After working for decades, my retirement plan will finally allow me to enjoy life with few worries. It is so tempting to buy that luxury car, travel to some exotic destinations or remodel our home. Why not spend the money, I earned it and people say that can’t take it with you.
On the other hand, the financial meltdown of 2008-09 was scary, it reminds me that unexpected events could disrupt our travel plans and lifestyle choices. Life has thrown me a number of surprised curve balls over time so I remain cautious.
Surprise Curve Ball No. 1: Ailing parents
The Canadian Alzheimer society estimates that one out of five Canadians provide some form of care to seniors with long-term health problems. What if your parents need nursing or assisted living care and they don’t have the money to pay for it. Unfortunately, elder care is not cheap and costs vary depending upon where you live. (Surprise, my elderly mother has been diagnosed with early stages of dementia.)
In my area, estimates for a private room in a nursing home is around $50,000 per year and you need to apply two years in advance just to get in. An alternative would be to hire a live in caregiver if your parents own their own home. I am not a big fan of using a reverse mortgage to pay for a caregiver but all options should be investigated.
Another option that may lessen the financial impact on your retirement nest egg is to determine if it makes more sense for you to become the caregiver. One of my friends, will an ailing mother-in-law, used an agency to hire a full-time live in caregiver from aboard. Since his children had moved out, he had two spare bedrooms, one for care giver and the other for his mother-in-law. He was lucky that all his wife’s siblings agreed to share the extra costs.
Surprise Curve Ball No. 2: An adult child falls on hard times.
There are a variety of reasons why a child may need some financial aid. Most common are marriage breakdown, job loss, poor saving habits or bad decision-making. There is a disturbing trend for adult children to move back in with their parents. The media refers to them as “Boomerang kids.”
Parents always want to help their children out of trouble. It helps to know how much money you can afford to give before it wreaks havoc on your retirement plans. Before making any decisions, determine how long you can provide any financial assistance and make it clear to the child up front that your financial aid can only last for a certain period of time. If they move back in, give them a moving out date. (Both my adult children have solid careers and stable marriages, so far so good!)
The risk of joining the sandwich generation is increasing
The new reality is low-interest rates over the past decade and talk of negative rates in the future could escalate the number of seniors requiring financial aid from their children due to illness. Your parents are living longer, 1 in 3 seniors are dying from Alzheimer’s and Dementia. Your children are getting married much later and are deeper in debt.
I recently emailed a follow blogger if he was planning to apply for social security at 62? His answer: ” Still working, my youngest will be in college”
Sometimes you just have to be aware what is happening within your extended family. Here are two posts that could be of help.
Talk to your Elderly Parents about Money
Bank of Mom & Dad, Cutting the Purse Strings
Don’t be troubled if you have to put a limited on financial aid to your family. It’s okay to look after yourself first.
Smart Money 
Some good examples of future costs we might occur.
I was myself a boomerang kid after breaking up and having no place to stay (it was her apartment we lived in)
I do feel lucky to live in Belgium. Full time elder care is less expensive, about 24K with the average pension for employees being 15K. using the 4pct rule, this means having 375K.
It motivtes to see all these numbers to keep being frugal and working on the plan.
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I am lucky that my mother owns her own house. I am not worried about the money yet but as an only child, I have had to adjust my life style. Looking after an elderly parent has a lot of challenges.
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We are not quite in that situation. I have seen the effort it took my mother to take care if an older relative. I can imagine that some changes are needed indeed.
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It was hard to take away her car but very necessary. I am lucky that her neighbours drive her to church so I only have to worry about doctor’s appointments. Thank god for Internet banking, it makes it so easy for me to pay her bills. The worse part is having to repeat conversations because of short term memory lost and listening to the same stories over and over again.
It is a sad way to go!
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Great points. It’s hard because there are so many personal curve balls that can come our way that could hurt our retirement efforts. Then there’s the one you wrote about, that are out of our control.
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