Three years ago, Bill and Ann Broward (their names and personal details are changed to protect the couple's privacy) learned a hard lesson about the state of retirement planning in America. Ann's mother, a widow in her early 70s, was diagnosed with Alzheimer's, and after much discussion, Bill and Ann took over caring for her, a decision Ann says she doesn't regret, despite the havoc it has caused in the couple's personal finances.
"I was pretty shocked to discover Mom had next to nothing set aside for retirement. We walked in at ground zero and had to make financial decisions on the fly. I mean, there was literally nothing in place to cover the type of arrangements we needed to make for her," Ann said of her experience early in the process."
The North Carolina, couple saw firsthand what the GAO recently reported about the state of retirement security in the U.S.: Nearly 30% of 55-and-older households have no retirement savings or pension plan and half of 65-and-older households rely entirely on Social Security for retirement income. Many in Ann's mother's generation are simply not financially prepared for old age.
Today, the Browards are part of the roughly half of Americans in the "sandwich generation" who simultaneously care for their own young families and provide care and/or financial support to an aging parent. Over the past two years, they've made radical changes to their own savings and investment strategies, both to enable them to continue to care for Ann's mother--and to ensure their own children won't have to make the same difficult decisions in the future should the couple need care as they age.
If your parents have investment income or a pension plan, get account details and find out where they keep important documents.
Ann puts it bluntly: "I wish we had known Mom's situation long before it became a financial crisis for us. I tell all my friends no matter how awkward it is, have those difficult conversations with your parents. Make a contingency plan. Hopefully, you'll never need it, but if you do — you'll be so thankful it's there."