Personal Finance

I'm 40 with a few million in the bank and want to retire in a few years - how do I factor in taking care of my aging parents to my plans?

Kristin Hitchcock

Published: November 11, 2024 4:18 pm

Last Updated: December 17, 2024 10:02 am

Planning for retirement is stressful enough, but when you add in not only your financial security but also the long-term care of your aging parents, things can get complicated.

One Reddit post I read recently dealt with exactly this. The poster is in an admirable financial position, with an impressive household income of $650k-$800k and a net worth (NW) of $2.3M at age 40. They are well on track to retire with about $6M. 

However, the poster’s parents’ potential care needs could potentially be as high as $10K per month per parent, complicating their retirement. 

24/7 Wall St. Key Points:

• Have direct financial conversations with your parents about their ability to contribute to their long-term care needs. 
• Factor in the potential long-term care costs of your parents into your retirement plan to avoid unexpected expenses. 
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

Let’s look at how they can address these concerns head-on without jeopardizing their potential retirement. 

1. Open Communication

What should your first step be?

Figure out your parent’s assets, income, and how much they can contribute to their own care. 

Most people will have some savings as they approach retirement. Understanding what your parents haver saved lets you know just how much you might need to throw into the pot. 

While it can be uncomfortable to have these conversations with your parents, having the conversation sooner rather than later helps you be better prepared. 

2. Adjusting Your Retirement Goals

The poster has worked hard to aim for early retirement, but factoring in long-term care may require adjustments to this plan. 

Balance your desired retirement age with your parent’s potential needs based on what you learned in step one. 

Worst case scenario:

You may need to stay in the workforce longer for extra security, especially if your parents require significant amounts of care or have little savings. 

3. Financial Safety Nets

There are other ways to care for aging parents, such as long-term care insurance. If funding the care of your parents is a serious concern, this insurance may be the most cost-effective way to cover it. It is one of the suggestions on our financial checklist for those over 50 years old. 

Beyond insurance, a dedicated fund specifically for parental care costs can also be helpful.

4. Professional Guidance

Consulting with a financial advisor can be very helpful when deciding how your retirement and long-term care planning interact. They can help forecast potential costs in your specific area and determine if long-term care insurance makes sense for your parents. 

You should likely meet with them yourself and encourage your parents to meet with their own advisor.