If you’re part of the sandwich generation — that is, tasked with caring for your own kids as well as your aging parents — you’re likely aware of the many inherent challenges that come with multigenerational caregiving.
With few social safety nets (and the possibility of the ones that do exist dwindling), aging parents might find themselves needing to work more years before they can retire, struggling to make ends meet when they should be enjoying their golden years comfortably.
So, if you can financially support your parents, should you?
The Stats
First, it’s worth noting that you’re far from alone in this conundrum. A 2020 AARP survey found that one-third of Americans between the ages of 40 and 64 are providing financial assistance to a parent, and another quarter say they plan to in the future. And that was before the COVID pandemic, which brought record-high inflation, employment insecurity, and new health challenges among all age groups, but particularly for seniors.
That’s without mentioning your own family’s unique dynamic, including any cultural norms and expectations that might exist. Talking about money is never easy, but it’s crucial if you want to help your folks without creating a sticky situation for anyone involved, as Deborah Cartisser, senior wealth advisor at Twelve Points Wealth Management, tells Scary Mommy.
Check Your Checkbook First
Your very first step should be ensuring your finances are in order. You should not go into debt or dip into your own emergency savings to bail out your parents, as this could negatively impact your financial future long after they’re gone. As Cartisser emphasizes, “It’s essential to put your own needs first before trying to offer assistance to others.”
Make sure your monthly budget allows for your family’s needs to be met, including saving for your own retirement. Cartisser recommends using a planning calculator for this.
Also, you should consider why your parents need financial assistance. Helping out in the event of an unforeseen expense or life change is different than a chronic mismanagement of funds. In the case of the latter, you’ll both be better off if you can help them budget or set them up with a financial planner who specializes in senior needs.
Talking Money Matters
To normalize these topics (and hopefully keep things from getting too emotionally charged), “Start the conversations with parents early,” says Cartisser. “Remember, everyone eventually needs help managing their finances. It’s not a question of if but when. Everyone suffers from cognitive decline in some form, so don’t wait for a mental or physical event before starting the discussion.”
She adds, “Aging isn’t unique, but it’s unique to your family. Begin by forming a partnership with them.” Let them know you’re on their side and that there’s no shame or stigma if they need some assistance from you.
Some questions to ask, per Cartisser:
- What are their wishes and guiding principles?
- How do they want things to be handled?
- How do they want to get that support?
- What accounts do they have?
- What institutions hold them?
“Start slowly and understand they may not want to get into specifics right away,” says Cartisser. You don’t need to get into the nitty-gritty in the first conversation, so you might want to set up recurring times (weekly or monthly) to chat, especially if you plan to provide ongoing support.
The Logistics of Lending a Helping Hand
“If you must offer financial assistance, think about doing it in the form of a loan,” suggests Cartisser. “If there is more than one child, a loan may ensure that the proceeds are paid back out of the estate proceeds. Ensure you put the loan and repayment terms in writing. Share the information with other family members so they aren’t surprised by the arrangements later.”
And if you do have siblings, enlist them for help where possible. “Remember, being far away doesn’t preclude them from helping. There are lots of ways to provide support that don’t involve being in close proximity,” points out Cartisser. “Divide up the responsibilities based on career expertise, time available, resources available, etc. Try to avoid having the person closest doing all the work. Plan to take tasks over one at a time (such as bill paying, tax prep, data gathering, healthcare support) if needed.” If your parents don’t want their kids involved in their finances, this is where a financial advisor will help.
Also, if you’re unable to contribute financially, there are plenty of ways you can support your parents that have nothing to do with your bank account. “Time contributions may be even more valuable. Understand how your parents want to be supported and help devise solutions to the issues they are facing. You can look at their resources and determine whether there are cost-saving measures they can take now,” says Cartisser.
For example, “Paid-off real estate can be a source of income,” she says. “If one spouse requires long-term care that they can’t afford, a Medicaid trust can help preserve assets for the other spouse. Consult with an elder care attorney to help understand how this tool can help. A third-party planner can offer advice and ensure anything being proposed will not have any adverse consequences.”
Taking Care of You
You also need to protect your own family, which means setting firm boundaries to prevent any financial hardship down the line.
“Don’t offer support without a full understanding of the parent’s financial situation,” stresses Cartisser. “Make clear how much support you are willing to provide and for how long. Give the money on a monthly basis rather than transfer it in one lump sum. Offer to pay one bill and pay the vendor directly. Track what you are giving them and ensure other family members are aware of the plan. Evaluate whether you need to be repaid for the support you are offering.”
Each situation will be as unique as each family, but you should always put your oxygen mask on first — no matter how much you want to help the ones you love.
