Many adults give financial support to their parents, despite feeling a strain on their own budgets, new research finds.
About a third of adults in their 40s, 50s and early 60s said they had given a parent money in the past year, according to a new survey from the research arm of AARP, the advocacy organization focused on older Americans.
About half said they had given at least $1,000, and about 20 percent said they had given $5,000 or more. The money was most often paid monthly or weekly for needs like groceries and housing, the survey found.
Earlier research from the Pew Research Center found, similarly, that about a third of adults with parents 65 or older had given them money. The AARP survey delved into more details about the cash that the children are contributing and what sort of things it paid for, said George Mannes, senior editor of AARP The Magazine, which published the survey.
“It’s really for the basic necessities,” he said. “This is not about helping Mom and Dad take another cruise.”
The dollar amounts cited in the survey were “sobering,” Mr. Mannes said. 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. A third of all midlife adults said they were “just meeting” or “falling short” of expenses, which doesn’t leave much room for savings for their own retirement.
Many midlife adults are also supporting adult children, the AARP survey found. Nineteen percent of those with adult children and aging parents said they were helping both financially.
AARP conducted the telephone survey of 1,508 adults, ages 40 to 64, in the fall.
Americans overwhelmingly believe that adult children should support their aging parents, other research has found. That may help explain why so many are doing it, even at a risk to their own financial well-being. After all, Mr. Mannes said, “they raised you.”
The findings help explain the challenges that many middle-aged people face in saving for themselves. A quarter of Americans who are not retired have no retirement savings or pension, the Federal Reserve reported last year.
Here are some questions and answers about helping aging parents:
How can I keep my own retirement savings on track while helping my parents?
People tend to quickly say yes when a parent asks for help. But it’s important to examine your own budget and retirement plans, and calculate how much you can realistically spend over time. Adults should ask, “How much can I help without hurting myself?” said Brad Klontz, a financial psychologist. You may want to consult an online retirement calculator or a financial planner if you can afford one, to help analyze your situation.
If you decide you can help financially, be clear about how much you can provide and what the money is to be used for so boundaries are established upfront, said Julie Fortin, a financial planner in Windham, N.H.
If there isn’t much extra money to spare but you are determined to help, you may have to cut back in some way — say, postpone buying a new car — to free up cash. You could consider reducing what you contribute to your own retirement savings, but eliminating contributions is unwise.
“Don’t stop your own savings,” said Erin Wood, a planner and wealth adviser in Omaha. “You don’t want to end up in the same situation your parents are in.”
What if I’m reluctant to press my parents for details about their finances?
“Most people don’t feel confident talking to their parents about money,” Ms. Wood said. And parents may feel embarrassed or ashamed about asking for help, which can make a discussion even more difficult.
So accept that the conversation will be awkward — but have it anyway.
To avoid misunderstandings, it’s best to begin talking when parents first ask for help, Ms. Wood said. Don’t be shy about requesting details about their finances, she said. “No one should give an open checkbook to a parent, or to anyone.”
Pinpointing the reason for their cash shortage can help identify possible solutions. If it’s a costly medical prescription, you can help identify options like taking a generic drug or using a money-saving mobile app. If your parents are spending a lot of money on entertainment, they may be bored and need some structured activities — perhaps a part-time job or volunteer work, if they’re able.
If significant, continuing assistance is necessary, professionals suggest organizing a meeting with siblings and other members of the family to discuss who can contribute, and how much. If you are short on funds, you may be able to offer other kinds of aid, like helping your parent with home maintenance and repairs, or researching possible financial assistance programs. If emotions run high, it may help to have a neutral person — a lawyer or a financial adviser the family trusts — mediate the discussion to make sure the conversation is constructive.
What other financial options are available to help aging parents?
Parents might consider selling their house and buying a smaller one, renting a more affordable home, or moving in with their children if there’s room, advisers suggest. If they don’t want to do that but have substantial equity in their home, a reverse mortgage — a loan in which you borrow money secured by the house and receive payments from the bank — may be an option. Federal rules require borrowers to be at least 62, and there are limits to the size of the loan. Counseling is required before borrowers can take out the loan; they can risk foreclosure if they don’t make necessary payments for property taxes, insurance and maintenance, and meet other requirements.
The National Council on Aging offers suggestions on money management on its website, including an “economic checkup” tool and another that can help maximize public health, nutrition and housing benefits.
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