Your aging parents may need financial assistance, from paying bills to making a choice about housing.
Quick takeaways
When it comes to average retirement savings, Americans aged 65–74 have about $609,000.
You may have an aging loved one who has saved less than planned and needs some (or a lot of) financial help. Can you do that and still progress toward your own savings goals? Yes, but it takes conversation, balance, and planning. Here’s how to start.
Perhaps you’re proactively planning for your parents’ retirement. Or maybe there’s been something that’s prompted concern, such as:
- unpaid bills
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stacks of unopened mail
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changes in financial habits (i.e., they used to pay for a meal or send a birthday check and now don’t)
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swings in health habits such as weight loss, an empty pantry, or spoiled food in the fridge
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mentions of unusual, out-of-character donations
It’s important to parse the difference between a parent needing financial assistance and a problem that’s solvable, but has led to some financial disarray. For example, maybe your parents are spending a lot on take-out meals because cooking feels overwhelming. Maybe their prescription medical expenses have increased because they’re not aware of generic options. Maybe the house is in disarray because it’s simply too big for them to manage.
“If you notice your parents having a hard time with one thing, it might come from a different cause,” says Heather Winston, head of product strategy at Principal®.
You won’t truly understand the scope of your aging parents’ financial needs unless you talk about it. But tiptoeing into your aging parents’ financial picture can be fraught. “No one likes to have those difficult conversations,” Winston says.
You’re essentially starting to reverse roles—overseeing, evaluating, and making suggestions as they did with you when you were young. “You’re talking about topics that are embarrassing, challenging, scary, and oftentimes sad,” Winston says. “Those conversations can help you understand where your parents are today, what they want, and what may be needed in the future.”
Winston suggests focusing on facts, not judgment. Start with these questions from you to your parents:
- Do you have enough retirement income to pay monthly bills?
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Do you have health insurance that provides adequate care?
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Do you have extra funds to assist with any tasks or chores you can no longer manage?
If the answer to any of these questions is “no,” you have a baseline to start seeking out possible solutions.
Financial challenges happen to all sorts of people for all sorts of reasons. The financial help your parents might need is probably on a spectrum. Thinking about it like that may help you mitigate some of your financial stress, too.
| What's happening | What can help |
|---|---|
| Past due notices, even with adequate retirement income |
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| Past experience with fraud |
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| Falling behind with daily needs |
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| Challenging daily activities |
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And then there’s housing, the biggest conversation of all. Many people confronting the challenges of aging want to stay put in their home, but financial challenges may make that more difficult. There are options for long-term care, each of them with a different financial implication. They include:
- Aging in place: Staying put, with adaptations and assistance as needed for mobility and safety.
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Living with a relative: Adaptations and nursing assistance may be needed.
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Continuing care communities: Includes a range of independent, assisted, and skilled residences with services like meals and social activities.
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Assisted living: An option that has some independence, but more assistance than continuing care.
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Nursing/skilled care: 24/7 residential care for those unable to fully care for themselves.
“Many people assume they’ll have someone come in and help them, but they don’t understand the costs associated with those services,” Winston says. “Acknowledging the unknown is hard, but the best you can do is look at your family’s history, their current health, and financial means, and then plan for as much as you can.”
The progression of age looks different—physically and financially—for every person. Very often, with older adults, needs can change quickly. Winston advises a six-month review, at a minimum, for any plan. “What works at the outset may not work for long in the future,” she says. “It can be dramatically different within a matter of weeks sometimes.”
If you do choose to help your parents financially, the basics, such as meals and cleaning, may not make a big dent in your budget. But sometimes your aging parents’ financial needs are more serious, such as housing. If they don’t have adequate resources, there’s more than a budget cost; there’s your time and energy, too. If you need to contribute, you’ll have to make room not just in your budget, but in your own planning. Paying for their care may mean it’s harder to balance your own income and expenses—including saving for your own imminent retirement. A financial professional can help you assess where you’re at and how to continue to build toward your own goals.
“There will be some things you wish you had done sooner, but you do what you can,” Winston says. “It’s a hit to your parents’ independence to have to acknowledge they’re struggling. The best thing you can do is to be thoughtful and understanding.”
Track how well you’re progressing toward your own retirement savings goals with a personalized Retirement Wellness Score (login to your Principal account required). Or, if you don’t have an account with Principal, visit the public Retirement Wellness Planner.
