How to financially support your parents
Balancing their needs and yours can be difficult.
Like many young adults, Jen Holmes of Chicago sometimes looked to her mom for financial help. However, the roles reversed a couple of years ago when the 34-year-old public relations executive’s income increased and her 70-year-old mom retired.
“It transitioned from me asking to borrow money to her asking to borrow money,” Holmes says. Today, Holmes sets aside cash each month to help her mom with rent and other bills. “She is retired and receives Social Security, which is not even close to enough to get by,” Holmes says.
A growing number of seniors are finding themselves needing financial help. A study released this month by the Consumer Bankruptcy Project found that bankruptcy filings among people 65 and older have tripled since 1991. Sometimes medical costs are to blame; in other cases, seniors find that they have not saved enough for retirement. Like Holmes, many adult children step in to provide their parents with financial relief.
“Out of love and concern, we often try to step up to help our family members, but we have to understand some of the trade- offs,” says Kamilah WilliamsKemp, vice-president of longterm care for Northwestern Mutual.
If you’re planning to offer financial help to mom and dad, here’s how to balance it with taking care of your own needs:
Determine the cost
Before you commit to helping out financially, make sure you are clear about the expenses involved. According to Northwestern Mutual’s 2018 C.A.R.E. Study, 34 percent of caregivers spend more than 20 percent of their monthly budget on care for loved ones. That could easily add up to $500 to $1,000 a month, WilliamsKemp says, so make sure you understand what you’re signing up for. Have a conversation
Ask your parents what they need and let them know how you can help, says Josh Simpson, investment adviser with Lake Advisory Group in The Villages, Florida. Include siblings in the conversations. They may be able to contribute, which would lessen the burden on any one person.
Consider the personal cost
Think about how helping mom and dad will affect your own future. Will you have to put off retirement? Will you take on additional debt? If you’re married, make sure your spouse is OK with your plans, Simpson suggests.
Look for ways to preserve your savings
See if there are government benefits that could help your parents financially, Simpson suggests. The National Council on Aging’s website BenefitsCheckup.org can help you identify programs your parents may qualify for. Some people also pick up more hours at work or get a part-time job to help with additional costs, WilliamsKemp says.
Avoid sabotaging your retirement
“If you cannot afford to save for your own retirement, you’re really limited in what you can do to help your parents,” Simp- son says. If you do use retirement savings to help out, your kids may end up having to help you down the road. Instead, cut back on discretionary spending such as family vacations.
Prepare in advance
James Colozzo started helping out his parents financially at the age of 39 after his father became ill in 1992. “I took over the family finances in 1993 and struggled with them on a month-to-month basis until 2013 when my mother passed away,” he says. Colozzo, now 57, says he’s still trying to recover from the toll of financial caregiving. To help others in the situation, he wrote a book about his struggle called “You Got to Do What You Got to Do: My Experience as a Caregiver Taking Care of My Parents for Over Twenty Years.” He urges anyone with aging parents to figure out what they’d do if their parents experienced a financial crisis. “Find out if they have long-term care insurance. Most people that have living parents are going to have to think about this.”