They helped you when you were little and supported you through your teens, your college years and possibly into young adulthood. Now it seems that a significant number of adult kids are returning the favor and helping to support their aging parents financially. That’s the conclusion from a newly-released AARP survey, highlighted in this New York Times story by reporter Ann Carrns. The story appeared January 31st.
Supporting Aging Parents Despite Financial Strain
“Many adults give financial support to their parents, despite feeling a strain on their own budgets,” Carrns writes. “About a third of adults in their 40s, 50s and early 60s said they had given a parent money in the past year.” The AARP study, which you’ll find here, said that, of that group of adult kids, roughly half had given at least $1,000, and about one in five reported giving their parents $5,000 or more. The Times article says this support went toward necessities, not luxuries. “The money was most often paid monthly or weekly for needs like groceries and housing, the survey found.” As George Mannes of AARP stated, “This is not about helping Mom and Dad take another cruise.”
The AARP report, which involved over 1,500 respondents, matches a smaller survey done in 2013 by the Pew Research Center. According to the New York Times analysis, many people are helping out their folks in spite of their own financial pressures. “A third of all midlife adults said they were ‘just meeting’ or ‘falling short’ of expenses, which doesn’t leave much room for savings for their own retirement,” the article states. As a result, “More than a quarter of the adults who provided financial help to their parents said it had placed a ‘high’ level of financial strain on their family.”
Supporting Aging Parents: The Sandwich Generation
The AARP survey showed that about one in five respondents is caught in the “sandwich” between aging parents and kids just starting out. “Many midlife adults are also supporting adult children,” says the New York Times. “Nineteen percent of those with adult children and aging parents said they were helping both financially.” Yet in spite of the pressure, Americans believe supporting their aging parents is the right thing to do. “That may help explain why so many are doing it, even at a risk to their own financial well-being,” the article says. After all, as the AARP’s Mannes said, “they raised you.” The stress of helping out mom and dad may be part of the reason why many middle-aged people are facing a major challenge in saving for themselves. According to Federal Reserve data from 2018, at least one-quarter of working Americans have no retirement savings or pension.
So, should you help your parents financially, even at the cost of your own retirement security? The New York Times article lists some important questions you should answer before making up your mind.
Supporting Aging Parents: Can You Still Save for your Own Retirement?
“People tend to quickly say yes when a parent asks for help,” says the article. “But it’s important to examine your own budget and retirement plans, and calculate how much you can realistically spend over time.” It would be wise to consult with a qualified financial planner to properly analyze your situation. This would also be an excellent time to create a financial dashboard, which can help you with all aspects of saving, spending, and investing. Contact us at AgingOptions and we can refer you to a recommended adviser to assist you.
“If you decide you can help financially, be clear about how much you can provide and what the money is to be used for so boundaries are established upfront,” one planner told the New York Times. “If there isn’t much extra money to spare but you are determined to help, you may have to cut back in some way — say, postpone buying a new car — to free up cash.” While it might be necessary to reduce your own retirement savings contribution, analysts caution against stopping altogether. “Don’t stop your own savings,” another adviser stated. “You don’t want to end up in the same situation your parents are in.”
Supporting Aging Parents: Can You Initiate What May Be an Awkward Conversation?
Most people don’t feel confident talking to their parents about money, the article says. “Parents may feel embarrassed or ashamed about asking for help, which can make a discussion even more difficult. So accept that the conversation will be awkward — but have it anyway.” The sooner you have an honest financial conversation with the folks, the better. Start the conversation when the parents first ask for help. “Don’t be shy about requesting details about their finances,” says the Times, and never make an open-ended commitment. Figure out what’s triggering the problem and deal with specific issues.
This is an appropriate topic for a family meeting. We’ve hosted many of these at AgingOptions, and would be glad to discuss the benefits of a facilitated conference with you, your parents, and your siblings. As the New York Times suggests, “If emotions run high, it may help to have a neutral person — a lawyer or a financial adviser the family trusts — mediate the discussion to make sure the conversation is constructive.”
Supporting Aging Parents: What Other Help is Available?
Is it time to sell the family home and downsize? Would your parents be good candidates for a reverse mortgage? These are worthwhile options to consider. There are also some budgeting tips available from the National Council on Aging. But we think one of the best things you can do to help your parents while helping yourself is to bring them to an AgingOptions LifePlanning Seminar. After hearing Rajiv explain the realities of comprehensive retirement planning and the power of a LifePlan, you and your folks will come away armed with fresh new information and a much better perspective on how to protect your assets, avoid becoming a burden to loved ones, and escape the trap of being forced against your desires into institutional care.
Visit our Live Events page for a calendar of upcoming seminars, and then sign up online or by phone for the date and time of your choice. Whatever the challenges you and your parents may be facing, a LifePlan can help you see a clearer path forward. We’ll be eager to meet you – and meanwhile, “Age on!”
(originally reported at www.nytimes.com)