Helping Your Aging Parents With Their Finances? Here’s How To Start
Cultural and generational differences can cause friction between you and your parents.
At the beginning of my personal finance journey in 2016, the best I could do to help my family was pay for groceries or a few medical bills. Since then, my husband and I have saved $1 million for retirement and become completely debt free. This affords us the ability to navigate the financial challenges of the “sandwich generation”: supporting aging parents, the next generation and ourselves.
If you’re feeling the pressure of caring for aging parents, here are five ways you can start to provide support without putting your own financial future at risk.
Write Out Your List Of Questions For Your Parents
I am the eighth of my father’s nine children. He was older than most of my peers’ parents, and my mother was plagued with various health issues that forced her to leave the workforce earlier than expected.
So, I found myself worrying about the financial obligations of caretaking sooner than my friends did, and especially because I knew that in Filipino culture, I was implicitly expected to take care of them, even if I couldn’t afford it.
I had no idea where to begin, so I started by simply writing down the questions I had for them:
Do you owe any money? Are you planning to pay your debts down? What amount do you have saved for retirement? How much is on the mortgage? Are you planning to stay in this home? If there’s a health emergency, what is your expectation of me? Of my siblings? Would you want to go to an assisted living facility? What do you think about having an aide come to your home?
The swirl of questions in my head gave me a lot of anxiety because I realized how little I knew about my parents’ financial position, and how costly it could be to care for elderly parents. Getting the questions out of my brain and onto paper helped me organize my thoughts, and help facilitate a conversation with my husband about what questions he had for his parents, too.
Ask How Your Parents Feel Before Talking Numbers
My mother-in-law retired this past year, and even though I’ve been married into my husband’s family for more than a decade, we never talked about his parents’ retirement plans. When my mother-in-law started contemplating retirement, I asked what was stopping her. I learned she was scared to retire, when I assumed she would be excited.
Despite having a financial planner for many years, my inlaws weren’t sure if they had enough to retire. My mother-in-law’s fear wasn’t without base. Federal Reserve data shows the median balance in a retirement account in 2019 for a household nearing retirement (age 55-64) was just $144,000.
At first I was frustrated she hadn’t shared this sooner. I then realized it was less about hiding finances from us, and more about the shame of having worked hard for so many years and still thinking they hadn’t saved enough.
Even more surprisingly, she had no idea what she wanted to do in retirement. It saddened me to hear her say, “If I’m not working, what good am I?” I witnessed my father have that same loss of identity when he retired and spent years looking for new things to do, and to feel like he was still valuable. I hadn’t considered that she was conditioned to think like so many of our parents that working equals worth.
I learned my mother-in-law likes going to Broadway shows, and so we’ve made it a regular family gathering. Since then, my husband and I have had more frequent conversations with his parents. We’re encouraging them to explore new interests and hobbies, and spending more time with them than we have in the past.
Have Your Own Estate Plan, Even If You’re Young And Healthy
I unfortunately had to learn the hard way what it’s like to have someone pass away with no plan in place. When my father died, we were left to make a lot of decisions while also managing grief.
Two out of three Americans do not have any type of estate planning document, according to a study by Caring.com. It’s uncomfortable, but I found that creating my own estate plan not only helped me feel more financially responsible. It also equipped me to have a more informed conversation with my aging parents who didn’t have anything in place.
Even though we are relatively young and healthy, my husband and I review our estate plan annually, or whenever our assets have changed significantly, like when we recently sold our house. It’s an annual reminder to review all our assets and insurances, but also to have a deeper review about the relationships that matter to us most.
Having our own estate plans opened up a less awkward conversation to talk about finances with our families because we were walking the walk and not just talking the talk when it came to planning for the future.
Don’t Assume Your Parents Know Or Care About Money The Same Way You Do
My father passed away almost two years ago, and up until recently, I kept thinking, “No one taught me about how to manage money.” I hear the same response from many of the people I’ve coached — that they had no financial literacy education while growing up.
It only occurred to me recently that my parents couldn’t teach us how to manage money well because they were already doing the best they could as immigrants who left rural areas of a developing nation to build families, careers and stable homes completely from scratch. I resolved to stop resenting my parents for what they did not have the capacity to teach me.
When I started managing my money well, I’m not proud to say that I was obnoxious about it. I brought up what I learned in family gatherings, sent financial books as gifts and scoffed when asked why we were being so “cheap.”
Eventually, I just had to mind my own business, and stop offering unsolicited advice.
Instead, Show Them By Pursuing Your Own Financial Independence
I once was criticized for pursuing the FIRE (financial independence, retire early) movement because it appears to be selfish. FIRE can be perceived as caring for yourself instead of others.
When my husband and I paid off $72,000 of student loans, our mortgage in our thirties and I quit my corporate job to pursue my own business, my in-laws started taking notice and asking questions. I shared our net worth, our budget and how our “cheap” choices were allowing us to take more time off from work.
To my surprise, my in-laws accelerated their mortgage payments and paid off their house shortly after we paid off ours. Showing them, rather than telling them, was much more effective.
Many of my students voiced similar concerns, particularly those from collectivist cultures who feel guilty for prioritizing their own finances before their families. I’ve had several Filipino clients who send money back to their families in the Philippines, even when deep in their own debt and living paycheck to paycheck.
Financially supporting aging parents when your own finances are unsustainable can only last so long. It took me and my husband three years to pay off $300,000 of debt, but in exchange, we can now afford to take care of ourselves and our parents if we need to. Pursuing your own financial independence first will not only ultimately create more generational wealth, but also more freedom to spend money with your family while you are all still alive and well.
