ST. CROIX INSIGHTS
When kids have to help their parents financially
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
It’s not surprising; it’s something I hear on a regular basis. Just change the dollar amount for how much your household makes. I bet most of us can relate especially when you have a couple of kids, mortgage, car payment, are saving for retirement, etc.
As baby boomers enter their golden years, some are discovering new financial challenges including running out of money. I have to tell you this isn’t an easy situation or conversation to have with anyone.
Being in the financial world for such a long time, I have seen first-hand how someone can run out of money. It’s easier than you’d think. Here are a few ways it happens:
1. They didn’t save enough in the first place. When we are 20, we believe we have our entire lives ahead of us. But before we know it we are 70! Overtime you realize you didn’t save enough money, Social Security isn’t enough and other retirement savings won’t make it. I see kids financially supporting their parents all the time. It might be a couple of hundred a month, but as you work to help your parents, you have to make sure you don’t neglect your overall retirement goals and savings needs.
2. A sickness or illness wiped them out. Chances are they have insurance but it can and does fall short for all of our needs and they are now faced with a mountain of medical bills. Then you are left wondering what to do and how can Medicaid help.
3. They got suckered. This one is becoming all too common. It happens a few ways. First, older folks are lonely and seek companionship, someone to hang out with. They develop a friendship online or with someone locally. Over time, the friendship builds and it turns out this new “friend” needs financial help. And before you know it, all their accounts are cleaned out. Yes, this happens. They actually “give” all their money away. Make sure you receive duplicate financial statements each month so you can monitor account activity of your parents. Secondly, people fall for some phone or internet scam. It seems like common sense to now fall for this….but it’s not. Pay $5,000 and we’ll send you winnings of $1 million. Or you owe the IRS and if you don’t pay with bitcoin or gift cards you are going to jail.
It can be very hard to sit on the sidelines and watch your parents suffer. I know my clients don’t want their parents to suffer but it’s not always as easy just to give someone money. Sometimes that doesn’t solve the underlying problems.
If you like to talk about how to best help and support your family members, let’s talk.