Last month I was contacted by Kira Reginato, an elder-care management specialist and host of a weekly radio program in Santa Rosa, California. She’d come across an article I did for MSN Money, “Are you your parents’ ATM?”
Reginato invited me to be on her program, “Call Kira About Aging,” to talk about this very sensitive issue. If you’d like to hear the result, you can access the podcast here.
No time to listen? Let me give you a few of the highlights, starting with some frightening stats regarding folks currently in their 40s and 50s. According to the Pew Research Center:
- 27% provide primary support for a grown child.
- 21% have provided financial support to a parent aged 65 or older in the past year.
- 38% say both their grown children and their parents rely on them for emotional support.
Anybody but me think that sounds not only emotionally but financially exhausting?
Specifically: If you’re helping out parents whose money isn’t stretching far enough and/or picking up the slack for your under- or unemployed kids, what happens to your own finances?
The rate of bankruptcy filings among those ages 65 or older has more than doubled since 1991, according to a study from the AARP Policy Research Institute. Before you go off on the Baby Boomers and their profligate ways, consider these possible contributing factors:
- Some people invested wisely for retirement yet watched their funds shrivel during the downturn.
- Others were downsized late in their careers and went through most of their assets just to survive.
- Remember that “primary support for a grown child” thing? Raise your hand if you know of someone whose kid(s) never quite flew the coop.
- Women live longer than men but earn less and are more likely to take time out of the workplace to raise children or care for their parents.
- Perhaps they did save for retirement but didn’t/couldn’t imagine how much they’d need for unexpected expenses (especially the ones that accompany serious illness).
- Some people never learned smart money practices, and now it’s coming back to haunt them.
About that last: It could also be that your folks were shortsighted or foolish when it came to retirement planning. Maybe that was part of a lifelong pattern of laziness or mooching off whoever would open his wallet.
Are you legally obligated to help? Maybe
Suppose your parents were a couple of grasshoppers who sang and danced their way through life and now, in their golden years, expect you to pony up. Here’s where it gets interesting: 29 states have “filial responsibility laws” that require offspring to provide for their indigent folks.
These laws are rarely enforced, but some speculate that authorities could start invoking these laws to save on Medicaid expenses.
Can they actually make you pay? Depends on where you live: According to the National Center for Policy Analysis, 21 states allow a civil court action to obtain financial support or cost recovery, 12 states impose criminal penalties on children who do not support their parents, and three states allow both civil and criminal actions.
It’s not likely that your parents will look for pro bono representation and sue you if you won’t help with the taxes on their timeshare. But if they ask for help of any kind, don’t just dole out the cash – ask for a look at their finances.
It’s likely they’ll resist, saying that it’s none of your business. But the moment they ask you for help it becomes your business. If you don’t know what you’re dealing with you can’t make smart decisions.
Suppose you prop them up financially for months (or, heaven forbid, years) only to find out that their outgo greatly exceeds their income. They’ll wind up having to sell the house or file for bankruptcy anyway, and you’ll be out thousands of dollars that could have gone toward legal fees or getting settled in a smaller place.
Hard to say “no”
The first thing you should do is create a budget of their most basic needs and compare it to all income sources. If those needs aren’t being covered, several options can be considered:
- Getting a more manageable place to live, or having someone move in to share expenses (obviously you’d want to be very careful who you let move in – maybe a trusted relative).
- Considering whether to let them move in with you (this is a very delicate situation and you need to think it through pretty thoroughly).
- Getting together with siblings (if any) to chip in a certain amount each month.
- Helping them apply for aid such as food stamps or prescription drug assistance.
- Looking for services and breaks such as senior rides or property tax discounts.
I can’t emphasize this part strongly enough: While you should acknowledge how hard it must have been for them to ask, you should never make a loan you cannot afford.
It is very, very hard to say no. If you do say “yes,” it should hinge on your parents creating a workable budget. No one is suggesting that you should let your parents freeze in the dark. Tact and compassion are called for, of course.
But so is realism. You might have to be mature enough to acknowledge that you can’t afford to make a big enough difference. That would mean it’s time for them to rethink where they live and how they live.
If you feel yourself wavering, remember this: For plenty of people, the retirement they plan is the only retirement they’re going to get. Fewer and fewer companies have pension plans (and pension plans have been known to collapse).
You must put on your own oxygen mask first, lest you leave your own kids in the uncomfortable position you are facing. Do what you can for your parents, but also require them to be part of the solution. That could mean their having to make some hard, hard choices.
Don’t expect that this will be easy. Just necessary.