Don't be a financial burden on your kids

By Dan Kadlec, Money Magazine contributing writer


(Money Magazine) -- Every generation has its challenges. As boomers, one of our biggest is caring for our long-lived parents, providing both physical and sometimes monetary assistance, even as we're putting our children through college and grad school.

I'd choose this two-front financial battle any day over, say, defending the world against fascism. (Thanks, Mom and Dad!) But that doesn't mean our worries are a trifle, and if we don't fix things before long, our children will wind up in the middle of the same sandwich.

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Dan Kadlec
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Don't think the kids are oblivious. One in three boomers has helped out a parent with financial matters such as paying utilities, rent, and medical bills, reports financial firm Ameriprise. Seeing this, many of our children (44% of those ages 21 to 30) are concerned about having the resources and time to care for us down the road, MetLife found.

To ensure you will never be a burden on your kids' bankroll, take these steps.

Fill them in money-wise

Three out of four boomers admit they haven't adequately discussed their finances with their adult children. Big mistake. Being in the dark about your resources will make the task of helping you if you become ill or incapacitated far tougher for your kids.

Think about the things you wish your parents would have done, then act. Organize your records (insurance, will, power of attorney, medical directives, and financial accounts). Also provide contact information for your financial adviser, accountant, and lawyer. Then let the kids know where everything is and offer them an overview.

Plan for long-term care

A couple who retires today at 65 and lives to 85 can expect to pay as much as $250,000 for out-of-pocket health expenses, the Employee Benefits Research Institute reports. If you don't plan for your future medical needs now -- what kind of care you'd prefer and how you'll pay for it -- you greatly better the odds that your children will one day choose for you and end up paying part of the bill.

Ask yourself: If you can no longer live independently, would you rather have help at home if possible or move to an assisted-living facility? Let your children know your thinking, and how you expect to pay. If your savings won't cover the costs, look into a long-term-care policy that will foot the bill for home health care and assisted living, as well as a nursing home for more comprehensive care. You'll get the best deal (premiums typically under $2,000 a year) if you buy when you're still healthy and in your mid-fifties.

Cut off your grown kids

Picking up the tab for college is one thing. But a third or more of older boomers have paid for a grown child's car, rent, or health insurance, Ameriprise found. Overall, six in 10 boomers report giving financial help to a child or grandchild in the past five years, according to MetLife. Average amount of aid: $59,000.

It's all good if you really have the resources. But most of us aren't saving nearly enough for retirement. So offer your offspring less cash and more guidance about how they can improve their financial situation; limit your largesse to birthdays, holidays, and genuine emergencies.

Feel guilty about cutting the cord? Don't. You may be doing your children a favor. After all, if you stop paying their way now, you greatly reduce the chances that they'll have to pay yours later on.  To top of page

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