published: August, 07th 2017
Baby Boomers – The Sandwich Generation
By: Tommy Williams, President and Founder, Williams Financial Advisors, LLC
Do we have central banks to thank? Low interest rates, accommodative monetary policy, and improving economic growth have helped stock markets around the world reach record highs, reports Barron’s:
“…a look around the globe shows the surge of the U.S. market to new peaksto be anything but unique. Major [markets] in Europe and Asia also have been setting records.”
Eventually, central banks are expected to tighten monetary policy by raising interest rates and reducing the size of their balance sheets and that could affect markets. The U.S. Federal Reserve released its Policy Normalization Principles and Plans back in 2014. Last month, Chair Janet Yellen indicated the Fed currently intends to begin normalizing policy during 2017.
U.S. monetary policy isn’t the only phenomenon investors may want to watch. Fiscal policy (the steps a government takes to influence its country’s economy) deserves some attention, too. The United States will, once again, hit its legal spending limit (the debt ceiling) this fall. U.S. News reported, “Were the United States to hit its borrowing limit – and thus have to start missing payments and stiffing creditors – there's no telling the exact consequences, but they wouldn't be good.”
While the U.S. is facing the end of its legal spending limit, many middle-aged Americans with elderly parents are feeling the same way. Caring for aging parents is a topic all too familiar to many of us, and it can take a drastic toll on families, both financially and emotionally. According to Forbes,
“It costs families more to care for a frail older adult than to raise a child for the first 17 years of her life. Yet, while the government routinely provides a broad range of assistance and free services for children, it offers only limited benefits for those needing long-term supports and services – and mostly only for those who are impoverished and very ill. The average out-of-pocket cost of raising a child from birth to age 17 is about $234,000. Among families where an older adult has severe long-term care needs and uses paid care, out-of-pocket costs average $140,000. That enormous cost is generally spread over much less time, typically four years in contrast to 17.”
So, if you’re one of many families supporting your aging parents, what can you do to relieve some of the financial stress? Forbes reports that there are several solutions. However, for the most part, “you are pretty much on your own.”:
“You can deduct some long-term care costs from your federal income tax, but only if [your] total medical expenses exceed 10 percent of your income. There are also programs funded through the Older Americans Act, such as Meals on Wheels or information services, but spending for most of them has been frozen for years. Of the $266,000 in average costs for those families who use paid care, $140,000, or 55 percent, is paid out of pocket. Medicaid picks up about one-third on average, [for those 18 percent of Americans who qualify for Medicaid].”
While this may sound frightening, it’s not a lost cause. There are many ways to prepare yourself and your family for future financial hurdles. Your trusted financial advisor can educate and guide you on a path that best suits your family’s unique needs. So, as you are considering what you could improve, develop or change to make your wealth strategy meet the needs of your unique circumstances (and the consequences of not doing anything) you might add this to your list!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. This material was prepared in part by Peak Advisor Alliance.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through RFG Advisory Group, a registered investment advisor. RFG Advisory Group, Williams Financial Advisors, LLC, and Peak Advisor Alliance are separate entities from LPL Financial. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.