A helping hand: Quency Hawkins balances his own retirement plan with aiding relatives.

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QUENCY HAWKINS TAKES TO HEART the commandment "honor thy mother and father." The only child of retired parents, he's helping fill the financial gaps not only for them butt also for his grandmother.

Hawkins' 60-year-old mother, Brenda, a former teacher's assistant, and father, 64-year-old Vernice, a former custodian, have a limited monthly income that includes his father's Social Security benefit and funds from their respective pensions. Fortunately, it's enough to meet their monthly expenses, but they have to call on Hawkins when they need extras or have emergencies. Simply put, there's not a lot of cushion for the unexpected: "I see the train coming, and I'm trying to prepare for it," says Hawkins.

It's not as though his parents haven't tried to make adjustments in retirement. They have become fastidious about watching utility bills, cutting costs by 30%. They also purchase food in bulk to save money. But his parents still come up short from time to time. Hawkins currently contributes $4,000 to $5,000 a year for things such as repairs for his mother's aging car, maintenance and utilities for his 78-year-old grandmother's home, and other bills--basically wherever his family needs help. Though other family members chip in to the extent they are able, it's Hawkins and his mother who are primarily responsible for helping his grandmother, who receives Medicaid.

Hawkins, 34, earns $75,000 a year as a senior instructor for a software and database company in Raleigh, North Carolina. He moved into his new position in October 2004 and says he needs every bit of that salary and more. While right now he can manage to help his family without too much strain, there is potential for a real financial crunch ahead. Today, thankfully, everyone is relatively healthy, and his parents have major medical coverage. But if health concerns should become an issue, that could get expensive. The average annual cost of nursing home care is more than $74,000 according to Genworth Financial's 2007 Cost of Care Survey.

Hawkins recognizes that his family members are likely to need more from him in the future. "It's not a burden, I'm glad to do it," he says. "Culturally, it's what we do. My great-grandmother lived at home until she was 96--my mother and grandmother helped out with her. It's my turn." Certainly his parents were there for him along the way. "They helped me in undergrad and graduate school," says Hawkins, who received his bachelor's degree in electronics from North Carolina A&T State University and a master's in industrial technology from East Carolina University.

Hawkins is also thinking about his finances because he foresees marrying his girlfriend in the future. Much farther down the road Hawkins says that he would like to head his own IT consulting business.

Three years ago, Hawkins purchased a three-bedroom townhouse for $115,000 through a HUD first-time homebuyers program and got a 30-year fixed rate mortgage at 5.75%. He wants to buy a bigger home when he gets married.

Hawkins credits his parents for making the most of their available resources. "My mom was always good about squirreling away something." Now the onus is on him to be the financial standard-bearer. While he doesn't have everything figured out yet, he's optimistic, "I've been able to accumulate in a few years what it took my parents their entire career to accumulate."

THE ADVICE

To help Hawkins work out his elder care and financial planning issues, Michael Smith, a certified financial planner with Phoenix-based ProFocus Inc., analyzed his situation. Here is his advice:

* Discuss critical issues now. It's a little late to explore long-term care insurance for his parents, says Smith; because they are over 60, it would cost about $4,000 to $5,000 a year for a $100 per day lifetime benefit for the both of them. Still, it's never too soon for adult children to have tough conversations about end-of-life issues with their parents. This can be an uncomfortable conversation, but it's critical that adult children discuss what role they may need to play in assisting their parents financially so that they can plan appropriately. Hawkins should seek full disclosure from his parents so that they can work together to ensure that everyone's interests are protected. "You need to talk about getting a living trust with healthcare provisions. Designate who will take care of your parents," says Smith. "[Hawkins] and his future wife must be in agreement about his financial support [of his parents,]" says Smith. "He must tell her about his responsibilities long before the wedding."

* Don't let history repeat itself. Hawkins should get even more aggressive about saving and investing. Smith says Hawkins should use his $2,000 contest winnings to open a Roth IRA and invest in exchange-traded funds (ETFs) such as the Wisdom Tree Pacific Ex-Japan Total Dividend Exchange Traded Fund (DND). A key benefit of ETFs is their lower expense ratios. In addition to the roughly $5,000 a year he socks away in his 401(k), Smith would like to see Hawkins put $500 a month into two no-load value mutual funds: Tweedy, Brown Global Value (TBGVX) and RS Value (RSVAX), which have posted five-year annualized returns of 16.6% and 25.0%, respectively.

* Consider becoming a landlord. If Hawkins' townhouse is low maintenance, he should keep it and rent it, says Smith. The rental income should be equal to or higher than the mortgage payment. Once the market improves or if Hawkins gets an attractive offer, selling could be an option too, he adds.

Smith is positive about Hawkins' potential, particularly if he keeps everything in perspective: "Quency must realize that eventually his future wife and own family will be the priority. If he doesn't remain financially stable, he can't help anyone."

In the meantime, "With proper planning and investment discipline, his net worth could triple over the next couple of years."

Financial Snapshot:
Quency Hawkins
Raleigh, NC

HOUSEHOLD INCOME

Gross Income                     $15,000

ASSETS

Market Value of Home            $125,000
401(k) Account                    38,000
Money Market Account              13,025
2001 Toyota Celica                 9,040
Checking Account                   1,200
E-trade Brokerage Account          6,425
Sharebuilder Account               3,341
Total                            196,031

LIABILITIES

Mortgage                        $109,000
Loan for 2001 Toyota Celica        3,000
Credit Cards                       2,400
College Loans                     25,500
Total                           $139,900
NET WORTH                        $56,137

* ACCORDING TO KELLEY BLUE BOOK