If you’re like many sons and daughters, you’ve often thought about everything your parents have done for you. On a financial level alone, they probably worked hard to support you when you were a child, perhaps put you through college or helped you buy your first home.
While it may seem impossible to return the favor, you may need to if your parents need help on a day-to-day basis. You are not alone; nearly a third of all U.S. adults provide care to someone who is ill, disabled or aged, according to the Family Caregiver Alliance.
If you are considering becoming a primary or partial caregiver for your parents and taking one or both of them into your homefinancial considerations before they move in, including health care costs and ensuring your home can accommodate their needs. The Pew Research Center recently reported that nearly 23 percent of adults have given financial support to an aging parent in the past year.
Fortunately, sound financial planning can go a long way to maximize the health and wealth of the whole family. Feeling secure in your finances can reduce stress so you can focus on the emotional and logistical aspects of this life change.
Plan on planning
By 2030, the U.S. Administration on Aging estimates the population of Americans age 65 and older will be more than double what it was in 2000. And yet, many families are not planning ahead.
“With medical care becoming increasingly effective, people are living longer, which oftentimes makes it more difficult to plan for financial events that are going to come in your 80s, 90s or beyond,” says Robert Pace, a Financial Advisor at SunTrust Bank, SunTrust Investment Services, Inc., in Savannah, Ga. With this trend in mind, he recommends his clients manage their money in “buckets,” including one dedicated to money needed for caregiving. The size of this bucket depends on your parent’s needs and resources.
Unfortunately, he finds that most adult children have not thought about or contributed to the caregiving bucket before they need those funds.
“It’s usually not something we think about when Dad and Mom are in their 50s, but that’s when we should start planning,” Pace says.
It’s important to fill this bucket early and understand your parents’ life circumstances and risk factors so you can head off financial—as well as emotional —challenges in the event that they suddenly require a new level of support, Pace says.
Plan in advance for caregiving costs and a parent’s potential move by taking the following into consideration when making a financial plan:
Ultimately, families have two choices: Be reactive or proactive. Pace recommends the latter. “Planning ahead will make the transition a lot easier, both financially and emotionally,” he says.
This article is general in nature and does not constitute legal, tax, or investment advice. SunTrust makes no warranties as to accuracy or completeness of this information, does not endorse any non-SunTrust companies, products, or services described here, and takes no liability for your use of this information.