Preparing for the retirement years means different things to different people. Some folks see themselves using their newly gained free time to travel the world, spend time with family, relax and enjoy life. For others the prospect of retirement looks more like a stressful nightmare, with increasing health problems, serious financial issues, and worries about caring for disabled family members in an increasingly volatile economy.

Surveys conducted by the Charles Schwab Corporation in 2008 showed that most retirees think they need at least $500,000 to live comfortably in retirement, yet that is twice the median net worth of today’s workforce entering retirement. Only 25% of Americans say that they clearly understand how Social Security works and only 11% understand their Medicare healthcare options. 78% of Americans have said that financial education in schools is lacking and they have had to acquire financial management skills on their own.

In addition, the ‘sandwich effect’ or individuals caring for both parents and children at the same time, is becoming even more complex. While four out of ten people believe they will need to financially support their parent’s as they retire, one in four also believes they will need to financially support a sibling. Most will still be assisting their children get started in life, all while their own future Social Security and retirement benefits are in jeopardy of being significantly reduced. It’s a stressful position to be in.

Knowledge is power

It’s a great idea to start planning ahead not only for your own financial security during retirement, but for helping your parents by making sure they have appropriate plans in place to cover their care as well. You can start by educating yourself on the following topics:

Social Security – Understanding your own benefits can help you navigate the system for your parents and others. Start by creating your personal Social Security account here:  www.ssa.gov it will show you your accrued benefits over time. It’s a good idea to check it once a year. They also have great education articles to help you understand your benefits.

Long-Term Care insurance –  Most health and disability insurance won’t cover long-term care, or only cover it for a temporary period. A long-term care insurance policy can help you pay for nursing home care, home health care, or assisted living if you expect to be in care for an extended period of time. Learn more about long-term care insurance.

Reverse Mortgages –  A reverse mortgage is a type of home loan that allows older homeowners to access the equity they have built up in their homes, and defer payment of the loan until they pass away, sell, or move out of the home. It’s not an option for everyone, but it can ease the burden from elderly homeowners. Learn more.

Medicare/Medicaid Health Options – Medicaid is managed by states and is based on income. Medicare is managed by the federal government and is mainly based on age. But there are special circumstances, like certain disabilities, that may allow younger people to get Medicare. Learn more here.

Assisted living and Full-time care – There are many levels of cost and care associated with senior living options. Here is a place where you can get more info. www.caring.com

Funeral planning – We all know that we will die some day and that the costs associated with end of life arrangements can be high. It is a good idea to start today planning and paying for those expenses. The benefit is that not only will you save your loved ones those decisions and costs, but often you can lock in today’s rate for services, even if you’ll be around for another 20 years or more. Your local funeral home is a good place to start to see your options.

Trusts – Trusts are financial arrangements where a representative holds and manages your assets. There are different kinds. They are designed to take care of your needs while you are living and distribute your assets once you pass away. There are also tax benefits involved in passing assets to heirs.  Learn more.

SSA and SSDI Disability benefits – The Social Security and Supplemental Security Income disability programs provide assistance to people with disabilities and can help individuals who can’t work before they qualify for standard social security. Learn more.

Start Planning Today

Just over one of every eight Americans between age 40-60 is both raising a child and caring for a parent in their home, and an additional 10 million adults are caring for their parents or disabled siblings from a distance. According to the census bureau there will be over 70 million adults over the age of 65 by 2030, and no one can predict how future events will change the state of elder care.

Caring for another adult of any age can take its toll both emotionally and financially and the financial aspects can have repercussions long after an elderly parent passes. If you are in a situation where you could find yourself in a position to care for someone else in addition to yourself heading into retirement, it’s even more important to have a plan.

1. Make a list. Find out in detail what your parents/disabled siblings have in terms of savings, assets, income, insurance and legal protection. Review and list their bank and financial arrangements. Look into their medical coverage, social security, and pension benefits.
2. Gather important documents from them such as their social security and drivers license numbers, Medicare or Medicaid account numbers, insurance information especially any long-term care insurance, their will, doctor contact information, a list of medications, the deed information for their home, trusts, birth certificate and other relevant information.
3. Make sure they have a durable power of attorney for both financial and health care and a living will. This will help you have a say in your parent’s care if they are unable to make decisions.
4. Review your own financial situation. List your assets. Figure out how much money you will need to help with your children’s education and your retirement. Create a financial plan with a reputable financial planner if possible. They can help you locate areas you may have missed.
5. Prepare for the unexpected. If you are working look into getting disability insurance to cover yourself and those you care for in the event that you are unable to work. Get a life insurance policy with your dependents as beneficiaries.
6. Understand the guardianship process. If your aging parent, disabled sibling or disabled adult child is unable to make decisions for themselves, you may have to assume guardianship.
7. At tax time look closely at medical expenses. If your parent or sibling qualifies as a dependent you can claim some deductions.

If you are unable or unavailable to help on a long-term basis, there are services available to help manage the daily financial affairs of an elderly parent or disabled adult. FFEF has been approved by the Social Security Administration to provide a certified Organizational Representative Payee Program offering money management and bill-pay services to individuals in need of Social Security, Veterans Affairs, or pension fund management and representation because of age, illness, addiction, or physical or mental disability. It’s easy to get started, just call one of our counselors at 877-789-4172 and find the help you need. www.ffef.org

Here are some additional resources for you:

• Unexpected Occurrences: Protecting your loved ones, assets, and finances
• What Is Long-Term Care? 
• Financial Concerns and Caring for the Elderly, Family Financial Training Course, Vol. 12