This means that boomers are rapidly aging to a stage in life where they may need help or just don’t want to live alone. And no one wants to talk about it, it seems. About 42% of Americans would rather discuss their parents’ funeral plans than finances, according to a recent survey by Wells Fargo and Ipsos.
Honestly, it’s terrifying. Not having a direct conversation about a parent’s ability to retire or an older child’s ability to support an elderly parent can create financial risk for all parties involved. This is especially true if the need for care is unexpected and there are no safeguards such as affordable housing, long-term care insurance or adequate health coverage.
In 2021, an estimated 48 million people provided unpaid care to an older family member or friend; 80% of them had regular out-of-pocket expenses, with a typical annual cost of $7,242, according to the AARP survey.
Before anyone comes into care, it is important that parents and older children discuss what the future could look like and what it should be.
Multigenerational households are a cultural expectation around the world but not necessarily the norm for American families. However, their economic environment – or simply the reality of aging – can force parents, older children, spouses and children to live together under a roof. It is important that those who do not have a cultural expectation of multigenerational households begin to put the system into a harmonious dynamic. First step? Frank talks about financial realities and expectations. Second step? There are many health limitations.
The discussion should focus on how many parents can prepare financially for retirement. The average monthly Social Security benefit for workers retiring in November 2022 was just $1,677.52, according to the Social Security Administration. It probably won’t cover the cost of living for most retirees, even though Social Security is the primary source of income for retirees.
In 2017, 49% of adults ages 55 to 66 had no personal retirement savings, according to the U.S. Census Bureau’s Survey of Income and Contributions. the program. Although this is an old figure, it is hard to imagine that there has been much improvement due to the pandemic, stock market volatility, inflation and general demographic age. Even if a parent has additional benefits in a defined benefit pension or defined contribution plan, it’s important to run the numbers and determine if it’s enough to allow for retirement. milk to cover the foundation and age with integrity.
Unfortunately, this is one area where many parents are hesitant to talk to their grown children. Of course, many parents have been able to work hard their whole lives, doing what they see fit to build a retirement fund and take care of their family, but their wallets may still run dry. . No one wants to feel embarrassed or ashamed.
Despite the discomfort, it’s important for parents and older children to have conversations about retirement and estate planning, especially before a triggering event such as an accident occurs. traffic or health scares. Sharing expectations and planning ahead will allow time to prepare financially and mentally for the changes ahead. It is also worth researching whether the care provided by an adult child to one parent can be taxed as an “other dependent.”
Older children and elderly parents need to share financial information to determine how best to provide care and support. Cohabitation in multigenerational households can alleviate financial stress for both generations by consolidating financial resources. There are also the added benefits of helping each other in terms of household work, childcare and eliminating the risk of social isolation.
However, like sex for unmarried couples, strengthening resources does not necessarily mean getting together. Both parties need to discuss how they want to split and pay bills and how they will manage their finances after the move.
Building a multigenerational household requires setting new boundaries, especially around raising young children. In general, the children’s parents set the rules that the grandparents must respect.
Grandparents certainly have their own limitations, including not being an illegal babysitter, but they should have an open discussion with their older children about their preferred parenting and discipline methods. . An older child may choose a different parent because of the way he was raised. This is not an indictment of the parenting style of the grandparents, and the criticism of boomer parents does not feel attacked or judged because their children choose to parent differently.
On the other hand, older children need to know how they are trying to raise their parents. Yes, parents are getting old and may be reaching a point where they can no longer do the work they used to do physically or mentally, but educating them is not the answer either. It is important to allow elderly parents to remain independent and to create an environment where they can still provide as much as possible.
No matter how well a family works, there are bound to be disagreements and uncomfortable moments during the process of creating a multigenerational household, or simply trying to provide financial, physical support. or emotional for elderly parents. The goal is to create an environment where both sides are respected and, I would say, treated as equals.
This column does not necessarily reflect the views of the editorial board or Bloomberg LP and its owners.
Erin Lowry is a Bloomberg Opinion columnist covering personal finance. He is the author of three “Broke Millennial” series.
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