As our population ages, more and more adult children will probably have to help their parents out financially. This will put a strain on their own retirement plans.
Some parents, including my own, would be offended by the prospect of not keeping their financial independence.
So how do you help without offending?
Talk about it first. Discuss the new financial arrangement with your parents first. It’s an important first step. That way you can know exactly how touchy the subject may be. Developing a plan (you know I’m not doing anything without one) from the beginning to clearly communicate what will be possible. You definitely don’t want to commit to something that will put your own family in a financial bind either. Decide where money will go, and for how long the assistance will last.
Decide if they need more than financial help. Money issues often are quite clear. However, parents might benefit from emotional support as well. Who better than their adult children to show them this support? This is another reason it’s so important to sit down and talk and develop that plan. Your support may be more valuable than your money.
Make sure they are using all their resources. Are they maxing out their social security, medicare or medicaid? It’s always good to review these once in a while. Perhaps they don’t have the right supplemental plans. Have they checked on old pensions? Sometimes parents will have benefits that may have forgotten about. This could provide some additional income.
Review their investments. I review portfolios on a daily basis. Often, I find elderly clients have just ignored their investments for years even decades. Leaving money in money markets, checking accounts and CDs. These investments are just not yielding enough in this environment. Look at restructuring the portfolio for additional income. This may be all that is needed to provide a cushion that they are taking advantage of right now.
Reduce their living expenses. It may be time to sell a home they have lived in for many years. Difficult and painful, it may be the only solution. If they just cannot afford the maintenance, utilities and taxes, it may help to find a less expensive home. Another idea may be to sell a car, camper or boat that costs too much to maintain or insure.
Consider your parents living with you. This is happening more and more. If they just cannot cut it from the suggestions above, this may be your last resort. You could allow them to pay a small amount of rent. This would serve two purposes. Allow them to keep their financial dignity and feel like they are contributing. Plus, it would offset the additional food, utilities and upkeep. This arrangement could free up quite a bit of money. Not too mention if your parents are talented cooks, plumbers or carpenters!
You may dread these conversations with parents. There will be complaining, some frustration and gnashing of teeth. However, helping your parents may be a blessing. It will be quality time spent together as well as support both financially and monetarily.
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