Friday, September 21, 2007

Retirement Planning and Your family

Retirement Planning and Your Family

There is a fine line between selfishness and selflessness. Call it a grey area. Better yet, call it a graying area.

In the world of retirement planning, it is how you navigate this no-reward zone that separates those who can (make and keep to their plan) from those who cannot (finance all of the needed accounts that make retirement what it could be).

The suggestion to begin early in life with your retirement plan is made for a simple reason: failure to finance these plans early on offsets the chance that you will be forced to make a decision at some point, taking into account the pressures that family will place on you.

The cost of raising a child is relatively well known. Calculating those numbers, and you can try your plan at Baby Center yield some long range and conservative projections. Using the default information available at their calculator estimates that your child, as yet to be born will cost you $266,698. Those figures, by the way are in 2006 dollars.

But consider this, before we move on to the more difficult subject of retirement planning and your parents, many of the costs that these kinds of calculators estimate will be incurred children or not. You will pay for housing, medical, food, clothing and transportation, kids or no kids. Your skills as a money manager will, without a doubt be put to the test the larger the family you have however, these are not break-the-bank problems that are insurmountable.

The real and almost incalculable cost comes from the other end of the spectrum: your parents and those of your spouse. There are over 20 million of us caring for our parents or otherwise financing that care above and beyond what social insurance and services provide.

ABC News referred to it as Role Reversal. Elderly caretakers and those who might possibly be at some point have been described as the “sandwich generation”, caught between those "costly children" and those aging parents. Few of us calculate these costs when we stare dreamily into the future thinking about our own retirement.

There are several ways to offset these problems before they arise. First, be selfish about your own retirement. This is what will keep you from possibly having the same situation your aging parents maybe in or are headed for. This is best offset by beginning your savings for retirement early. You will be able to save less allowing compounding to do the work for you.

If you are starting later, a group I refer to in the book as "the Chaser", that selfishness becomes even more important. Beware though of the rising feeling of guilt that can accompany this plan. You will, without a doubt, see some of the money as better spent on the kids or even the parents. But doing yourself the favor is also doing your children the favor as well.

As you approach retirement, you will have a better grasp of the actual cost of your family. You will have built a better base – at least financially that many allow you to take a few extra days off to care for that aging parent without jeopardizing your nest egg.

Below, you will find some additional information of how to handle this problem from the folks who focus on the issue.

THE AMERICAN ASSOCIATION OF HOMES AND SERVICES FOR THE AGING ( or 202-783-2242) publishes free brochures on how to choose a nursing home or assisted-living facility, a directory of continuing-care retirement communities, and information on long-term care insurance.

FAMILY CAREGIVER ALLIANCE (; 415-434-3388) offers information for caregiver concerns, newsletters (English, Spanish, and Chinese), and an online support group.

THE NATIONAL ALLIANCE FOR CAREGIVING (; 301-718-8444) is a national resource center that provides information on elder-care conferences, books, and training for professionals.

NATIONAL ASSOCIATION OF AREA AGENCIES ON AGING (; 202-872-0888), an advocacy group for local aging agencies, offers The Eldercare Locator (800-677-1116), a service that puts you in touch with a local resource-and-referral organization, which, in turn, will recommend home health care aides.