Last Week’s Question of the Week: How many credits do you need to have to qualify to receive retirement benefits through Social Security?ANSWER: You must earn 40 Credits (equals 10 years of work) to qualify for retirement.
HOST: Before we get started with today’s topic, please let our listeners know how they can get help from a firm like yours? Call to make an appt? Is there any cost?
KLAAS FINANCIAL: Klaas Financial is 42 years old! We are an independent hybrid advisory firm; two offices in the Stateline area. We are a mid- sized firm that focus’ on fee-based planning for individuals who are planning for eventual retirement. We have 3 divisions to help direct future retirement of individuals (KIP & KLAAS 360) and also assist companies with their 401k plans (KLAAS 401k).
The first meeting is always complimentary, and a second opinion can’t hurt. Always good to make sure that you are on track for your goals.
Klaas works often as a quarterback for your retirement, which does separate us from other firms. We help direct YOUR TEAM (Accountant, Investment Services, Insurance Agent, Estate Planning Attorney, Banker)
HOST: So, your topic today revolves around caring and paying for aging parents, and how that might affect your retirement?
KLAAS FINANCIAL: Yes, this really can have some impact on our listeners and their future portfolios and retirement plans. So, the key words here today are longevity and planning.
With longevity, we are seeing the effects that many of us in our 50’s & 60’s are caring either financially or physically for our parents who are in their 70’s, 80’s and 90’s. This is certainly role-reversal. While caring for your parents is certainly an important and compassionate thing to do, we want to highlight some realities associated with this, especially as you are working on your own retirement planning.
Stress: First, recognize that caring for an aging parent is often a stressful undertaking and time consuming. It can take a huge emotional toll on everyone in a family, but for women the financial impact can hit especially hard.
Long-term impact for caregivers: Understand the long-term impact especially for women. The reality is that 2 out of 3 caregivers are women, and women lose valuable time outside the workforce causing them to have fewer contributions to pensions, Social Security, and other retirement savings vehicles. Fact: Daughters tend to take more of the physical caregiving aspects for their parents, while sons tend to help more financially.
How many of us are caregivers? According to a study by MetLife that looked at the economic impact of care for seniors, the number of adults taking care of aging parents has tripled in the past 15 years, and a full 25 percent of grown children are helping their parents by providing either personal care or financial assistance.
Financial Costs: When adult children quit their jobs, or cut back on hours, they not only give up immediate income. They also reduce the amount they’ll eventually see in their Social Security checks. They might give up additional years of accumulating pension benefits. Lost wages, Social Security benefits and pension benefits, caregivers’ losses total $3 trillion. The average adult child who is a caregiver loses $303,880 in lifetime wages and retirement benefits.
HOST: So, what can we do as adult children to help our parents in advance?
KLAAS FINANCIAL:
Start a Discussion. Talking with your parents while they are healthy gives them more control over what happens to them if they eventually need care either in their home or assisted living. While it can be tough for parents in their 70s or 80s to open up about money troubles to their grown kids in their 50s or 60s, you can’t come up with a financial plan without knowing what you’re working with. Be open in your conversation with your parents, let them know that you don’t want them to struggle or be a burden on anyone. Include discussions with siblings so that everyone is on the same page.
Review their desires: Do they want to continue living in the same community? Do they eventually want to move closer to children or grandchildren? Are there any renovations they need to make on their house?
Review their insurance plans: If your parents’ savings and assets aren’t enough for their retirement, you may end up providing care and financial help, derailing your own future plans as a result. Help them plan for Long-term care or other insurance programs.
Review their estate planning: Make sure that they have their estate planning documents up to date and their burial wishes understood by the whole family.
HOST: What about protecting your older parents from people trying to take advantage of them?
KLAAS FINANCIAL: Yes, this is very important.
Don’t let your parents fall for scams: If your parents are trying to boost their nest egg, they may be tempted into making investments that promise huge returns but are actually scams targeting the elderly.
Declining mental health may also affect their ability to make wise decisions, which is why scammers treat retirees as prime targets.
Keep track of where and how your parents are spending money, become involved in helping them study investments or “deals” and remain alert for any suspicious activity.
Consult with your parents together with their financial planner to understand the financial reality for your parent’s future. Or, perhaps bring them to your financial planner. Having a professional may help the conversation.
Care for Yourself
- When adult children provide care for aging parents, research has found, their own health suffers. People who are family caregivers are more likely to suffer from depression, stress, heart disease or alcohol abuse.
- They are less likely than their peers without caretaking roles to take preventive health steps, like mammograms, colonoscopies or even blood pressure readings. It adds up to a population so involved in looking out for the health and well being of others that they increase their own risk of dying.
- Remember that if your health fails, you won’t be able to continue to care for your parent. So, get yourself to your own physician when you feel ill, or simply too stressed out for anyone’s good.
Catch C.J. Klaas and Maleeah Cuevas on Money in Motion every Thursday on Madison's 1310 WIBA from 8:05-8:35am.
