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Data reveals that younger Americans face different obstacles when saving for long-term goals like retirement. Discover one that might catch you off guard.
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Saving for long-term goals like retirement isn’t easy. And there are many things that have the potential to get in your way.
A recent Schwab survey found that Gen Zers are facing a number of obstacles that are impacting their ability to save for the future. A good 54% point to inflation as a major obstacle, while 31% cite emergency expenses.
But for 30% of Gen Zers, helping aging parents financially is a reason they’re struggling to save money. And that’s not a boat you want to end up in. With a couple of key steps, however, you can potentially avoid that situation.
1. Have conversations about caregiving and support before an actual need arises
Many adults end up in a position where they have to assume a caregiving role. That’s something you may want to be able to do for your parents — namely because they sacrificed so much to raise and care for you.
However, you should know that the cost of being a caregiver can be huge. For one thing, you might spend a lot of money just running back and forth to see your parents and helping them with tasks like shopping and household chores.
Also, if your parents are reliant on you for help, you may not be able to commit to a higher-level job. The result? Lower earnings for you, and less opportunity to save.
That’s why it’s so important to set expectations and have an open discussion about things like caregiving and logistical and financial support before your parents end up in a position where they need it. And if you have siblings, involve them, as it should really be a group effort to make sure your parents’ needs are met.
2. Encourage your parents to look into long-term care insurance
A big reason some adults end up in a caregiving role is that the cost of long-term care can be absolutely prohibitive. Genworth reports that as of 2021, the average cost of a home health aide was almost $62,000 a year on a national level. If your parents can’t afford to shell out that kind of money, they might end up relying on you to help on a regular basis as they age.
That’s why it’s a good idea to talk to your parents about long-term care insurance. If they have a financial advisor they work with, that person could serve as a resource and help them explore their options.
Long-term care insurance is definitely a notable expense, and each policy out there comes with its own costs and coverage. So it’s the sort of thing that will require a lot of research, and that research may be over your head. Hence, it’s a good idea to turn to a financial advisor for help.
However, a long-term care policy could help defray a lot of the costs your parents might face as they get older — such as visits from home health aides and assisted living fees. And if your parents are able to get that outside help, it’ll put less of a financial and logistical burden on your personal finances.
You may be of the mindset that you should do everything you can to support your parents as they age. But mapping out a plan and looking into long-term care insurance are ways to help out, so aim to do those things sooner rather than later.
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