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Mike Loo, MBA

Vice President of Investments


Is Your Financial Strategy Parent-Proof?

| December 02, 2016
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Picture this: at age 60, you have a net worth of $3 million, and you’re feeling confident about your upcoming retirement. However, after 10 years of market growth, you somehow end up with a $2 million net worth when you turn 70.

Most people can’t (or don’t want to) imagine such a situation, but it can happen. You could be doing everything right financially for yourself, but if your parents aren’t on the right track, the financial responsibility of their mishaps may fall on your shoulders.

As you approach retirement, it’s important to parent-proof your financial strategies so that your assets don’t drain unexpectedly. Here are three questions you should consider.

Do Your Parents Have a Retirement Income Plan in Place?

If the parents were to retire before determining how much they’ll need to last through their golden years, they run the risk of passing a financial burden onto their children – it wouldn’t be uncommon for the adult children to help subsidize their parents’ costs in retirement, whether that’s sending money every month or moving the parents into their home. While you may not mind assisting your parents financially, it could drain your retirement savings, prevent you from saving the amount you need to retire, and prolong the number of years that you need to work.

If your parents haven’t yet retired, encourage them to meet with a financial advisor to review their current savings and determine whether or not they’re on track. If your parents have already retired, that doesn’t mean it’s too late. A financial advisor can help them create a budget and review opportunities for increasing their income.

Do They Have an Up-to-Date Estate Plan?

Most people understand that having an estate plan is crucial.  However, having a poorly created or an outdated plan can be just as harmful as having no plan at all. It can be helpful to sit down with your parents and review these items.

If they don’t have an estate plan, your inheritance could be redirected to the IRS, and you may face hefty attorney fees to settle their finances. Talk with your parents about how they intend to divide up their assets amongst their loved ones.  Meet with an estate attorney to put a plan in place to make things easier on your family in the future.  

Dividing an inheritance evenly may sound easy, but what if you wanted to sell your parents’ house, but your sibling doesn’t want to part ways with it for sentimental reasons?  If you are receiving a large inheritance and you can’t come to an agreement with your siblings, what happens next?  It’s possible you could see yourself in court fighting against them.  It’s important to have these open conversations early on to avoid conflict in the future. Your parents should have an estate plan that is up-to-date and that clearly outlines their legacy intentions.

Do They Have Long-Term Care Insurance?

Insurance may seem like a bet against yourself, but if your parents are approaching age 65, it can be a bigger gamble to go without long-term care insurance. According to the U.S. Department of Health and Human Services, 70% of Americans age 65 or older can expect to need some form of long-term care in their lifetime.

Long-term care can be very expensive, quickly depleting one’s savings. On average, it costs $229 per day or $6,965 per month for a private room in a nursing home. For women, who require long-term care for an average of 3.7 years, that adds up to $306,460. For men, who require long-term care for an average of 2.2 years, that adds up to $181,090.

If your parents don’t have long-term care insurance and also feel they can’t afford it, you and your siblings may want to consider funding it so that it doesn’t adversely affect you later and possibly deplete your inheritance.

Taking Action

Many times, family members have different ideas about money, from how much to save versus spend to the definition of wealth. A financial advisor is like a money counselor, helping generations of families get on the same page financially by communicating their financial goals and legacy wishes.

If you’d like to learn more about discussing these questions with your parents, or how I may be able to help you and your parents, I encourage you to give me a call or send me an email. To set up a meeting, call my office at (949) 221-8105 x 2128, or email me at [email protected]. I look forward to meeting with you and learning more about your family and your goals.

About Mike Loo


Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at [email protected].

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Trilogy Capital, a registered investment advisor. Trilogy Capital and Trilogy Financial are separate entities from LPL Financial.

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