Retirement Involves Supporting More Than Just Yourself

When saving for retirement, make sure to put a little extra away for those coming along for the ride.

A broad-ranging financial survey from HSBC stumbled across one little nugget worth examining more closely: 64% of people age 70 or older are financially supporting others. That's compared to just 56% of workers, though 73% of folks 30 through 39 and 70% of those 40 through 49 are borrowing money just to make ends meet.

Retirees are shouldering the load for others despite the fact that 40% are still paying off credit cards, as 12% struggled to pay off loans. That's coming as a surprise to many of them, as only 20% expected to have credit card debt in retirement and just 5% thought loans would still be a concern.

As UBS discovered, Millennials are more than twice as likely to move home after college as their parents were. Saddled with an average of more than $35,000 in student loan debt, according to Edvisors, and facing an unemployment rate almost double that of Generation X, 24% of Millennials prefer to live with their parents to save money, while 22% say their parents wanted them to stay. That means leaning on parents health insurance (29%), home buying/renting (28%), auto insurance (26%) and utilities (23%).

"Don't let yourself get into financial trouble because you failed to reassess your own budget while helping your child," says Shomari Hearn, a certified financial planner with Palisades Hudson Financial Group's Fort Lauderdale office. "This holds true for all sorts of gifts, but it can be harder to say no when you share a living space and witness your child's struggles firsthand."

Meanwhile, many of those same retirees find themselves supporting their parents in retirement as well. Though a UBS survey finds that 42% older retirees fear that they'll become a burden to their children as they age, only 39% of investors have talked with children about who will take care of them in old age. Only 50% have figured healthcare costs into their financial plan, and only 23% have saved for their future care.

That isn't great news when Census Bureau data predicts that the population of Americans aged 65 and older will grow to greater than 80 million by 2050. Of that group, the number of people likely to require long-term care is expected to more than double from 12 million today to 27 million during that time. If they're wondering if they'll actually be a burden to their kids, the answer is an absolute "yes." Among those currently caring for adult parents, 47% describe it as a heavy burden, 41% described it as a moderate burden and 12% said it was a minimal burden. In no scenario is it no trouble at all.

"Maintaining self reliance is important to the vast majority of investors," says Paula Polito, client strategy officer, UBS Wealth Management Americas. "Having a plan in place for long-term care before they actually need it will help them avoid burdening their children."

As the folks at long-term care insurance provider Genworth financial know all too well, 70% of people over 65 will need long-term care. Even if parents are cared for at home, it won't be cheap. The median cost of homemaker services -- which helps with household chores that can no longer be managed alone, including cooking, cleaning and running errands -- is $20 an hour nationwide. Hiring a home health aide for personal needs other than medical care will also cost $20 an hour. Adult Day Health Care (ADC) -- which basically amounts to day trips, recreation and social engagements -- will run you $69 a day.

Women are going to be on the hook for much of it. Among UBS investors, 66% say they would rely on a daughter for care. Meanwhile, 29% of women vs. 19% of men think they'll likely be their parents' caregivers, with 26% of men and 11% of women planning to foist the responsibility onto a sibling. Women say they are willing to become the primary caregiver because they have a closer relationship with their parents (52% of women vs. 41% of men), while men more often say they will take on their parents' care because they live closer (41% of men vs. 32% of women) or because they have greater financial resources (50% of men vs. 32% of women).

It doesn't end once they hit retirement age themselves, either. According to a Nationwide Retirement Institute survey, 66% of women are worried they will become a burden to their family as they get older -- compared to just 50% of men -- while 78% of these women say they are concerned about having money to cover long-term care expenses. More than 62% of women haven't talked to anyone about long-term care costs, and 43% of those with a spouse and 62% of women with at least one child won't because they don't want them to worry.

"The sacrifice women make for their families at the expense of their health and finances does not come cheap," says Shawn Britt, director of long term care/advance consulting at Nationwide. "Families need to be aware of what they will face if they do not plan ahead for this risk - both emotionally and financially."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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