We focus a lot of our energies here at AgingOptions in helping people prepare well in advance for retirement. Our philosophy is simple: we believe that, with a comprehensive and strategic plan in place – a plan we call a “LifePlan – just about anyone can enjoy their retirement years securely, knowing that they won’t lose their assets, become a burden to family members, or end up living in a nursing home against their will. That sounds all well and good, but what if you’re an adult whose aging parents don’t seem to be getting the message? What can you do if your parents seem unprepared for retirement?
With Parents Unprepared for Retirement, Adult Kids Need to Step Up
This recent article from the Motley Fool website gives an answer to that question. Reporter Catherine Brock lists what the Fool calls six things you can do when your parents have no savings. We should point out that these tips all involve money, and if you are an AgingOptions regular, you know that finances are only part of the retirement challenge – there are plenty of other issues to worry about if mom and dad are facing retirement ill-equipped for what lies ahead. We’ll discuss those issues in a moment, but first let’s consider what Brock has to say about helping your aging parents come to grips with their retirement finances. These ideas could prove helpful.
“It sounds like the makings of a sitcom,” Brock writes, “but your parents may end up rooming with you if they haven’t started saving for retirement.” She quotes a recent Harvard report concluding that 3.4 million Americans 65 and older were living in the home of one of their adult kids in 2016. Sharing your home with your parent or parents may be your preferred solution to the challenge of retirement housing, but that’s not true for many families. The article says, “Before you start counting the ways your life will change once your parents move in, prepare to do some information gathering. Your parents may not have much in savings, but the faster you can get their finances in order, the better off you’ll all be.”
Parents Unprepared: Time for Family Members to Get Involved, Get Specific
Here are the six suggestions from Motley Fool.
- Get your siblings on board. We agree that families need to handle these issues together if at all possible. “Start by having an informal chat with your siblings to share perspectives,” Brock suggests. “Has anyone already had this conversation with mom and dad? If so, how’d it go?” If everyone gets their thoughts together, the more informed everyone is, the easier it will be to avoid surprises later on.
- Invite your folks to an open conversation about finances. As Brock warns, “Your parents may be defensive about their financial situation, so it’s important to set the tone carefully. Do your best to treat this as a shared circumstance. You’re not fixing or blaming. You’re simply looking out for them by planning for their future.” Based on our many years of experience with thousands of clients, having this “open conversation” unaided can often backfire, however. We think it is often best to have this “conversation” in the form of a family conference held on neutral territory and facilitated by an estate planning attorney. Contact us if you want to pursue this idea.
- Ask for the numbers. The Motley Fool article points out that the discussion of finances can’t simply revolve around generalities – you need to get specific. “You can be most helpful when you know how much your parents spend, their income, what they own, and what they owe. It’s also useful to chat openly about how stable they think their income is.” Once you know your parents’ true situation, you can make sure they get good advice about vital issues such as Social Security. This is also a good time to make sure someone in the family has access to important passwords to financial accounts.
Parents Unprepared: Expenses, Downsizing, New Income Sources
- Address debt and out-of-whack expenses first. This advice from Motley Fool sounds good but can quickly become an emotional minefield. “If your folks have a ton of debt or are borrowing to cover their expenses, help them find ways to spend less,” Brock writes. She suggests reviewing credit card statements and checking accounts, helping your parents shop for cheaper insurance rates, and getting them off expensive phone and cable plans. Then, “once your parents’ spending is in line with their income, every bit of savings should go towards paying down the debt.”
- Consider downsizing on homes and cars. “If your parents are open to it, downsizing now may result in more freedom later,” says the article. The idea of downsizing the home may be a tough conversation, but it’s one worth having. See if your parents might be open to getting rid of a second car, especially if family can help with occasional transportation. Consider introducing them to ride-sharing services like Lyft and Über.
- Brainstorm new streams of income. We live in the era of the gig economy, and retirees are among the biggest beneficiaries. According to a 2019 Prudential study called “Gig Workers in America,” almost one-third of “Gig-Only” workers are boomers, and about one-third of those are retired. Many are using gig work to cushion the transition to full-time retirement. Typical gigs include construction, installation, repair, personal care, business, finance, and sales. Gig workers in the 55-plus age group are earning over $43,000 per year on average, says the study. “Maybe your dad’s success in the corporate world positions him for business coaching gigs,” Motley Fool “Or your mom’s love of gardening could earn her some light yard work. They could also rent out an extra room in the house on Airbnb.”
Parents Unprepared? It’s Not Just About the Money
As we said above, the Motley Fool article is helpful, but limited, because it’s entirely about finances. True retirement preparation and planning involve much more than money! We advise you, if your parents appear to be unready for the retirement phase of life, that you and your siblings should invite them to accompany you to a free LifePlanning Seminar with Rajiv Nagaich, whose comprehensive and informative approach to retirement will open their eyes – and yours – to a much bigger picture. You and your folks will discover how finances, housing choices, medical coverage and legal planning are all intertwined, and how family dynamics play a key role in a successful retirement. A LifePlan from AgingOptions is the only plan we know of that brings all these “puzzle pieces” together so that your plan for the future is complete.
Please visit the Live Events page on our website to discover more about LifePlanning Seminars, along with a complete calendar of upcoming dates, times and locations. There’s no cost, and no obligation – but we predict you and your parents will come away encouraged, enlightened, and ready for a fresh approach to retirement planning. We’ll look forward to seeing you soon – and meanwhile, “Age on!”
(originally reported at www.fool.com)