Financially Supporting Your Parents: 7 Steps to Take
It’s a fact: multigenerational households are becoming more common in the United States. In the ’50s, it wasn’t unusual for older adults to live with their grown children and possibly grandchildren. That living arrangement trended downward for several decades, but saw a big upswing between 2000 and 2014. In fact, in 2014, 19% of Americans — 60.6 million people — lived in households that included at least two generations of adults.
The economy explains some of these trends. When retirement funds crashed during the Great Recession, older adults may have suddenly found themselves unable to financially make it on their own. Couple that with rising housing costs and a shaky job market and the result is that many in middle-age who are caring for elderly parents can’t afford to put mom and dad in a care facility.
You can’t trace the entirety of this trend to the economy, though. Actually, some of it is due to increasing diversity in America. The Pew research shows that more families with Asian, African American, and Hispanic backgrounds are likely to live in a multigenerational household. This is likely due, at least in part, to upbringing and the cultural expectation that adult children are to support their elderly parents.
Regardless of culture or background, many adults expect to have at least some role in caring for their parents when they’re no longer able to do so themselves. But what this looks like — and the financial and emotional toll it takes — can vary from family to family. If you think you might be in this situation in the coming years, start taking the following steps now:
1. Consult your spouse and siblings
The first step in deciding how to help your aging parents financially isn’t necessarily to talk to your parents. Sure, the conversation might come up. But before you commit to anything or set expectations, consult with your spouse and any siblings who are in the picture.
It’s essential to be on the same page about elderly care with your spouse. Financially and practically supporting one (or more) parents can put some serious strain on your marriage. So, talk to your spouse about what you would like to do for your parents. Then, reach an agreement on what you, as a couple, are willing and able to do — financially, but also practically and emotionally. Also, decide ahead of time what boundaries you need to put in place in order to preserve healthy relationships all around.
You’ll definitely want to pull in your siblings for this. See how much they’re willing and able to contribute to your parents’ care, financially. But again, also consider the practical aspects of caring for them. Who is most able to take on emotional support roles? Who is best at dealing with practical details? Does one of the siblings prefer to have mom or dad live with their family, or do you need to work together to support your parents in a care facility or retirement community?
Having these conversations before approaching your parents can help everyone stay on the same page.
2. Talk with your parents
Next, you’ll want to have a frank conversation with your parents. You don’t have to start by laying out the nitty-gritty details of their budget. Instead, try talking more generally about your parents’ goals and needs as they approach old age. Do they want to live on their own as long as possible? Have they considered retirement or assisted living facility, depending on their physical and medical needs? Do they expect to be healthy well into old age, based on their ancestry? Or are health problems already cropping up and complicating matters?
Read More: How to Afford Healthcare in Retirement
During this conversation, you might bring up some of the options you’ve already thought out. Whether that’s helping your parents settle into a nearby assisted living facility or adding an in-law suite to your home, present these options as just that… options. Unless your parents are at the point where they are no longer capable of making sound decisions, you should try, wherever possible, to defer to their judgment and preferences.
3. Understand the financial situation
Once you’ve gotten a feel as a whole family — spouse, siblings, and parents — for everyone’s needs, preferences, and boundaries, it may be time to have a frank conversation about money. By this time, you should already know what you are willing and able to contribute to your parents’ care and well-being. Hopefully, you also have an idea of what, if anything, your siblings can contribute.
Now, it’s time to figure out where your parents are financially. You might even want to consider pulling in a financial planner who can look holistically at your parents’ investments, retirement accounts, and other assets. This can help you get a more objective view of the best way to allocate resources.
If you don’t already have a trusted financial planner, the process can be overwhelming to find the right match, especially if you are dealing with stressful issues about the long-term care of your parents. One way to make this step easier is to use a trusted platform like Paladin Registry, which matches users with vetted financial advisors. I like this platform because its easy to use, free, and only matches users with five-star rated financial advisors. See our full review of Paladin Registry here.
Related: Moving Assets Into a Revocable Living Trust
Digging into the financial details may be awkward. But it’s essential in this decision-making process, as the available resources — including government-funded benefits, Social Security, and assets — will tell you what options are available to your family now and in the future.
4. Consider your insurance options
Once you have a better understanding of the financial situation, you’ll want to consider what type of insurance your parents have. Don’t skip this piece because it seems complicated – it can be easier to do than you may think and it’s so important.
If mom and dad are over 65, they qualify for Medicare. But basic Medicare probably isn’t enough to shield them from big medical expenses — it doesn’t even cover for things like prescription drugs or visits to your family doctor. You’ll want to look into Medicare Advantage – this gives your parents additional coverage for things like hospital visits and prescription drugs (which is so important since the older they get, the more likely it is they’ll be on prescription drugs).
Another program to consider for your parents is Medicare Supplement – this covers more out of pocket expenses than basic Medicare and allows your parents more choice when it comes to the doctors, hospitals, and specialists they see.
You can find both Medicare Advantage and Medicare Supplement plans from many providers, so It is recommended to shop around and compare the rates, before making a decision. A good place to start with is Assurance. You can compare different quotes, tailored to your specific needs, by a sophisticated algorithm.
Beyond Medicare, you’ll want to consider long-term care insurance. This is an insurance product specifically for paying for long-term healthcare, often including assisted living and in-home care that isn’t covered by insurance or Medicare. Depending on your parents’ current health status, premiums may be relatively affordable. And you could consider paying for premiums yourself — or with the help of siblings — to reduce the risk of having to pay out loads of money for long-term care in the future.
5. Put a plan in place (and have a backup)
Once your family has worked through all of these issues — probably over the course of several months or even years — it’s time to put a formal plan into place. This might include steps like adding an in-law suite to your own home or converting some space you already have in order to move your parents into your home. Or it might require you to visit local assisted living and retirement communities, to be ready to move mom or dad there when the time comes.
Whatever you plan, though, make sure you have a backup. This is especially true if your goal is to move your parents into your own home. Often times, this is an excellent fit and winds up benefiting everyone. But if medical or mental health needs become more complex, this arrangement may not work out as well as you’d hoped. Always hope for the best, but plan for the worst. In this case, you may need to plan for an alternative living situation or figure out how you could afford in-home care to help lighten the load.
6. Make it all legal
After the plan is made, it’s a good idea to ensure that a responsible sibling has medical power of attorney and financial power of attorney for your parents. While you’re helping your parents get these documents drawn up, it’s a good idea to have them go over their will with an attorney, as well. If they don’t have an attorney or can’t afford one, a great option is to use Trust & Will, an online site that makes it easy to create a trust, will, and other legal documents.
Planning Your Estate? You Need These 3 Documents NOW
In the end, it’s up to your parents, as long as they are of sound mind, to decide who has power of attorney and how to spell out their own will. And they may prefer to work these documents out directly with an attorney. If that’s the case, simply make sure you know who has power of attorney and where copies of their documents are stored, in case you should ever need them.
7. Start helping out early
As memories start to fade or medical needs get complicated, older adults occasionally have trouble managing their finances. If you notice this happening to your parents, you may want to start helping out with their finances sooner rather than later. Sometimes this is as simple as helping them write a budget and set up automatic bill payments so things don’t get missed. Or it may be more complicated, like managing investment accounts to make the most of the savings.
Related: 7 Free Tools to Help Aging Parents With Their Money
Caring for elderly parents can be stressful — both emotionally and financially. Taking the time now to plan ahead for this eventuality will help take some of the stress out of the situation for everyone.
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My in-laws had their life set up simply and were self-sufficient with their retirement income made up of Social Security and two small pensions. However, we found ourselves being asked to help more and more. There was always some story about a home improvement or taxes or some one-time charge that we could help with. The payments became regular and we were glad to be able to help. Of course we sent the money and over the last few years they were alive, we awakened to the fact that our money was not being spent on the parents-in-law.
They were giving money to their other children and supporting their very financially irresponsible lifestyles. Their youngest daughter never went to work at all and when her husband fell ill, she felt entitled to be supported by the bank of Mom and Dad financed by my husband and I. When we found out where the money was going, we stopped. She continued to drain their meager savings until my father-in-law finally realized that if he didn’t stop, neither his daughter or her husband would never look for work.
The bottom line is that if you are going to help support your parents you have to take part in their financial planning or at least KNOW where your money is going.
No one can really say what they will do. Circumstances are all different. What if you had to take care of your in-laws because they were financially irrespsonsible? What if they retired early and chose not to work and support themselves and simply rely on you? Would you still be so willing to take them in and pay for them while they take their minimal amount of retirement and blow it on other things? This are difficult situations to deal with. You always think of when your parents are old and cannot care for themselves, sure, you will help them. That is something that they cannot help. But if they had a choice but chooses to lean on you instead, what do you do then?
My great-grandmother lived to 90 and was able to take care of herself until around 85. I think i’m in good shape for not having to take care of my parents.
I don’t expect to financially support my mom as she ages (my dad passed a few years ago) because she and my dad worked very hard and invested wisely through the years. I do, however, expect (and hope) to take care of her when the day comes that she can not physically take care of herself. Right now she’s still active and running her business, and wants to stay that way.
I will financially support my parents as they get older but thankfully they saved up money, paid off their house, paid off debts so for them it shouldn’t be an issue.
My father died 15 years ago and left no resources for my Mom. We , 5 kids, have helped her the past 15 years but she is now not able to stay by herself. After discussion with my siblings it was decided that she will move in with my younger sister but we have still helped my sister and her family and still help to make sure that my Mother received some luxuries. Mom died a few years ago and I would give anything to be able to help her still.
But having no children ourselves we are trying to make sure that we have the resources to take care of ourselves in our old age.
I do expect to have to help my mom in retirement. She has a very small pension that will be coming in, and she is not in the best shape though she is only in her early sixties. I worry about how I will take care of her and my three kids at the same time.
My mother died in 2003. Thanks to her extreme caution with money she and my stepfather were OK even though he had to retire early due to the factory closing. My sisters and I cared for her in their home for the last few of weeks of her life, with help from Hospice.
My father is doing well health- and finance-wise. I doubt I’ll be called upon to help support him. If I were, i would do what I could.
My daughter and son-in-law, on the other hand, have had to take in his parents because they are facing bankruptcy. It hasn’t been easy for anyone involved. I am saving and planning so that I am not a burden on her when I get older — both she and my son-in-law have chronic illnesses. I also have designated her as the sole beneficiary of both my estate, such as it is, and my life insurance policy.
With the aging population, this is just the beginning of a long trend. The early 1900s was characterized by families living together in three tenement buildings. I think we are going to see that again in the next 20-30 years. The economy has changed forever.
My Mom lives with us here in Missouri 6 months of the year. She spends her winters with my brother and his wife in Florida (go figure). Although fairly healthy at 93 she is legally blind and needs help in the form of transportation, housecleaning duties, cooking clothes-washing etc. She contributes $400 dollars a month to our respective household budgets but does require “time” from both me and my wife. We don’t support her financially other than I do all her bookkeeping and bill paying. We feel blessed rather than obligated as she is the only parent either of us have left. Although there are restrictions to our retirement activities, we can always find a way to fullfill our own retirement plans. While making the trek to Florida last year, my wife and I also went on a cruise to the Carribean with a trip to the Panama Canal.
I believe one should take care of one’s aged parents, financially if necessary. I am not banking on my children taking care of my though, because I will not need financial assistance from them, and will will my estate to them, which will include tons of cash. For aged parents that need financial assistance, I think it is natural that their children step in. One good turn deserves another
Fortunately my parents are pretty well off, having sold their business interests and investing their money wisely. They will however need emotional and physical support as they get older. So lets not forget the importance of that as well.
We’ve had to deal with these issues a lot in recent years. My wife’s parents both died within the last few years, her mom was in and out of the hospital and rehab facilities for a while because she needed pretty intensive care. We were prepared to have her dad move in but he was diagnosed with lung cancer and spent most of the time in and out of the hospital himself…I think he only spent a week total living with us. My dad died before that and now my mom and sister live together in the house I grew up in. Money is very tight for them though and I can see my mom needing help in the future if things don’t turn around.
No, luckily my parents are able to support themselves in retirement. My mother by careful planning and my father by luck and circumstance. I would step in and manage their finances if necessary, but I don’t think I’ll need to contribute to it. We have an implicit agreement that each will take care of their own retirement.
I’m helping my parents make sure that they are able to take care of themselves. I want them to be financially able, but I will step in if needed.
Financially is not too much of a way I can do a lot with to help take care of my family member.That is more on my brothers part. But for helping come to the rescue? Take care of the more important needs the people seek.To be there. Show your love not just saying it. GIVING from the. Heart freely as Christ our Lord ask us.Flowers on her bday.NotHim!Instead of planning to put her somewhere too soon as he did when she didn’t need to yet & right after that? I find out she died! Unjust.
This is a very thought provoking subject. It definitely highlights the need to make smart financial decisions throughout your life. For one, I don’t want to put an unnecessary burden on my child/children as I age, and I want to be able to help my wife’s or my own parents should they need it later in life. Both knowledge and discipline are needed to attain these goals. Thankfully, blogs such as this offer great advice regarding financial fitness. This post emphasizes the fact that my actions today can greatly affect the well being of both my parents and my children.
Although my parents are still young, I’ve been thinking about this more and more. I’m about to remarry and gain two wonderful stepkids in addition to having my own daughter so my family will expand and by extension get more expensive. I don’t specifically budget or plan for taking care of my parents as they age, but I am looking into things like long-term care insurance for them and when I buy a house in the next few years, I want to make sure I’d have room for either one of them. I’ve already been in a situation where I’ve had to give my mother money to pay her mortgage and other bills during a serious illness; I’ve been fortunate to make a good income in recent years.
Thanks for this post. Gave me some serious food for thought!
I need to get a job first and start earning something for myself before I even start thinking about this. Hopefully the upcoming elections bring can bring some “hope and change” to the millions of unemployed.
My parents are great with their money, so I’m not too worried about having to help them out. That being said if they ever needed help I would love to be able to help them out.
This is an interesting topic. I for sure will be there for my mother if need be. I don’t really see it happening though -as she has managed her money well and has plenty in reserves. But, if it should happen – I would definitely be there.
Thankfully my Dad and in-laws are doing OK financially and I don’t expect we’ll need to support any of them with money. If they need medical care or assistance in that way then we might end up having one of them live with us eventually, but they are all relatively healthy so far.
Although I did not financially support my Mother, I took care of your personal financial life. I paid her bills, took care of her investments and made financial decisions for her. She lived a very long (almost 99 years) life and had dementia for the last 3 years before she died. It was emotionally and financially draining. It had an huge impact on my planning and thinking for the future.
I’ve been a parental caregiver for almost five years. Neither of my parents wanted the nursing home route. They didn’t need my financial support, they needed me to stay with them to be able to live at home. It is a full-time job. I try to earn a few bucks on the side but that is limited. So you see, even if they don’t need your money, they may need your time.
Caring for parents is definitely something that most people do not plan for. I know that my parents are fairly well secured for retirement, but that could change in the future. Its really just another reason that we all need to get our finances in good shape so that we have the ability to care for our family if necessary.
I’ve been thinking about this a bit more lately. With my ex I knew that we were most likely going to have to help support her parents at some point. They just hadn’t saved up much for retirement. Then there’s my parents…my mom is quite well off and will have no problem with retirement. My dad on the other side, I doubt he has anything saved up at all. Luckily he lives a pretty modest lifestyle. I think I may have to eventually help support him, but the catch is that he didn’t support me and my mom much while I was growing up. So it’s a bit tricky there. First thing’s first though…I need to get my finances improved so that those things are at least an option when they roll around.
I expect to be supporting my parents someday, though they’re in good health, so it doesn’t seem likely to happen very soon. Not only do I not mind, I consider it my privilege to give back to them a fraction of the care they gave me all my life. I was just talking to my husband about this the other day. We think it is very strange that our generation seems to assume that their lives will always be untouched by the needs of others outside their household, and feel put out with their own parents for needing them in their old age. The newish term “sandwich generation” is a good example of this thinking, as if every generation in history hasn’t needed to take care of both their elders and their children!
Financially, my husband and I aren’t in the best shape for taking on the needs of elderly people, but we will certainly do it anyway. We don’t believe in long-term facilities except for people who need skilled care. I’ve worked in enough of them to know that no one should leave their parents in those places. Many are downright abusive. Even the best ones are still lonely and devoid of warmth. They kill people early just because they’re so depressing.
We’re saving against the day that our parents need us, but I don’t expect to have every penny we need before that day comes. Life is hard, sometimes. I don’t see any point in complaining about it.
This is a very positive and compassionate way to think Cindy. My Dad passed away pretty young and we helped out our step-mom. He raised 11 kids, so he didn’t have much money to leave her. I’m sure my Dad would have been proud of us and I definitely felt good about doing it.