Today many families face the fact that the value of their retirement accounts has plummeted. Limited financial resources, rising healthcare and tuition costs leave many families forced to choose between saving for their own futures and depleting their resources to provide quality education for their children. When it comes to parenting, we often feel that sacrificing our futures for the sake of our children is just the right thing to do. However, I urge parents to strongly consider the adverse consequences of making such a choice.
THINK YOU WON’T NEED A STURDY RETIREMENT CUSHION?
Consider this: According to the Pew Research Center, one out of eight Americans aged 40 to 60 is raising a family as well as caring for an aging parent. As healthcare costs rise, the average annual income of persons 65 or older remains flat. In fact, the Employee Benefit Research Institute reported in 2005 that the average income of people aged 65 is a whopping $24,418.
That’s not all: The Journal of Gerontology reports that the elderly spend 19 percent of their income on healthcare cost. These figures are even higher for those with chronic conditions of which the Center for Disease Control reports that 80 percent of Americans aged 65 or older have at least one chronic condition.
The cost of caring: Middle-income parents often ravage through their resources and incur debt to help with their children’s education cost. However, this noble act puts them at a disadvantage when trying to provide for their own needs. Caregivers are often expected to make up the difference. But many college graduates face the economic pressures of climbing the corporate ladder, raising a family and creating wealth for their futures. So if they’re struggling themselves, what’s going to give?
First things first: If you have ever flown in an airplane you know the stewardess always gives you basic instructions in case of an emergency: “Put the mask on yourself before helping others.” I understand the financial, psychological and
physical stress that accompanies the life of a caregiver. I have also counseled many older adults who sacrificed their future for their children’s education only to live later with guilt and regret for threatening their children’s financial stability. The sad truth is that many people are just not in a financial position to provide a significant amount of financial support to their college-age adult children.
SO WHAT CAN YOU DO?
Set a plan early: Setting a plan in motion for college funding or other types of monetary gifts early in your child’s life is vitally important. You can avoid the guilt, shame, and disappointment that accompanies having to tell your child “No, I can’t help you; I didn’t prepare.”
Talk about money: It’s time to take the taboo out of talking to our kids about the financial wellbeing of our families. Decisions affect the entire family directly or indirectly and at some point, we will all need to lean on one another for support.
Share the effort and success: Parents need to become transparent in order to openly share with their children their concerns. Children need to be prepared to make some tough decisions about the direction of their future. Our financial planning strategies have to reach beyond today and consider generations to come.
Contact Jaynee at jaynee@urbanviewsrva.com
