Picture of a Latino family

Many 2nd generation Latinos are often put in the position to have to not only provide for themselves, but for aging parents as well. Generations of white people have had unfettered access to education, real estate acquisition, and other wealth building opportunities, while Latino (and Black and other non-white people) families haven’t had the same access. This has resulted in Latino children having to go beyond just caring for their aging parents, but to also be their parents’ financial retirement plan.


With the Latina wage gap increasing in 2022, the future seems even bleaker than before. Meanwhile, the dutiful daughter complex lives on strongly in the Latina community making the responsibility of providing a good quality life for parents even more anxiety-ridden.

But there is a way to manage it. Unless our elected officials make meaningful changes to address the horrific wealth gap, the overall landscape won’t improve anytime soon, however, we can be proactive about how we move forward with taking care of ourselves and our loved ones.

Get an idea of your parent's finances.

Finances in many Latino households aren’t a popular discussion. While many 2nd generation Latinos end up understanding the value of money simply because of different socioeconomic situations they encounter, the conversations end there. It’s not enough to just know where your parents land on the income scale, you have to know their whole portfolio or lack thereof.

Do they have any savings at all? How much, if anything, do they expect in private retirement or social security payments? Do they own a home and if so, what’s owed on it? It’s important to sit down with your parents and have an honest conversation about their lifestyle and what they expect to maintain after they are too old to keep working. And most importantly, how much you can contribute to help.

Manage each other expectations.

Along with the difficult conversation about how much money they have and what they can depend on, it's important to manage each other's expectations for what is expected of you. This includes the caretaking, expenses, and how they will contribute. If you even need to go so far as to have it in writing, do that. This includes any end-of-life documents such as medical power of attorneys, a will, and any life insurance they may have.

Clear boundaries will help relieve the stress of having to figure it out on the fly when someone all of a sudden can’t work or if a parent should unexpectedly pass. No one wants to depend on a go fund me, so don’t.

Don't expect your parents to remain in perfect health.

While many start retirement planning before any illnesses come to mind, it’s important to note that with aging parents come higher healthcare costs. Budgeting for potential illnesses or shopping around for insurance that might enable better care pre-retirement is vital to ensuring that retirement-age expenses will be accounted for. When budgeting for retirement, many people do so without healthcare costs in mind, so be prepared for the unexpected and potentially the worst outcome will ensure everyone is equipped to deal with the situation.

As previously mentioned, life insurance is relatively inexpensive especially when the policy is purchased earlier in life. Many people mistakingly believe that all insurance is unaffordable and this simply isn’t true. What’s unaffordable is having to fork over $10,000.00 or more for a proper funeral and worse, having to ask friends, family, and strangers to help thru a go fund me. Save yourself a lot of stress, anxiety, and time and prepare in advance for the inevitable.

Savings accounts save lives.

Opening up a Roth IRA is a great option for those working for employers that may not have retirement accounts available. Gains to contributions tend to be higher the earlier you begin putting money towards a Roth. Still, it's never too late to open an account and utilize it for savings - for those earning less than six figures; it also helps with taxable income, which helps present-day you as well. Making sure your parents understand the benefits of retirement accounts and the gains made from contributions can make a huge difference in the money they will have come retirement time.

Lifestyle changes might need to be made now to make it easier later.

Some of us know the importance of investing into retirement younger, so it's less of a catch-up once you are older. This means that adjusting current spending habits might need to happen to direct that money to more useful paths like a retirement savings account to offset the amount needing to be saved later. This includes getting rid of exorbitant car payments or money pits that could currently be presenting obstacles to proper retirement savings.

Create living wills.

Estate planning doesn't seem necessary if you don't have assets, but it is important to encourage your parents to create wills for the division of assets after their deaths. This prevents potentially costly arguments with the state over dividing what it is they left behind and can prevent family infighting during those sad times as well.

Insurance policies can go a long way.

Some employers have free life insurance policies, while others can be quite costly. Those life insurance policies can prove to be quite helpful to cover the costs of anything from funeral expenses to cover any outstanding debt you might have. Various types of insurance provide a solution should any financial obligations a person had when they were alive need to be met, so encouraging your parents to invest in policies as early as possible is a viable solution should they not have much saved in retirement accounts.

Some policies, like whole life policies, will accumulate worth and actually provide payments before death. There are many different types of insurance products that can work with your parent’s budget that will help them and you during difficult times.

We know that things get complicated as our parents age, and our own financial situations can change a lot with aging family members. It is important to keep in mind how we can all adjust to make being your parent's retirement account less stressful and more beneficial to all.

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