An increasing number of Americans at retirement age are facing an unexpected and new expense, according to Suzanne Shier, chief tax strategist with Northern Trust.
“Most people have a financial picture of launching their children and maybe helping their grandchildren, but more and more we are having this conversation about helping elderly parents as well,” Shier said.
“Some will have to work a few more years to accommodate the expenses they will incur to take care of elderly parents, while others will pool resources with multiple siblings,” Shier said. “It’s an expense that people hadn’t thought much about but that more and more people are having to accommodate.”
With people living longer, it's not uncommon for a person in his or her sixties or even older to have an elderly parent still alive. In 2015, there were nearly half a million people on earth 100 years or older, according to United Nations data, and projections suggest there will be 3.7 million centenarians across the globe by 2050.
Shier was among a group of experts discussing trends in financial planning who gathered at the New York City offices of Northern Trust last week.
A wealth management trend that Northern Trust Managing Director John Voltaggio has noticed is that high-net-worth individuals are making more charitable contributions in 2017. “They want a [tax] deduction while rates are high this year because it’s been proposed to cut the [top federal] rate to 35 percent in 2018,” said Voltaggio at the evening cocktail reception. “Frontloading deductions this year makes sense to lock in current rates.”
According to a document issued by the Trump campaign called “Tax Reform That Will Make America Great Again,” the administration will seek to reduce income taxes, corporate taxes, the estate tax, taxes on pass-through entities, and taxes on capital gains and dividends.
“Our clients are continuing with their estate planning because nothing’s certain, and it’s likely we will still have some form of death tax in the future,” Voltaggio said.
Northern Trust Hedge Fund Services CEO Peter Sanchez noted trends in the hedge fund business, in particular, its convergence with private equity.
“Five years ago, hedge funds, private equity, real estate and infrastructure were all separate and now they are coming together under the umbrella of alternatives,” he said.