A report from The Caring Advisor found that a third of millennials plan to financially care for their aging parents and have, on average, put away about $3,100. That is still not enough. Almost 1 in 3 said they would take another job if required. What’s more, millennials surveyed said they hadn’t even begun to think seriously about what it would take to financially support their parents because of their own money problems.
Shazia Virji, managing director of credit services at Credit Sesame, the first platform to provide free access to consumers’ credit scores, says there’s good reason to be concerned.
“Individuals who are financially supporting their parents as they age have an added level of pressure when it comes to meeting their own financial goals, especially during a high-inflation environment such as the one we find ourselves in today.” The emotional and financial stress that comes along with having a primary financial support system can be daunting.”
Fortunately, there is hope.
Virgie shared advice for millennials who are worried about taking care of their parents, especially with the recession looming.
Be open and honest
“You want to make sure you don’t give up on your financial goals, because achieving financial security will help you be more independent as you reach retirement age yourself.” Talk with transparency and respect.
Ask questions: Ask your parents if they have proper estate planning documents. On the financial side, it’s important to know how much liquidity your parents have from retirement accounts or other assets, and to understand any debt they’re currently responsible for paying back.”
Find a balance
“There’s no need to put your financial goals on hold.” Planning your financial goals in advance is a good first step, so you understand the time frame and commitment required to achieve them. If you’re saving for a big purchase like a home, you need to take tangible steps now that can help you prepare financially for that purchase while still supporting your parents.”
Maintain healthy credit
“By understanding the basics that go into a healthy credit picture, you can set yourself up for financial success while balancing the needs of your parents.” Pay your bills on time, spend responsibly on your credit cards, and keep your credit utilization at 10% or less for the best potential credit scenario and 30% or less for the good credit scenario. By showing lenders that you’re responsible for your credit, you’re setting yourself up for success no matter when you decide to take action on your financial goals.”