Updated on 08.13.07

Parents And Finances: An Uneasy Mix

Trent Hamm

A reader wrote to me recently with the following concerns about the financial health of her parents:

I’m still repairing my own finances (I’m out of debt but still working on retirement, I don’t yet own a home though I am 34)… but my parents have NO health insurance and NO retirement funds whatsoever. How does one prioritize such a thing? How would I prevent my parents’ continuing disaster of a life from undermining my own progress? How should I protect their meager assets (one house, no cars, no stocks, no bonds, no savings account, $10,00 cash) from the state before something befalls their health?

This is a situation where the raw financials of the situation rub strongly against cultural and personal values, and these values are going to be vastly different not only from culture to culture, but from family to family. Because of that, advice that would work for one specific family may create enormous problems if directly applied to other families.

Regardless of your family, there is a general framework of things that you can do to help everyone get on the same page that I discussed in detail earlier:

Don’t be angry. Quite often, parents will make statements and suggestions that provoke a sense of anger in the child, even if that’s not their intention. If you find yourself getting angry during this talk, look like you’re thinking, count to ten, and then ask yourself why exactly you got angry. Usually, it’s defensiveness, so ask yourself what you’re defending and why. In many cases, you’re defending a paper castle, something that you’d be better off revealing than hiding.

If their attitude makes you uncomfortable, ask questions. If they appear superior and condescending, ask them calmly if they’ve ever been in an awkward money situation before and how they dealt with it. Ask them how they would deal with your situation given that the past can’t be changed. Do it calmly and rationally above all, because anger is the one element that will cause this conversation to collapse.

Be completely open. If you are hiding things, you will only make things worse. Your life doesn’t have to be an open book, but if something is relevant to the topic, be open about it rather than hiding it. Not only will this answer more of your questions, it will encourage your parents to be more open as well.

Don’t be combative. Don’t enter into a financial conversation perceiving it to be a war, with ground gained and lost. Instead, look at it as a situation to personally improve yourself. The only way people win in conversation is if they gain a greater understanding of the issues discussed, not if they “win” or “lose.” Thus, quite often there’s nothing to argue or feel resentment about.

Ask lots of questions. The most valuable thing you can gain from a conversation is a resolution to the questions inside of you, so ask every question that comes to mind. Not only will you receive answers, giving others the chance to talk and say what’s on their mind will make them more calm and collected as well.

In addition, if you expect the talk to be difficult:

Figure out how you actually feel. Clearly, the reader above has some emotional ties to the situation that are quite messy. “Continuing disaster of a life” is a phrase that indicates some pretty strong negative feelings, and those feelings should be clarified. What do you feel is the right thing to do? If you’re harboring feelings contrary to your stated position, it’s going to be very hard to communicate well and communicate fairly with your family. If you believe something needs to change, have the courage to say so or don’t bother at all. That doesn’t mean you should be rude, merely that you should speak in a way that matches what you actually think is right.

Check your ego at the door. If you’re going to be honest, everyone needs to check their ego at the door. There is going to be some criticism in the air, and if people are adamantly holding onto their pride and their ego, not much will be accomplished.

State your expectations. The best first step to take is for everyone to state what they expect from everyone else. What do you expect from your parents? Financial independence? Planning? What do your parents expect from you? Financial support in their dotage? Likely, these expectations won’t match up and that’s the reason this conversation is happening at all.

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  1. invah says:

    It’s like when you were a child, or even an ‘adultolescent’; my house, my rules. In other words, if I’m shelling out money than you aren’t 100% autonomous.

    People don’t seem to realize that you can’t control other people, but you CAN make your expectations known and have a ‘meeting of the minds’.

    But know that you may end up with a situation where they feel that ‘I’m the parent and I’m in charge no matter what’. You have to know ahead of time whether you are willing to provide support in that instance.

    I’m not, but then that’s me.

  2. Sharon says:

    I think that this reader (no name??) needs to remember a few concrete things when he goes into this…
    One: He is not as bad off as he claims. I would have thought that “still repairing” would mean he is paying off debt at least. Possibly still organizing the debt to be paid off. “Building finances” is where I would put him.
    Two: He is not legally responsible for his parents. If he doesn’t co-sign for anything, the disaster does not undermine his progress. Morally, he may have different views, but I am just stating the legal facts. One the other hand he does not have a right to an inheritance. He is “paddling his own canoe” and doing okay at it.
    Three: Their immediate needs would be healthcare and enough life insurance to cover funeral expenses. He might volunteer to pay for the cost of a small policy to cover both of them. Ten thousand each should be sufficient and not too costly. Healthcare is a bit stickier. He might look into whether they might be able get a disaster-type plan or if they qualify for some state plan which offer inexpensive insurance for those who can’t get it through an employer.
    Five: There are systems in place for those who can’t physically or financially care for themselves anymore. And yes life may be nicer if you had a spare $15,000 a month to spend on long term care, but Medicare exists for a reason. Yes, they would have to lose the house, but that is where the “don’t expect an inheritance” comes in. And, REGARDLESS of how “hoity-toity” a nursing home you put your parent in, nothing will replace your attention and insistence on understanding and receiving good care. There are things that you can do to make their “dotage” more comfortable and they don’t require you gutting your finances to do it. Visit. Understand every medication they are on. Bring them goodies, books, CDs or whatnot to keep up their interest in life. Talk to the staff who are caring for them, explaining idiosyncrosies (bad spellling)which will make life better for them and take little time from the staff…
    sorry to be so adamant…yes, I have cared for the elderly ;)

  3. ok. says:

    Having trouble with my parents as well(mainly my father). Debt is very high. A credit line of 44K+ that is more than half used up. A huge mortgage, a bunch of credit card bills, student loans, big car payments, etc.

    What gets me is that he still spends money. Even with that large debt, he just bought a car, a brand new gas grill(even though the charcoal one was fine and rather new), and a nice vacation in Downtown Chicago coming up. He uses credit way too often… trying to keep up with “The Joneses”.

    What makes me worried is that he had to take care of his mother for a large chunk of her life. I think he is going to expect the same for his children. I do not want to pay off his debt AND pay for him to live when its time for them to retire. I mean, I love my parents but I think it is unfair for me to pay for his mistakes especially since he makes very good money and could have a very large retirement fund right now instead of being heavily in debt.

    Something needs to be done and fast. Hopefully these steps will help.

  4. Mitch says:

    It’s not clear to me whether the parents are still working (say late 50’s/early 60’s) or if they’re already retired (could be any age). If parents are difficult, it may be important to figure out what the parents find persuasive–it might be good to have Oprah or the Reader’s Digest “on your side,” or you might do better to put it in an academic context, or bring up stories of their friends, or discuss it in conjunction with an advisor, therapist, or with a spiritual counselor. Figure out who has more authority than you.

  5. Been There says:

    I have had continuous discussions with my mother over the past several years (she is 80) to no avail, she constantly mentions the children fighting after the parents pass away, who gets what, who pays for what. So I finally took my life in my own hands and made and appointment with a lawyer for mom and me.
    She now has a Will, a Living Will, a Medical Power of Attorney and Power of Attorney if she is unable to do for herself. This cost me $400, well worth every penny, I let mom and the lawyer do all the talking and I just sat there, spoke when spoken to, and questioned only things I didn’t understand. Mom made all her own choices, but they are in writing and when the time comes, I can contact the lawyer for any additional help I might need. She was mad as H*ll at first, but glad when it was done and everything was planned and taken care of. She knows everything from her physical well being to what happens after she is gone is all written down, and she has nothing to worry about.

  6. Margaret says:

    Your reader sounds very frustrated. It must be hard watching someone mess up their financial life when you know they could be doing better. I think if I were in that position, I would probably approach my parents saying something like, “I care about what happens to you, and I am concerned about your financial future. Have you thought about these things? Would you like some help in working on your finances?” And I would try to have information to hand over — articles about elderly and debt maybe, or a checklist from somewhere on financial health, or contact information for credit counselling — whatever I could find that I thought would be helpful. I suspect that you might have to just have a brief conversation at first to bring it up, and then give them time to digest the information you hand over. If they are really bad at finances, they might not even have any idea about their total debts and liabilities. If they were approachable after that, then you could work with them. However, it will probably be embarrassing to them — both to be in poor financial shape and to have to discuss this with their child (which is why you might want to steer them towards some other counselling). They might get defensive or defeatist. I would be VERY careful in what I said. I would be prepared to state how much financial support I was prepared to give them in the future (e.g. $100 a month or no money but help with banking, forms, etc). If you do not intend to help them financially, then tell them you have worked very hard to overcome debt and you do not think you will be in a position to provide financial support. Maybe you will inspire them to get their act together. BUT — if you offer to help them and they DO NOT WANT TO CHAANGE, or they do not want your help, then that is THEIR CHOICE, not yours. Unless you have made yourself liable for their debts, from a financial and legal perspective it is not your problem and it is none of your business.

    My mom is in okay shape financially. I haven’t asked for specifics, because I don’t think it is any of my business unless she is asking me for support, but I have asked her if she thought she would need financial support in her old age, and she says no. She’s very frugal and sensible, and it is more likely I will need her support!! My husband’s parents, though, are in another boat. They have always been quite poor, they have no savings, they have had to take their pensions early because both have serious health problems, and only 2 of their 7 kids have made anything of themselves, those being my husband and his older sister. All his older brothers (he is the baby) are more likely to be a burden on them than any kind of assitance (several substance abusers, don’t hold steady jobs, frequently move back in with mom and dad — it is a miracle DH turned out as well as he did). I have told him he should suggest a family meeting with his parents and siblings to see what kind of support they are going to need (probably only he and his sister would be interested, though), but so far, nothing. At least DH has put his foot down with the sibs as far as giving them any more money.

    There is one other thing for your reader to consider. Although the parents are in poor shape, there are likely to be some social programs to assist them in their old age, so it is not like they will have to live off their $10,000 for 20 years. In fact, several years ago my mom gave me a book to read called “Free Parking”. The author took the name from monopoly. He said he didn’t care about landing on all the other squares and building up his monopoly empire. He just liked passing go, collecting his $200, and landing on free parking as much as possible. What that meant was that in his life, he didn’t worry about the big income — he worked, but kept his income low, lived a frugal life, and then relied on social programs. For example, I just ran a quick calculation on the (Canadian) government website. For a family with 2 kids and an income of $30,000, the child tax benefit (sort of like family allowance) is about $400 a month. So yes, lower income, but there is assitance. I can’t remember the details, but he gave an example of an elderly person who owned her own home and had enough assets that she did not qualify for any extra pension support. She might be cash poor and struggling, whereas someone with a lower income and renting might qualify for extra benefits and be doing better, day to day, than the other. I personally would rather be filthy rich, but as my mom said, it makes her feel a little better about not having done more saving for retirement.

  7. brent says:

    The emailer should explain very clearly to their parents that shit travels downhill. Parents look after kids, then set them out in the world. Kids don’t then come back and look after the parents – at least, not financially.

    Aside from restating that nobody is ENTITLED to an inheritance (not that the emailer reads as a greedy person, or someone who was counting on ineritance as part of their life-plan), I would just advise the emailer to draw a line in the sand where the kid’s finances stop and the parent’s finances start. They can dig their own hole.

  8. brent says:

    ““Free Parking”. The author took the name from monopoly. He said he didn’t care about landing on all the other squares and building up his monopoly empire. He just liked passing go, collecting his $200, and landing on free parking as much as possible. What that meant was that in his life, he didn’t worry about the big income — he worked, but kept his income low, lived a frugal life, and then relied on social programs.”

    Oh. My. God.

    That is just immoral.

    “then relied on social programs”!!!


    What a freeloader! That $400 doesn’t just burst into existence you know! It comes from someone’s hard work!

    Lazy bums like that should be in jail!


    Bear in mind that I speak as a recipient of a monthly tax-benefit just like that one: only, I’m using that benefit to prepare for my kid’s future – to put equity into our home, to provide for them so that my wife doesn’t have to work so they have a full-time parent rather than spedning their weeks at the day-time-orphanage… since I started getting these payments, my salary has gone UP by 20% in the last 2 years, and my government “benefits” have gone down by 50%.

    Personal responsibility!

    Some people were born with their hand out.

  9. Margaret says:

    I have to be clear — I read that book about 5 years ago, so I am just going by memory here. Anyway, I don’t really see the difference between you receiving a child tax benefit and using it to put equity into your home and support your wife’s decision to be at home and his decision to work less and spend more time with his children (honestly, I can’t remember if he just worked less or if he chose a lower income career that he cared about more. I do remember something about him spending time at the park with his kids). Both of you are paying some amount of income tax, and both of you are receiving the benefits of a social program. The way I remember the book, the author didn’t come across as a lazy bum; he came across as someone who had adjusted his lifestyle so as to require less income, and this was how he was living. The point being that you do not HAVE to have a high income. I should also point out that when I mentioned $400, it wasn’t from the book. I have no idea how much assistance he got or whether he ever had any social assistance beyond what EVERY parent is entitled to in Canada (which is based on family income and number of children). It also occurs to me that I may have done an injustice by using the word “relied”, implying that he was just looking for handouts. It might have been more accurate to say that although he lived on a lower income, he was able to live a satisfying life, and he was pointing out that there is supplemental assistance available to low income people.

    I may have to find this book and reread it now.

    If lazy bums like him were put in jail, it would cost the rest of us a lot more than whatever you can get off social programs.

  10. Margaret says:

    One last thing — my point in bringing up that book wasn’t to condone or condemn the content. The point was that even though the reader’s parents are in poor financial shape, it is not necessarily the end of the world for them. They won’t be living the high life in retirement, but hopefully there will be enough support that they are not living off of cat food either.

  11. guinness416 says:

    Margaret are you thinking of Derek Foster? I seem to recall he keeps his income (from dividend stocks and REITs etc) low to keep taxes as low as humanly possible and claims some benefits, and lives very frugally. Could be misremembering though.

  12. janewilk says:

    To me, the original writer was wondering how much responsibility he bore towards his parents, financially or otherwise. I completely understand his fear of finally building some sort of future for himself and then having it all come crashing down around his ears if he had to take care of his parents financially at some point. My husband and I (we have a ten-year-old child) have just now gotten our ducks in a row, paid off all debts, and are building retirement funds and other savings vehicles. I am not at all confident that I’ll be able to support my parents in their dotage without seriously undermining *our* eventual retirement – not a travel-and-golf-course retirement, just a modest one. I agree that having a conversation – without anger – is the key, but my parents refuse to discuss it. I have three other siblings, two of whom could be potential contributors to my parents’ lives. My parents are already in their mid-seventies and I have a panic attack every time I think about it. All of this is to say that I took the original writer’s question to hinge more on how having to support his parents later in life would undo all the work he had put into his own financial life – rather than him angling for an inheritance.

  13. blackliquorish says:

    I’m with Jane above… I don’t think the poster is after an inheritance (how much could it be if the parents have no savings or insurance?) but trying to figure out how to use the asset to take care of the parents without handing it over to the state. I’m thinking maybe he could put it in some kind of trust (??) now that protects it from the state in case he needs to sell it later for their care?

    Or maybe his parents should sell their house now and move in with one of their children so that they could invest the money from the house and get health care?

    It’s good advice to say “talk to the parents,” but what solution should he be proposing during this conversation to improve their situation?

  14. vh says:

    Did you see the article on the front page of today’s New York Times, titled “A Grass-Roots Effort to Grow Old at Home”? It’s about an alternative approach to taking care of ourselves as we get older. It’s not the only alternative, collaborative strategy to deal with aging–maybe checking out a few of these would be helpful.

    From the perspective of an old bat, letting go seems really important. Lemme put it this way: Every time my adult son picks up a cigarette–the same g.d. brand that killed his grandmother, my mother–I want to cry. Every day that he lets himself get older in a crummy job he hates and puts off going to graduate school for a degree that would move him into something that would earn him a decent living without crushing his soul, I want to kick his shins. But you know what? It’s NONE OF MY BUSINESS. I keep quiet and accept him for what he is and who he is, and enjoy him for the things that make him a fellow human being.

    Your parents’ (grown children’s, deadbeat fellow citizens’) choices are theirs and not yours, and living with the consequences of those choices is something you have to let those folks figure out. Deliver your advice (whatever it may be) once, and then shut up. Resign yourself to the truth that you can’t make other people change.

    Are they over 50? They can join AARP, which has a new health insurance plan. Are they self-employed or freelancers? Various trade & professional groups offer group insurance plans. Point them in that direction and hope they take advantage of it. But recognize there’s a point where you have to keep your peace and quit trying to deal with their problems.

    When they get old & sick and they’ve burned through resources, Medicaid (or whatever your state’s version of it is) will pick up the tab. Should you feel guilty or angry about that? No. In a civilized society, we don’t let people crawl off to die beneath a freeway overpass. Sure, as a society it costs us something to behave like civilized human beings–humanity isn’t cheap.

    But you don’t have to feel you need to support your parents in their dotage all by yourself–you don’t. They have other resources for which they and I and everyone in my cohort have paid taxes all our working lives. Their bad decisions are not your problem. Don’t make them your problem.

  15. Margaret says:

    guinness416 — I think the author is Alan Dickson — I just looked up free parking on amazon.ca and the reviews seem reasonably like it was the right book. It is a Canadian book.

    vh — Well said. I wish you were my relative.

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