In many cases Baby Boomers not only have to plan for their own financial future but also that of their parents. Not all Baby Boomers are going to inherit money from their parents; many will have to assist their parents both financially and personally.
There is a distinct gap between the level of financial assistance that parents of adult children think they want and what they really need.
In a recent survey conducted by Toronto-based Bayshore Home Health the following was revealed:
Almost one in four adult children didn’t know their parent’s annual income.
One-quarter of adult children think their parents will ask them for financial help to get through the recession, though only five per cent of parents plan to ask for assistance.
Two-thirds of grown children are more willing to give financial help than their parents’ think they would be.
Fully 73 per cent of aging parents felt they didn’t need help around the home, only 43% of their adult children agreed.
Those aged 65 to 85 will do whatever it takes to avoid moving into nursing homes or extended-care facilities. Three out of four children say they’re willing to care for their parents to help them avoid moving to such institutions.
While 88 per cent of aging parents don’t want to be a burden to their families, 65 per cent of the adult children would accommodate them moving in and 32 per cent think their parent is too embarrassed to ask for help.
Clearly there is a disconnect between what adult children and their parents think about the level of financial assistance they need, this can probably be attributed to a lack of communication. This lack of communication exists due to the nature of the topic, for many parents of Baby Boomers discussing their personal finances is taboo.
Open up a line of communication
The earlier these discussions can start the better; a financial advisor is a good resource to use as a third party and facilitator of these discussions.
The advantages of
As a general rule of thumb planning early always make sense. By planning early you can take advantage of many opportunities and avoid some missed ones. A recent example was an adult child that found out that their aging parent cancelled a life insurance policy that they had for many years because they believed that their adult child did not need the proceeds. The adult child was prepared to pay the insurance premium as they still had some debts.
The next step
Open a line of communication. Some of the areas that need be discussed are:
• Health — specifically care options if health deteriorates;
• Estate Planning — wills, power of attorney;
• Life insurance – potential for children to assume existing policies;
• Personal balance sheet showing all assets and liabilities;
• Income requirements — considering all sources of income;
• Property tax deferral to free up additional income;
• Tax reduction strategies.
If you are a Baby Boomer with aging parents or if you are a parent with Baby Boomer children then you need to start having dialogue with regards to financial assistance and planning.
Stuart Kirk is a Wealth Advisor with Precision Wealth Management Ltd and an Investment Funds Advisor with Manulife Securities Investment Services Inc. The opinions expressed are those of the author and may not necessarily reflect those of Precision Wealth Management Ltd or Manulife Securities Investment Services Inc. For comments or questions Stuart can be reached at HYPERLINK “mailto:email@example.com” firstname.lastname@example.org or 250-954-0247. Website www.precisionwealth.ca