Our Readers Ask: A Financial Intervention For My Parents?

by Mr. Cheap

We recently got an e-mail (summarized below) from a reader asking for advice about a situation with her parents.

“My parents have worked hard their entire life but never saved a dime.  As they approached retirement, they worked as the resident managers for an apartment building.  They have very minimal savings, and the small amount they have (X-mas bonuses or RRSPs) they cash in for consumer purchases such as a La-Z-Boy chair, new Jeep or a string of campers.  They’ve recently bought into an expensive timeshare style campground membership.

My brother and I had a meeting with them, talked about our concerns and offered to help set them up with a small building they could manage for us.  They said they’d be happy to live there, but didn’t want to be involved in operating a business (because of bad experiences in the past) and wouldn’t take any action to help set up something to take care of their own retirement.

They joke about living in my driveway in a camper as their retirement plan.  Both seem concerned about retirement at times, but won’t change their behaviour or do anything to plan for it.  They didn’t help us with out schooling and have lived the good life, so it doesn’t seem fair that my brother and I will have to support them in their golden years (they’ve had far more, nicer trips than I have over recent years).  We both have kids we’re planning to send to school and our own financial obligations.

What is the best response in this situation?  My brother has given up on them and I want to confront them!

Since the e-mail wasn’t addressed to Mike or I specifically, our lucky reader gets a two-for-the-price-of-one response!

Mike’s Response

“Your parents are stupid, selfish and screwed. You are screwed as well unless you can disown them (which is unlikely)”. :)

Mr. Cheap’s Response

There are a number of perspectives on this.  I think the first two can safely be dismissed, and the later two are worth your consideration.

1.  Legal

Except for a small number of very isolated cases, there usually isn’t any legal obligation to financially support your parents.  I am not a lawyer, but my understanding of whether you support them or not in their old age isn’t a legal obligation.  You don’t mention this, but one of my friends once worried about inheriting her father’s bad debts.  This sort of Dickensian thing doesn’t happen anymore (as long as you don’t co-sign on the loans, lenders won’t be able to make you responsible for your parents financial mistakes).

2.  Cultural

I briefly dated a woman of Kenyan descent and she talked about how her parents would hit up her and her siblings for things like building a new deck on their house (hardly a necessity of life).  Even though she was working a low-paying job, the expectation was that the children would kick in to help the parents live a more comfortable life.

While your parents clearly aren’t good with money, did your dad teach you to ride a bike?  Did your mother read to you when she tucked you in at night?  Did your dad take you out to a bar for your 19th birthday and tell you why men were no good and you should steer clear of them?  Did your mom watch “The Bachelor” with you and make catty comments about the contestants?  Parenthood is about more than just paying university bills.

The obligations in Western cultures are almost entirely FROM the parent TO the child.  Some might argue that by virtue of giving birth to you and your siblings there is a debt that isn’t absolved by your parents making bad choices.

3.  Ethical

Friends and family make bad decisions for themselves.  It’s torturous when you see the problem coming from a mile away, you warn them and they tell you to mind your own business, then you’re expected to pick up the pieces when your prediction comes true.  Since you’re a mother, I’d bet you’ll have many opportunities to go through this again with your children as they get older! :-)

Your parents are adults and should have planned for their own retirement.  It isn’t fair that they’ve dumped this responsibility on you, their children.  Instead of having a comfortable apartment, treating the family to the odd meal out and taking the grandkids on a memorable trip to Disneyland they’ve set up a situation that is going to be unpleasant for everyone involved.

Setting aside whether it is “right” to help your parents out or leave them to sink or swim on their own, imagine your OWN future.  Say it’s 20 years from now and you’re thinking back on your parents (who have since passed away).  Would you prefer to have the memory of them being a financial burden on you in their golden years or of them living an impoverished life isolated from their family? Rather than determining what’s “right” it might be worthwhile to consider the situation from the perspective of what will lead to the least personal regret in the future.

One other thought is that having your parents live with you might not be the burden you expect.  Contrary to public perception, people don’t become instantly and completely useless the instant they turn 65.  If they’ve been resident managers, your parents have a set of skills that might make them very welcome guests in your house (cleaning, light repairs, contacts with tradespeople, etc).  Even having two trustworthy, loving people to help take care of the kids might be a welcome addition to the household.

I suspect that, of these two evils, having your parents be a financial burden for a few years would be the lesser evil (which, hopefully, your siblings would share with you).  I’ve never regretted kindnesses I’ve performed in the past, even those that have cost me significant (at the time) amounts of money.

4.  Pragmatic

The entire situation may be a moot point, as Canada has a pretty nice social support system.  For an elderly person with no money, they won’t be living a lavish lifestyle but the necessities of life will probably be covered by old age security and whatnot.  While they are in good health, this should cover rent and groceries.  Once they are in worse health it should cover a retirement / nursing home.  If having your parents live with you is too great a burden for you and your siblings, government programs will cover their lifestyle (and you shouldn’t feel guilty about letting your parents use these).

For your (and your parents’) peace of mind it may be worth researching this and letting them (and your siblings) know what a realistic future looks like for them:  it won’t be sipping drinks on a golf course in a tropical destination, but it won’t be living in your driveway and eating cat food either.

If, in this situation, you had a little extra money to treat your parents to cable TV in their room or to take them out to a restaurant occassionally it would be generous to do so, but not an obligation.

What are your feelings about the situation?  Any advice for the writer?

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