Many Gen Xers and Millennials are worried about having to financially support their aging parents while simultaneously trying to save for their own retirement and for their children to go to college. In addition, quite a few are still paying off their own student loans.Figuring out how to help their aging parents with their finances creates a new level of money-related stress.
We’ve watched our own parents struggle to take care of our grandparents, many of whom were unprepared to live quite as long as they did. We’ve seen grandparents outlive their savings, lose everything to nursing homes, and struggle to pay for the expensive medications they need. We’ve observed our parents give up their free time, and in fact, their lives to care for aging parents who are increasingly unable to live alone but don’t have the money to hire help or move into assisted living.
We’re watching this, all the while knowing that this is quite possibly going to be us in the future. We look at how little our parents have saved and wonder what will happen if they have a stroke or get Alzheimer’s. The thought of trying to plan for such unknowns throws our minds into complete chaos as we attempt to figure out what the heck to do with our limited income. Should we be saving for our parents? What about our own retirement? It seems like a giant bucket with holes that we can’t fill fast enough.
When it comes to supporting our aging parents, we are right to worry. According to the 2019 Planning and Progress Study from Northwestern Mutual, 17% of Baby Boomers have less than $5000 saved for retirement and 20% have less than $5000 in savings. The numbers for Gen Xers aren’t much better.
Also, things like rising health care costs, longer life expectancies, stock market volatility, and an insufficient social safety net are threatening the financial security of all but the very wealthy.
It’s not entirely our parents’ fault. During their early and prime working years, they were taught to expect that social security would take care of them or that the company to which they devoted their lives would pay them a healthy pension to take care of them in retirement. Then they watched as they got close to retirement as pensions failed and society moved to a system where we’re responsible for our own retirement savings. Our parents were not taught from an early age that they’d be taking care of themselves once they stopped working.
Added to that is the problem that American culture supports and even encourages spending. The health of our economy depends upon that which is least healthy for families: buying things. In late 2001, President Bush made a speech suggesting that the most patriotic thing one could do was to participate in the economy. Spending money would support the American economy. It was how we keep the terrorists from winning.
Spending money is also a cultural and social activity. We go to the mall to socialize and pass time. We’re bombarded with advertisem*nts and Facebook posts showing us all the things our friends have and do. Sometimes it seems as though our most significant national holiday is not the one where we eat turkey and express gratitude, but rather the one where we run each other over to get in line for the best deals.
I’m certainly not the only one who has heard many stories of parents spending their lives buying jet skis, extra-large homes, and expensive vacations only to end up with nothing saved for retirement. Just fill up one credit card and move on to the next is an all-too-common philosophy.
So, yes, we have good reason to worry about our aging parents and their finances. It is a glum situation and it doesn’t look like it will be improving anytime soon.
The good news is that Medicaid does provide a worst-case-scenario backup for many of America’s seniors and it isn’t the worst thing that could happen. Depending on where you live, you might even be pleasantly surprised with the quality of life one can get in a nursing home paid for by Medicaid. (Though this isn’t a universal experience.)
Over the next few weeks, I’ll be publishing a series of blog posts delving deeper into ways that Gen Xers, Millennials, and others can help financially support their parents as they age. We’ll look at how supporting aging parents fits into your own financial priorities, how to have conversations about money with your parents, and some tips and ideas for helping your parents with their financial situation. While the outlook may be bleak for many, there are things we can do to alleviate some of the stress and improve the situation.
This is the first article in a series on aging parents and finances. Check out the other articles in this series:
Part 2: How Caring for Aging Parents Fits into Your Financial Priorities
Part 3: How to Talk to Your Parents about Money
Part 4: How to Help Your Aging Parents with Money
