Denise Clark was flabbergasted and not without reason. Her mother wanted her children to buy her a brand new car and expensive birthday gifts for extended members of the family. Her mother thought nothing of asking for several hundreds of dollars each month from each of them to maintain her lifestyle. The Clarks are not the only family facing this issue, as reported in “How to Support Your Retired Parents Without Sinking Your Own Retirement Plans” from Money. A study from TD Ameritrade found that 13% of Americans are supporting a parent, including 19% of millennials.
This particular mother may have to find another money tree to shake. Clark doesn’t want to turn over the funds that she has saved over time, by careful budgeting to a parent who has a history of living beyond her means. All of the siblings have worked hard to attain financial security, devoting decades to building healthy nest eggs.
How can this family and others help aging parents, without sacrificing their own retirement or financial security?
Set boundaries, and stick to them. The role reversal of a child setting limits with a parent makes this a challenging set up, but it’s critical for the child to say no. The last thing you want is to go broke helping an elderly parent, and then finding yourself in the same situation with your own children years from now.
Address harmful money habits straight on. Spending as a hobby may be a symptom of depression or boredom. If that’s the situation, discuss it and consider getting the help of a professional counselor.
Don’t give cash directly to the person. If you can help out with small expenses and don’t want the money to be lost, pay a bill for them. The bill will be paid and the money won’t go elsewhere.
Try an approach of collaboration. Ask for their help in figuring out their financial future. Be encouraging, without scolding. If you’ve never talked about money, then be patient. It may take a while for them to accept your input, even if they are all too eager to accept financial gifts.
Check out government support programs. The Medicare Savings Program can help low-income seniors, who also qualify for Medicaid, afford a Medicare prescription plan. HUD runs a number of housing plans, although wait lists are often long.
If housing costs are a problem, look to alternatives. Are they willing to take on a roommate or two? The added rent money and socialization could alleviate some issues, although you have to be careful about who lives with your parent. A “Golden Girls” living situation might work.
Don’t overlook filing for bankruptcy. If their credit card debt, medical bills or underwater mortgage are overwhelming, bankruptcy might be a welcome relief.
Finally, if your own financial situation permits, consider setting up a trust with an estate planning attorney to benefit your aging parents. Inside a revocable living trust, a certain percentage of money or a set dollar amount can be distributed on a controlled basis, with a trustee who can be given the discretion to decide when assets should be distributed. If there are gambling or other abuse problems, restrictions should be built into the trust.
Reference: Money (December 3, 2019) “How to Support Your Retired Parents Without Sinking Your Own Retirement Plans”