According to a 2019 study by the Transamerica Center for Retirement Studies, 8% of Gen Xers and 3% of Boomers say supporting their parents is a top financial priority in their lives.
Next Avenue’s recent article entitled “When Your Parents Need Financial Help” says that if this is a financial priority for you, try a respectful approach to see the extent of your parents’ money issues and what you might be able to do to help.
In reviewing their finances, keep an eye out for one financial issue in particular that your parents may have: they may have failed to set aside money for long-term care, because of their debts.
However, before you jump in with both feet, consider your own money situation. Remember that your own finances come first because you may otherwise risk your own long term stability by overcommitting. Therefore, if you can afford to help them, you have to establish boundaries. If you have siblings, bring them into the discussion and ask about sharing the responsibility. After you figure out to what extent you can afford to help financially, reach out to your parents — with care. You don’t want to come off as criticizing or judging them for making financial mistakes or bad financial decisions.
It’s important to begin the conversation early. You also may want to refer your parents to a financial planner or to a credit counselor. If housing is a major expense, it may be time for your parents to downsize to a more affordable home. You can also look into having them move in with you.
If not a topic of discussion, perhaps you’re able to review their expenses to see what they can cut and help them find ways to improve their financial situation. You should also look into federal, state, and local resources, like benefits for which your parents may be eligible.
After you’ve delved into all the resources, and you’re also ready to help your parents financially, make sure you incorporate all of this newfound research and knowledge into building your own financial plan. Instead of handing your parents cash or a check to pay outstanding bills, pay the bills yourself. This will allow you to be certain that the money is actually used for the bill, rather than something else.
For long-term care assistance, ask an elder law attorney for help. They can investigate your parents’ eligibility for Medicaid.
Ensure that your parents know that you have their best interests at heart when assisting them with long-term care. Be respectful of your parents and tell them you’re not trying to take over.
Reference: Next Avenue (Jan. 30, 2020) “When Your Parents Need Financial Help”