How to spot warning signs of financial problems
Often, adult children need some money from their parents. But what do you do when your parents need financial help?
You won’t be alone. 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 current financial priority.
If it’s a financial priority for you, take a respectful approach to find out the extent of your parents’ money woes and what you might be able to do to help.
Your mother and father may not have set aside money for long-term care, they may have debts and they may not have built up savings, says Cameron Huddleston, author of “Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances.”
Think about your finances, too
But before you step in, think about your own money situation. “You have to remember your own finances take priority,” Huddleston says.
You can wind up jeopardizing your own finances by stepping in and doing more than you can afford, she notes. “If you can afford to help them, you have to establish boundaries,” Huddleston says.
If you have siblings, they need to be part of this conversation. “You need to be talking to them,” Huddleston says. “Share the responsibility. Figure out what each of you is willing and able to do.”
Once you determine how much you can afford to help financially, reach out to your parents — gently.
“You don’t want to make it look like you’re criticizing or judging them for making financial mistakes or bad financial decisions,” Huddleston says. “Instead, you might want to ask an open-ended question: ‘Mom and Dad, what does retirement look like?’”
Spotting signs of financial difficulty
Nola Kulig, 61, of Longmeadow, Mass., says that after her father died, and her mother progressed through her 80s, Kulig began watching for signs of financial difficulty.
“She said something to me about the nice people at the IRS who had fixed her return. That set some alarms off,” Kulig remembers. So Kulig offered to help her mom manage her finances.
She became a joint owner on her mom’s checking account, making it easy to see how her mother was doing paying bills. “So, I began watching for any signs of issues there,” Kulig says.
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Also, a friend of Kulig’s had stopped in to check on her mother and found she was in danger of having her utilities cut off due to nonpayment. “We fixed that and put her on an autopay program,” Kulig says.
“With hindsight, I wish I had stepped in sooner,” she says.
Start the conversation early
Her advice to others: “Start the conversation early. This is easier in some families than others. But if family has always played a role in helping each other, it comes naturally as life progresses,” Kulig says.
You might want to refer your parents to a financial planner or to a credit counselor with free budgeting advice or to free budget apps. “Point them to resources that can help them,” Huddleston says.
Since housing is such a big expense, it may be time for your parents to downsize to a more affordable home. If so, here is the big question: “Is there space for them to move in with you?”
Otherwise, if they are open to the idea, you can go through your parents’ expenses to see what they can cut. “Help them find ways to improve their financial situation,” Huddleston says.
Don’t forget to check out federal, state and local resources that may help. Visit the federal government’s Benefits.gov site to find out which benefits your parents may be eligible for and how they can receive them. The National Council on Aging also has a useful, free guide to benefits for older Americans: You Gave, Now Save.
The logistics of assistance
After you’ve explored all the resources and you’re also ready to help your parents financially, make sure you incorporate any assistance into your financial plan. “It needs to be a line item in your budget,” Huddleston says.
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Rather than giving your parents cash or a check to pay outstanding bills, however, pay the bills yourself. That way you’ll be sure the money is actually used for the bill and not for something else.
If your mom or dad needs help with daily living, reach out for help from a volunteer at their church or synagogue.
Helping with long-term care costs
For long-term care assistance, check out resources. Are your parents eligible for Medicaid? Do they have an elder law attorney? The local Area Agency on Aging can link you to local resources.
Related: Have you started saving for your parents’ old age?