exceed $500,000 – putting your own long-term financial health and goals at risk.
✔Be prepared to adjust your plan. Know that you’ll have to revisit whatever plan you come up with as things change. A parent who’s just fine living alone now may need or want to downsize later. Someone in robust health may have a sudden diagnosis that has them needing or wanting care sooner than you both expected or planned for. Even without a drastic change, over time, the type of support you give will likely change from help with bill-paying to taking over account management, from physical support like running errands to scheduling and attending doctor visits, to even hiring and managing an in-home caregiver.
This can understandably be financially and emotionally draining. As part of our holistic approach to financial planning, we help our clients quantify, prioritize, and balance their obligations in the context of their long-term financial goals, whether these include paying off student loans, buying property, or building a college education fund for their children while saving for retirement.
Are you financially supporting aging parents or other loves ones? For help creating a plan to make sure their needs are met while staying on track with your other life goals, please contact us at firstname.lastname@example.org.
GRID 202 Partners is an African-American and woman-owned Registered Investment Adviser (RIA) specializing in fee-based, comprehensive financial and investment planning for individuals, couples, businesses and institutions. We serve successful, ambitious professionals and business owners, mission-driven organizations, and households that are committed both to creating wealth for themselves and future generations and to aligning their financial assets with their social impact objectives.