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Planning for retirement when considering just yourself can be stressful. But what happens when your clients realize their retirement plan may be further complicated due to caring for aging parents or a special needs child?
According to the AARP and the National Alliance for Caregiving 2025 joint report, roughly 1 in 4 American adults are caregivers. Here’s what I’m telling my clients to help them prepare.
Key Takeaways
- Have open conversations with members of your family.
- Be clear about caregiving roles and responsibilities.
- Prepare a comprehensive retirement plan and estate plan.
- Understand your long-term care options.
What I’m Telling My Clients
Have Open Conversations With Your Family
Adult children are often the primary caregivers to aging parents. Clarifying roles and responsibilities early, especially if you have siblings, is an important step that will prevent confusion later.
Important questions include:
- Who will act as the primary caretaker for the dependent?
- What are the financial costs, and who is responsible for what?
Important
Family discussions about elder care can cover sensitive topics and may require multiple meetings. A mediator can be helpful.
Furthermore, parents often withhold information regarding their health and wealth. Lack of transparency can affect your ability to take advantage of employment opportunities during your peak working years. To protect your financial goals and life objectives, you must know where your parents stand, especially if they need your financial assistance and availability to help them as caregivers.
Complete a Comprehensive Retirement and Estate Plan
A comprehensive financial strategy and an estate plan are critical to adequately preparing for retirement. If you are already subsidizing your parents’ standard of living, you must consider how their long-term care needs could affect your own.
Unless you create a holistic financial plan that considers your parents’ needs, you may experience financial hardships as you age.
Fast Fact
Work on an estate plan for your aging parents so that you are clear on future obligations.
Understand Long-Term Care Options
Many families assume Medicare or Medicaid will completely cover their long-term care needs. This is a misconception. It’s essential to understand the difference between these two when preparing for your family’s future needs, and understand what they do and do not cover.
- Medicaid: Designed for people near the federal poverty level with limited income and virtually no assets. If you have more than the acceptable limit, you may need to spend down assets to qualify.
- Medicare: Available at age 65 or with disability benefits, but it only covers long-term care in limited situations, such as a stay in a skilled nursing facility. After 100 days, coverage stops entirely.
Instead of planning to rely on these programs, make sure your financial plan includes long-term care planning, as well.
The Bottom Line
Caring for an aging parent can be overwhelming, both emotionally and economically. Working together can help the caregiver plan more effectively for their retirement while offering their parents an improved quality of life during their later years.
