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“Caregiving” a Parent’s Investment Portfolio

Many individuals often spend large sums of their own money caring for an aging parent. A recent survey found that one out of three caregivers provide $5,000 or more per year helping their loved one, and nearly one in five provide $10,000 or more. One reason is because adult children are uncomfortable talking about their parents’ finances to discover what they can and can’t afford.

This often becomes an issue in the latter stages of retirement, when mature adults begin to have more health and mobility issues. It is important to know how much your parent(s) have in terms of ongoing income, expenses and overall assets. Otherwise, caregivers’ own savings and investments may suffer, making it more likely that they will need to rely financially on their own children during retirement — creating a cycle of dependency.

Parents may not even realize how much their children are contributing to their care or have a clear idea of how their own assets could potentially be used to offset their expenses.

To help evaluate a family member’s financial state, first determine how much income is available via Social Security and pension benefits, required minimum distributions and any automatic payouts. Then, determine the amount spent on bills and other household expenses. If the outgoing is more than the incoming, it’s time to take a hard look at assets.

It is also important to consider the level of risk for any given investment, since seniors do not have the luxury of time to make up for poor market performance. While it may be appropriate to maintain a growth component in the portfolio, it’s also important to consider risk-mitigation strategies such as diversification and insurer guarantees to help offset investment risk.

You should consult with the parent’s financial advisor or your own before making any financial changes to their portfolio.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.