A recently released Wells Fargo/Gallup Investor and Retirement Optimism Index survey revealed some shocking statistics on how much money people are giving to relatives and how it’s impacting their finances.
Nearly half of those surveyed said they have provided financial assistance to one or more of their close relatives. One-fifth of those respondents admitted they provided personal assistance, including making medical decisions, handling financial matters and hiring professional caregivers.
In fact, a shocking statistic appeared during the survey: When people were asked the total they spent in the past year financially supporting adult family members, investors estimated spending an average of $10,000. That was not including college expenses.
“It is extraordinarily generous for investors to step in and help adult family members with this level of support, but there is a risk if they are not doing so from a position of strength,” the regional president of Wells Fargo Advisors’ Northern Region Mary Sumners said.
Sumners told FOX Business there are some methods someone can use in order to avoid ruining themselves financially.
Sumners said it’s all about setting boundaries and assessing whether the things you’re paying for are truly needs that will help them one day achieve financial independence.
“Are you subsidizing a lifestyle that that individual might not be able to sustain once your payment stop?”
– Mary Sumners, Wells Fargo Advisors
Sumners reiterated the importance of having these conversations before the need arises.
Asking “How much do they have saved?” is a good place to start, especially when it comes to unexpected healthcare costs.
Over half of the investors surveyed anticipated they would pay less than $200,000 in healthcare costs, but the estimated costs are more than $300,000, which includes long-term care and does not include what Medicare would cover.
Sumners suggested setting up a realistic expectation of how much health care will actually cost when you retire and then building a plan to make sure you can pay for that later.
“Have those conversations about whether something like long-term care insurance or longevity insurance fits into the picture, something that can help not only your parents but may protect you because it is a situation that none of us want to fall into where an aging parent might need long-term care and that can quickly devastate your savings if you’re not prepared for that,” Sumners said.
Author: Blair Shiff
Source: Fox Business: How to financially cut off your family (but politely)