Are You One of the 32% of Americans Adults Who Gave Their Parents Money in the Past Year?

According to a new survey from the AARP, about one-third of adults in their 40s, 50s and 60s have given money to their parents in the past year.¹ This money was primarily offered to help cover everyday expenses such as groceries and housing (as opposed to luxury purchases like vacations). Interestingly enough, these adults who provided support to their parents were still experiencing their own financial strain. According to the survey, 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.¹

Common Questions About Caring for Financially Dependent Parents

Many Americans carry the belief that adult children should provide financial support for their parents. Our parents supported and raised us throughout childhood and into adulthood, so many feel they owe it them.  If you’re someone who has, or has considered, helping your parents financially, you might have some questions regarding the impact of this decision. Below we have outlined a few of the most common questions that can come with giving generously to loved ones. 

Question #1: How Can I Prepare for My Own Retirement and Help My Parents at the Same Time?

Saving for retirement is hard, and it becomes even harder if you're balancing saving with supporting your parents. When your parents ask for help, it’s easy to say “yes” without even thinking. However, it's important to stop and consider the impact. Start by asking yourself how much help you can realistically provide while still staying on track with your own retirement savings.

You might be inclined to assume you can make up the difference later, but delaying your savings plan is a risky move. According to the Federal Reserve, a quarter of non-retired Americans do not have any retirement savings.² Saving for retirement is a serious problem that a sizable portion of Americans face, meaning your retirement may depend on your ability to set boundaries with your parents. 

If you don't think you can support your parents with your current lifestyle, but you know you still want to help, you might have to cut back on your spending and change your habits. Reevaluate your monthly budget, or put one in place if you haven’t done so already. 

Question #2: What if Talking to My Parents About Their Finances Is Difficult? 

If you’re helping your parents financially, you probably want to know why they are having a cash shortage in the first place. It’s always a good idea to ask your parents for details about their finances in an effort to pinpoint where things are going wrong.

This may be an uncomfortable and difficult conversation, and your parents might feel embarrassed to discuss it with you. However, the awkwardness is something you have to simply accept and move past. If you have siblings, you should also speak with them (first and separately) about including them in the conversation with your parents to decide who can contribute and how much.

You may want to ask your parents to have a sit down and go through their finances together. Once you take a look, you may realize that your parents might be making poor financial decisions, creating problems. If you can help them with their financial decisions, they may be able to eventually become financially self-sufficient once again.

Question #3: What Other Financial Options Can I Use to Help My Aging Parents? 

If you can’t financially support your parents or your parents still need more help after your support, there are other options. For example, if your parents are stilling living in your childhood home, it may be time to downsize to something smaller and more affordable. If the situation is more extreme, perhaps your parents can move in with you or another relative. Alternatively, your parents may consider a reverse mortgage, which allows them to use their home equity to receive payments from the bank. Keep in mind, however, that this type of loan is reserved for those who are 62 and older and can come with its own set of challenges. It'll be helpful to speak with a financial professional as you and your parents try to make a decision.

Helping your aging parents is a wonderful thing, but it can often come with a personal cost. It's important that you still stay on track with your own savings, making it necessary to have candid financial conversations with your parents and talk about other available options if needed.