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Finance

Aging parents add to retirement planning challenge

Financial advisers say planning will help adult children better cope with living, health care challenges

Aging Parents

Wesley Bedrosian for The Boston Globe

Joanne and Everett Parhiala had a plan.

They would move from the Lexington house where they had raised their three children to a smaller Boston condo. Then, Joanne, 53, and Everett, 57, would work for a few more years before settling into retirement in the city.

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But now, instead of downsizing in Boston, the Parhialas are searching for an even bigger place in the suburbs to accommodate Joanne’s aging father and developmentally disabled brother.

“We had kind of pictured ourselves living in a small place in the city,’’ said Joanne Parhiala. “But now we’re moving further out in the suburbs. It’s not where we thought we’d be.’’

As baby boomers head into their golden years, many are finding they not only have to plan for their own retirement, but for the care of their aging parents as well. Americans are living longer, which also means they face more physical and mental challenges. More than one-quarter of people 80 and older experience three or more physical limitations, according to the National Center for Health Statistics, and the Alzheimer’s Association expects the number of dementia cases to double over the next 40 years.

“The fact that parents are living longer makes it more and more likely that children are going to have to have some presence,’’ said Bob Mauterstock of Brewster, a retired financial adviser who has written a book about planning for the care of aging parents. “The adult children may have to help them financially, or to pay for care. In some cases, the children may feel obligated to provide care themselves.’’

Just as the Parhialas are footing the bill for a new house, adult children may find themselves budgeting for costly health care for their parents at a time when they were hoping to trim their own expenses and save more for retirement. The costs can be staggering. Fidelity Investments estimated in May that a couple retiring this year can expect to spend $240,000 on health care through their golden years.

And the time demands of dealing with an aging parent can make retirement planning even more difficult.

“If they have to drop out of the workforce or reduce work hours to take care of an aging parent, it reduces the amount of money they can put aside for retirement,’’ Mauterstock said.

The so-so economy is not helping. Older employees may be reluctant to ask for time off or changes to their work schedule to deal with caring for their parents, said Jennifer Lane of Compass Planning in Newton.

“It’s hard to ask their employer for more balance when they’re concerned about their jobs,’’ she said.

Ultimately, the children of aging parents must see to their own needs first, and it may be impossible for most people to assume responsibility for their parent’s care in addition to their own retirement, planners said.

“It’s feasible for children to help in certain ways, but not to be responsible for their parents,’’ said William Driscoll, owner of Driscoll Financial in Plymouth. “We’ve got to make sure that we’re in financially sound condition, before we try to get someone else in the same place.’’

However, Driscoll and other financial planners said, there are steps adult children can take to prepare both themselves and their parents for the future: meeting with elder care specialists, making sure legal documents are in order, and considering long-term-care insurance.

As families undertake this process, communication is by far the most important consideration, planners said.

“You need to really assess what’s going on and sit down at the kitchen table and find out what they need, what they want,’’ Lane said.

These conversations can be difficult; many older parents are from a generation that was private about money matters, financial planners said. They also might question their children’s motives for asking such detailed financial questions. Nonetheless, several planners suggested boomers get these conversations going by the time the parents are in their early 70s.

“It’s critical that parents get together with their children while they’re still healthy,’’ Mauterstock said. “Most families don’t address it until Mom falls and breaks her hip or Dad’s diagnosed with Alzheimer’s.’’

These meetings may reveal that the older generation is well prepared; if they are not, a financial planner can help the family determine the best plan of attack. Lane said it is essential to find a financial planner who provides broad-based planning services, rather than just investment advice, and who works on a fee-only basis, so the possibility of commissions will not compromise the guidance he or she gives.

Parents and children should also make sure that all necessary legal documents - wills, trusts, health care proxies, powers of attorney - are in place and up-to-date, Driscoll said. Attorneys who specialize in elder law can help ensure the dizzying number of financial and legal matters are smoothly coordinated.

If adult children want or need to contribute financially to their parents’ care, long-term-care insurance can be a good option, Driscoll said. Such coverage can prevent nursing home or assisted living bills from quickly swallowing all of a parent’s assets, he said.

“It’s a much cheaper way to help them than trying to cover the cost of the care itself,’’ he said.

Driscoll speaks from personal experience: He and his siblings paid for a portion of their own mother’s long-term-care insurance, which allowed her to remain financially secure until her death two years ago, he said.

Long-term-care insurance, however, has its critics. Premiums are often quite high, making it less likely that the investment will ultimately save money, Lane said. “I see people struggling with it,’’ she said. “Often times people believe that that’s the panacea - it’s not.’’

Despite its difficulties, working out a plan for your parents’ care can bring peace of mind.

Joanne Parhiala acknowledged feeling wistful at times for the retirement she once planned. A psychiatric nurse, she expects to work night and weekend shifts to make time in the week for her father and brother.

In the end, though, she is glad she and her husband, an electrical engineer, are able to support her family. Both are planning to work for about 14 more years and they expect to have paid off their mortgage by then, freeing up more money for other expenses. Throughout the years, they have contributed to their retirement plans and participated in pension programs, giving them a pool of savings from which to draw.

Perhaps the most important decision was to act while Joanne Parhiala’s father, 77, is still healthy. The transition, she said, will be easier for everyone this way. “This is a big change for us, but we’re not looking at it as a negative,’’ she said. “It’s just a progression and a change in life.’’

Sarah Shemkus can be reached at seshemkus@yahoo.com.
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