A final barrier to retirement is family obligations. Many people approaching or in retirement find themselves having to use their money to address emergency family obligations. Frequently, these obligations directly spend the money faster than planned. Other times, the costs arise from indirect reasons.
Family obligations may include taking care of parents, spouses, siblings, children, grandchildren or yourself. While occasionally these emergencies could be prevented, frequently they could not. The purpose of this post is not to assign blame, but to confront the brutal fact that family obligations can erase retirement faster than anticipated.
Prepare as Best You Can
You can prepare for some of these family obligations with the following steps:
- Take out long-term care insurance on you and your spouse on your 60th birthday
- Ensure that your parents take out long-term care insurance on themselves, or give it to them as a birthday or anniversary gift. My brother-in-law took out a policy on his mother that saved the family hundreds of thousands of dollars and provide a good standard of living for 4 years after she had a stroke.
- Create educational savings accounts for your grandchildren while you are working
- Discuss among siblings or children how to share responsibilities before they become emergencies
- Establish a trust to protect some of your money, while giving you freedom to use it as needed
- Set guidelines for your children about what you can do, and what you cannot do, if they have problems. Dave Ramsey says never lend to family members—good advice
No one can foresee every emergency, divorce, or foreclosure. Yet, we can prepare for them. I encourage you to review some of these web sites for more ideas: The Sandwich Generation, GoBankingRates, MarketWatch, SeniorLiving, AXAEquitable, and Kiplinger.
Join us Monday when we begin a series examining planning your career in today’s workplace
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