New research from EMD Serono’s Embracing Carers initiative found that 54% of family caregivers said that the COVID-19 pandemic has worsened their financial health. To help pay for their parent’s medical and living costs, children may have to use money they were saving for retirement or their own children’s higher education. If a caregiver has to quit a full-time job, this may reduce their future Social Security benefits and keep them from saving for their own retirement at work.
There are a number of ways parents and children can work together to ease this financial burden for both sides. First, parents need to help document all of their financial information, including location of assets, titles and deeds, attorney and accountant contact information, and life and burial insurance policies. Before a crisis occurs, parents should assign healthcare and financial power of attorney to their children to allow them to make key decisions when they’re no longer able to able to do so on their own.
Parents should also consider getting long-term care insurance to enable them to receive skilled care in their homes without consuming all of their savings. Some policies can be combined with life insurance to provide death benefits to heirs if the long-term care benefits aren’t used.
Children need to be sensitive in the way they bring up these issues. Start by offering to do small tasks, such as opening their parents’ mail or making sure bills have been paid. When it’s time to make major decisions, frame the discussion as a gift between generations: Children give their time to help their parents deal with declining health, and parents provide the financial support and cooperation to prevent this assistance from becoming a burden. To help sort through these complex issues, parents and children may wish to hire a qualified fee-only fiduciary investment adviser. But it’s important to research their background and licenses to make sure they’re not members of the large community of scammers and criminals who prey on the elderly.
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