Parents are responsible for providing financial and emotional support for their children. But as parents age and their children grow up, there comes a time when the roles become reversed, and parents need financial and emotional support from their fully grown children. It’s an exciting and somewhat challenging transition for both parties involved.
According to The American Association of Retired Persons (AARP), about 32% of adults between the ages of 40 – 64 provided regular financial support to their parents. It’s worth mentioning that most people in the 40 – 64 age groups have adult children (usually 25 or older) that still depend on them for basic expenses. This can put financial pressure on those who want to provide financial support for their aging parents.
Below, you’ll find ways to comfortably provide financial support for your parents without feeling too much financial strain. Here we go.
- Planning Is Everything
Like everything, proper planning is critical to support your aging parents financially. First, you must be aware of their financial situation, which means an honest heart-to-heart conversation with your parents. While this can be intimidating for both parties, it’s something that needs to be done for you to know how much financial assistance they need. It’ll also help you figure out how much financial aid you can comfortably offer.
While discussing your parent’s financial situation, ask about their assets and current and future income from pensions, retirement accounts, or social security. You’ll also want to know their current monthly expenditures and potential changes to this. Insurance coverage is another crucial piece of information to be aware of.
Armed with all this information, you know about your parents’ sources of income and how long they will last. And while they may not need your financial support, you can start planning when your help is required. There’s no time like the present when it comes to potentially helping your parents financially in the future, and you need to start building those funds now. Set aside a comfortable amount of money monthly, preferably in an interest-bearing savings account.
- Help Them Explore Credit Options Available To Them
Some credit options are available for retirees/ seniors, and you could help your parents explore them to see if there’s one they find agreeable. Seniors are often targets of bad players in the financial world, and your help can ensure your parents don’t get scammed or agree to less-than-favorable terms.
Standard credit options for seniors include home equity loans, home equity lines of credit, and reverse mortgages. Home equity and home equity loans allow seniors to borrow against their home’s equity. However, these two aren’t very popular among seniors as they won’t have access to credit during the repayment period. Reverse mortgages are more popular among senior homeowners as they only must repay the credit once they sell their homes or pass away.
Regardless of your parents’ option, you must conduct in-depth research and let them know what’s good for them. You can start by finding reputable services in your area. Say you live in California; go to Google and type “who are best mortgage lenders in California” or “best HELOC lenders of 2023”, says reverse.mortgage.
- Look After Your Financial Health
You will only be a little help to yourself or anyone else if you are facing a financial crisis. So, you’ll have to look after your financial health and ensure you have a solid footing when it’s time to help your parents.
Analyze your finances and identify funds that are off-limits. Examples of such funds may be your retirement savings, college savings for your kids, or your emergency funds. It’s essential to have some healthy financial boundaries. You want to help your parents and not run yourself into financial peril.
- Watch Out For Fraud
Did you know that seniors are targeted explicitly for scams? The general feeling among scammers is that older people have much money chilling in their bank accounts. Also, many seniors don’t report financial scams; it can be tough to prosecute when they do. So, you can see why seniors are appealing targets to criminals.
This is why you should take steps to safeguard your parents from scams. Inform them of ways they can protect their bank accounts from fraud. Monitor their credit cards and bank accounts and have them send you text or email alerts to ensure everything is going smoothly.
If they have a financial advisor, meet them to discuss ways to protect your parents from fraud. If they don’t have a financial advisor and you have one, you could introduce your advisor to your parents.
- Help Them Slash Costs
There are several ways to slash costs or expenses for your parents. One such way is to go grocery shopping for them occasionally, helping them save money on groceries. You can add them to your phone plan bill and save them valuable money.
Do you live in the same area as your parents? Are your parents coming to visit you? You can offer to pay for their flight or train tickets. Are there medicines they rely on? You can pay for those medicines. You can have them for dinner a few times a week or as much as possible.
If they have any car troubles or need minor home repairs, you can fix them if you have the skills and time or pay someone else to do them. Help them slash costs whenever you can. No help is too small or insignificant.
- Consider Healthcare Plans And Premiums
If your parents are 65 or older, they are eligible for Medicare and should enroll in the National Health Insurance Program. If you are not familiar with Medicare, you should take the time to do research.
Only Medicare Part A is usually free; other program parts require premiums. Covering these premiums not only ensures your parents receive better healthcare, but you’ll also provide them with significant financial aid.
Last Updated: March 27, 2023