Change is typically front of mind for many when the calendar flips to a new year. If you’re in the Baby Boom generation, chances are you are also in the so-called Sandwich Generation. What is the Sandwich Generation? It’s that crop of Baby Boomers that are raising children, pursuing careers and taking care of aging parents.
If you’re taking over the financial responsibility for your parents you may find strategies they employed that make sense and that you will incorporate. However, you may find that your parents simply didn’t plan carefully enough for the future and with the potential for nursing home or assisted living costs looming, financial conversations need to take place sooner rather than later.
As a 50-something there is no time like the present to implement a financial strategy for yourself and your family. What can you do today? Here are some strategies:
- Understand how much you have “banked” for Social Security for when you retire. In the past the Social Security administration would mail out statements letting you know what your expected future benefits would be. They are no longer mailing statements but you can go online and see the amount you may collect when you retire. Go to www.ssa.gov. For many people, Social Security will not be enough to live comfortably on and that’s why there is the need to plan for future living expenses as you age.
- Look at your budget and determine whether you can put additional money away in a savings or retirement account. Even a modest increase in savings can add up in helping your retirement be more fiscally secure. Don’t forget to ask your accountant how much you can deposit into a retirement account to adhere to the IRS guidelines.
- Talk to a financial planner to see if you are on the right track for retirement. Do you have a true picture of your income and expenses? Do you know how much you need to live comfortably? Once your full time income is gone after you retire, where will you need to make cutbacks in the family budget and are those cutbacks items you can live with? You should know where your retirement income will come from and how much it is and compare that to expected expenses. If you plan to age in place you will also need to factor in home maintenance expenses and potential increases in utilities because you will no longer be out of the house at work.
- Are your investments working for you? You want to have an investment portfolio that matches your individual style, whether you are an aggressive investor or whether you simply want your money to grow at a steady pace. Understanding your investment style, though will help you determine your financial status once you retire and begin living off of the investment income.
- Determine whether it is worth it to you and your family to invest in long term care insurance. Have a plan in place for the time when, or if, you or your spouse can no longer live independently. Will you have the funds available to move into an assisted living facility that you prefer or will your finances force you to move into a facility in which you’re not happy?
If you’re in the midst of gathering up your paperwork to meet with the accountant and file your taxes, now is the ideal time to take a good, long look at your finances and make certain you are planning for your future.