What Gen X Needs to Know About Their Aging Parents' Finances
These six steps can help future caregivers know where aging parents stand financially as well as help them to avoid surprises that could imperil their own retirement.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
According to a report from the National Caregiving Alliance, more than 11 million Americans are caring for an adult family member while also raising children at home. This sandwich generation, primarily comprised of Generation X couples, faces the challenge of balancing multigenerational family responsibilities while catering to their own retirement planning needs.
Parenting is neither cheap nor easy. When you layer in the unplanned expenses that can come with supporting elderly parents, the situation can quickly derail or delay a couple’s retirement plan. Yet, according to a Wells Fargo survey, over a third of Americans with aging parents have not discussed their parents’ current or future financial situation.
That is why Gen X needs to understand their parents’ finances intimately. So here are some practical steps Gen X should take, ideally while their parents are still living independently, to empower themselves and their aging parents while helping to avoid unpleasant financial surprises in the future.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Know what assets they have
The first step in understanding your parents’ finances is to know what assets they have. This includes any retirement accounts, investment portfolios, real estate and other assets that may be part of their estate.
You should also know their debts, including mortgages, credit cards and other loans. This information can help you understand their financial situation and plan for their future needs.
The website eForms offers a simple, complimentary form to assist with this process.
To conduct a more custom and comprehensive asset audit, consider consulting with an estate attorney or financial planner.
Understand their income
It's also important to understand your parents’ income sources, such as Social Security, pensions and any other sources of retirement income. This can help you plan for their future expenses and ensure they have enough income to support their needs.
You should also know if they have any part-time or freelance work that provides additional income.
Discuss their estate plan
Another critical area to discuss with your parents is their estate plan. This includes their will, any trusts they have established and any other legal documents that outline their wishes for their assets after they pass away.
Yet, according to Caring.com’s 2023 Wills Survey, less than half of Americans over the age of 55 have their estate planning documents in order. Understanding their estate plan can help you prepare for potential inheritances and ensure their wishes are fulfilled.
Plan for healthcare costs
As your parents age, they may need additional healthcare support, including long-term care. This can be expensive, and planning for these costs in advance is essential.
You should discuss with your parents how they plan to pay for any potential healthcare costs and help them develop a plan to ensure they can afford the care they need.
Be aware of potential financial abuse
Unfortunately, older adults are often targeted by scammers and fraudsters who try to exploit them for financial gain.
According to the FBI's Internet Crime Complaint Center, elder fraud cost Americans over the age of 60 more than $1.7 billion in 2021. Therefore, it's important to be aware of the signs of financial abuse and take steps to prevent it from happening to your parents. This may include monitoring their accounts for any suspicious activity or helping them avoid scams and fraudulent schemes.
Work with a financial adviser
Finally, it's a good idea to work with a financial adviser specializing in retirement planning and intergenerational wealth transfer. A financial adviser can help you navigate the complex financial landscape of caring for aging parents while also managing your own retirement savings.
In addition, they can provide guidance on estate planning, retirement savings, tax implications and other financial matters that may arise.
It is also important for you to form a relationship with your parents’ financial adviser if they have one. The financial adviser can assign you as a trusted contact on your parents’ investment accounts or insurance policies. As the trusted contact, you can be alerted if an elderly parent changes behavior, such as makes requests for large withdrawals. You can also be contacted if a parent misses payments — such as on a long-term care insurance policy — or simply does not respond to requests.
As Gen Xers take on the role of caring for their aging parents, it's essential to understand their finances and plan accordingly. By following these tips and working with a financial adviser, you can help ensure that your parents' financial needs are met and that you are prepared for any potential financial challenges that may arise.
-
Quiz: Do You Know How to Avoid the "Medigap Trap?"Quiz Test your basic knowledge of the "Medigap Trap" in our quick quiz.
-
5 Top Tax-Efficient Mutual Funds for Smarter InvestingMutual funds are many things, but "tax-friendly" usually isn't one of them. These are the exceptions.
-
AI Sparks Existential Crisis for Software StocksThe Kiplinger Letter Fears that SaaS subscription software could be rendered obsolete by artificial intelligence make investors jittery.
-
Social Security Break-Even Math Is Helpful, But Don't Let It Dictate When You'll FileYour Social Security break-even age tells you how long you'd need to live for delaying to pay off, but shouldn't be the sole basis for deciding when to claim.
-
I'm an Opportunity Zone Pro: This Is How to Deliver Roth-Like Tax-Free Growth (Without Contribution Limits)Investors who combine Roth IRAs, the gold standard of tax-free savings, with qualified opportunity funds could enjoy decades of tax-free growth.
-
One of the Most Powerful Wealth-Building Moves a Woman Can Make: A Midcareer PivotIf it feels like you can't sustain what you're doing for the next 20 years, it's time for an honest look at what's draining you and what energizes you.
-
I'm a Wealth Adviser Obsessed With Mahjong: Here Are 8 Ways It Can Teach Us How to Manage Our MoneyThis increasingly popular Chinese game can teach us not only how to help manage our money but also how important it is to connect with other people.
-
Looking for a Financial Book That Won't Put Your Young Adult to Sleep? This One Makes 'Cents'"Wealth Your Way" by Cosmo DeStefano offers a highly accessible guide for young adults and their parents on building wealth through simple, consistent habits.
-
Global Uncertainty Has Investors Running Scared: This Is How Advisers Can Reassure ThemHow can advisers reassure clients nervous about their plans in an increasingly complex and rapidly changing world? This conversational framework provides the key.
-
I'm a Real Estate Investing Pro: This Is How to Use 1031 Exchanges to Scale Up Your Real Estate EmpireSmall rental properties can be excellent investments, but you can use 1031 exchanges to transition to commercial real estate for bigger wealth-building.
-
Should You Jump on the Roth Conversion Bandwagon? A Financial Adviser Weighs InRoth conversions are all the rage, but what works well for one household can cause financial strain for another. This is what you should consider before moving ahead.
