Son, It’s Time We Sit Down and Have A Talk…About MY Retirement

You’ve probably heard this from your parents and finance bloggers alike….

SAVE FOR YOUR RETIREMENT.

SAVE FOR RETIRMENT! SAVE FOR RETIREMENT!  

Yawn.  That refrain is getting old, but you want to know what else is getting old? YOUR PARENTS.

Parents are such excellent nags, right?  But heck, they love us.  That’s why the got us a lame pink piggy bank at age 5 that we hated, then they got us a cooler robotic bank when we turned 6 just so we’d think saving money is cool.  They want what’s best for us,  and want to make sure that we’re going to be okay when they’re gone.  But what about them, and what about the (hopefully) long amount of time before they’re gone?  Are THEY ready for retirement?

I think it’s realistic to fret about our own finances and wonder how we’re going to manage to sustain ourselves in our golden years.  Chances  are, a mentor or family member has had that discussion with you to make sure you’re setting yourself up for financial success years down the road by starting early with a ROTH IRA, 401K and an emergency fund- but have you had this discussions to see where your parents are at?

I realize the difficulty in having a conversation about financial security and retirement with your parents but if they get ill, are short on cash or are unable to care for themselves, that burden rests on you.  

Why do I bring this up?  This year will mark the first of the baby boomers hitting retirement age, and if your parents haven’t retired yet, in at least the financial sense (since our finances are usually planned for by decade, not by year), they will be retiring relatively soon.

Don’t assume anything about your parents (especially when they tell you how well behaved they were as kids) because you know what happens when you assume?

You make an ass out of…oh nevermind.

I want to share with you my family’s story– you’ve heard me talk about my Gram. I loved that woman, and while we lived together- she in her mid-80’s me in my early 20’s, we had these talks.  We discussed her money and what was to be allocated to what expense if ever she got sick.  After her first serious hospital visit, she gave me Power of Attorney and my name was placed on many of her accounts- I knew exactly what money she had and she assured me it would be enough to cover her through the rest of her life.

Problem was, it wasn’t enough.  Even with a pension, retirements savings and her life savings plus insurance and Medicaid, 6 short months of illness nearly wiped her out.

What we didn’t anticipate was the cost of care and had no way of knowing that in less than 6 months she’d be nearly broke.  My Gram was only sick and needing serious help and care for 6 months.  She fell, broke her wrist and needed corrective surgery.  During surgery she coded and was revived, and after her return from the hospital we had to find an assisted living facility (which was not covered by insurance).

We came to realize the cost of living for anyone that needs even moderate special care was astronomical.  

OH, and did I mention this was right about the time the economy collapsed?  We had to tell Gram not to watch CNN because it turns out AIG, had created a ripe mess for our family and her money.  Yep.  Sh*tstorm 2008.  Good times.

My Gram wasn’t too bad off at first either- she just needed help with bathing and using the restroom.  To get around in the house required one to use the stairs (another problem).

Chances are your parent’s insurance will not cover in home care and they may not qualify for Medicaid sponsored assisted living facilities or rehabilitation centers for care and treatment.  The cost of this care will either be astronomical or someone will have to provide that care, are you prepared?
We have a tendency to assume that our parents and older loved ones have it all together simply because they raised us- but there is a lot of confusion, emotion and fear behind preparing for retirement and aging.

I realize that this totally is the most un-fun discussion you could ever have a loved one, but trust me- when it happens you will feel scared, unprepared and insecure- having a discussion now will make it easier.

Possible Questions to Ask Your Parents:

• When do you plan on retiring?  Will you maintain your current cost of living?

• Where do you stand on outstanding loans: mortgage, car, other toys.

• Do you have sufficient insurance coverage?  Does it cover care and rehabilitation if you’re sick, injured or need surgery?

• When do you plan on receiving Social Security? Will there be a gap between the age you can collect SS and when you stop working?

• Have you maxed out your contributions for all your retirement accounts, if not, why?

• Where do you want to live after retirement?

• If the financial necessity arises, are there options to generate cash (selling assets, cashing out accounts).

• If the need arises, are there any expectations in the family as to who would step up to handle your care and your finances?  (Note: Don’t assume that as a child you have automatic legal rights to handle their finances or make medical decisions.  In some circumstances, having legal documentations that you would be the one in charge is a smart move)

• Do you have a Will & Trust?  Who do I contact in an emergency?

I realize these conversations are not fun- Gram and I had plenty of these talks and as prepared as we tried to be, there is still a lot of grey area so do the best you can to be prepared.  Transparency and understanding is key to getting through rough financial times and emotional unrest as easily as possible.

You’re smart, continue to plan for your retirement and make sure your parents are ready for theirs.  They took good care of us, and in this bad economy, let’s make sure we do the same for them.