Talk about the finances now

Whether it’s you avoiding getting a handle on your finances or the one that you care for, a lack of financial preparedness will affect every single decision you make for the future. A few years ago I became incredibly focused on cleaning up my finances. The motivation, my Gpa, in his late 80’s, living paycheck to paycheck in a rundown house with bad plumbing. The tree in his front yard had grown into the sewage pipes causing toilet water to back up into the shower and spill onto the floor. My Gpa never bothered fixing anything because “I never planned to live this long.”

I never planned to live this long.

He is now 94 and lives in a one bedroom apartment about 3 apartment buildings down from me. My Gpa gets a decent amount in social security plus a pension from the US Railroad. When my Gma died, he received a quarter of a million dollars from her life insurance policy. He purchased his house in 1989 for $90,000. In 2017 he owed $156,000 on a variable rate mortgage and $10,000 on a home equity line of credit. He had to leave his home of 30 years because of poor financial decisions and a belief that he wouldn’t live until his 90’s.

His quality of life has greatly diminished. He no longer has friends that stop by casually for a drink or to watch basketball. He can’t go out to his garden and pick a lemon for his tea. He can’t walk around his gated neighborhood if he wants some fresh air. The possessions that took decades to accumulate have been reduced to whatever can fit inside 750 square feet. He didn’t think he would outlive his money.

He didn’t think he would outlive his money.

Although it makes me sad every day to watch Gpa grieve his home (it’s been almost two years and he still talks about it), lessons can be learned.

  1. What is your plan?

Are you making retirement planning a priority? Because it is a NATIONAL EMERGENCY. One in five adult Americans have nothing saved for retirement. The average retiring age is 65 while the average life expectancy is 85. Medicare, in its current form, does not pay for long term care. So as of now, the probability of you aging in place (meaning in your home) is significant. That means having an income that can sustain not just daily living costs but housing, medical bills, transportation and perhaps also additional caregiving support. If you don’t qualify for Medicaid, then any in home care support is an out of pocket expense. The average cost of caregiving averages between $9 and $30 per hour; we currently pay $23. Depending on your needs, that can easily sum up to $1,000 or more a month on caregiving costs.

Are you taking advantage of the 401k plan offered to you? Do you have a savings plan? Are you paying off your debt with vigilance? Are you attempting to maximize your earning potential? Make a plan and take action, like right now.

2. Talk to the people you may end up caring for, about their plans.

My mother will be turning 60 this year and there is a very likely chance that I will be her primary caretaker when the time comes (I have lots of practice). So we talk! We talk about her financial health. We talk about her debt and we talk about her plans for getting out of debt before retirement.

Talking about money, debt and retirement is taboo and as children or grandchildren we are encouraged to stay out of the finances of grown folks. However, their preparation or lack of preparation will directly affect your goals and earning potential.

Their preparation or lack of preparation will directly affect your goals and earning potential.

If you are the primary caregiver to your father who needs a moderate amount of supervision and help with ADL’s (activities of daily living), and his limited income will not allow you to hire an additional caregiver, your ability to take a promotion, go back to school, or seek a career change are limited.

2019 produced a ton of content encouraging adult children to check in with their parents regarding their finances and retirement plans. Again, the financial mistakes or successes of your parents, grandparents, siblings, and maybe friends can affect you, especially if you will be providing care. If your parents are struggling in retirement, you are most likely who they will lean on. If you think broaching this topic will be difficult I would recommend starting tomorrow.  

I am not a financial expert, I am a therapist and a caregiver. In staying in my lane, I understand the effects of poor fiscal practices on mental health and care giving. Being prepared financially is about having options and opportunities. The option to stay in your home, the option to have additional support, the opportunity to maintain a reasonable quality of life. Imagine working your entire life and living your last 20 years impoverished. Stories about seniors resorting to eating dog food aren’t scary myths. What can you do today to improve the health of your finances and those that you care for or will care for?

Here are the takeaways:

  • Be realistic! There is a good chance that you will live until your 80’s. There is a good chance so will your parents/siblings/friends.
  • Outliving your money is a real possibility.
  • Homeless seniors do exist.
  • The days are long but the years are short, start making a plan of action now.

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