Our Readers Ask: A Financial Intervention For My Parents?

by Mr. Cheap

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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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{ 10 comments… read them below or add one }

1 Marianne O

The pragmatic approach works for me. I too have parents-in-law who are struggling to make ends meet and have no safety net as they approach retirement. What frustrates me most is that they’re convinced that they’ll be not only secure, but WEALTHY in retirement, if they just keep plugging away at their multi-level marketing (MLM) “business.” Never mind that they’ve been in that MLM for 10+ years with no financial profit to show for it (albeit lots of social benefits — in their view). My best guess is that they will stay afloat in retirement through the use of a reverse mortgage, which will eventually wipe out all the equity in their home, leaving only one financial support: government benefits. Sigh. We’ll certainly try to make their lives a little more pleasant with small luxuries, but we’re not planning a big bailout. Any significant financial help would just be siphoned off to the MLM anyway.

2 Alexandra

I would suggest going the pragmatic route as well. That is what we have done with my M-I-L. Through no real fault of her own (she is manic-depressive) she has not ever been able to hold down a real job for any time, and when she has money and is on a “high” she spends it irresponsibly. She once gave her diamond necklace to a taxi driver for cab fare.

She now lives entirely on the government’s tab. She lives in a nice group home setting, with access to an on-site nurse, all free medication, three square meals a day, several weekly scheduled activities and outings to various community events, a clothing allowance and other small perks. Her life is by no means luxurious, but she is well-provided for, and quite happy. We buy her lots of extras (although she gives most of them away) and we take her out to resturants all the time, although we can’t give her money because she just gives it away.

This is also the route my grandmother went – to a government retirement home with full care provided by the government. This was a decision my parents made, but I don’t think they had any extra to provide better for her.

My husband and I both earn good money. However, we have our own small family and that comes with obligations. We want to be able to provide our daughter with an education. We also want to provide for our own retirement so that we ourselves are not a burden on her or the taxpayers. That means we have to take any extra money we have after our needs are taken care of and put it away in RRSPs and RESPs.

I guess coming from Canada, my feeling is that the government can provide what a person cannot for their retirement. No one should become a burden to their family. In the writer’s case, it sounds like her parents have made their own bed knowingly and willingly. Now, let them lie in it. Do not let their decisions affect the future that you want to provide for your family and for yourself.

3 ldk

Wow…can I relate to the letter writer! I am in the exact same position. My parent’s situation, which I view as an impending financial train wreck, is pretty much the sole source of financial stress in my life.

I am resentful of the situation as I know that it will fall to us to step in when they are finally forced (by their age or health) to stop working. They are in their mid-60′s now and as long as they can continue to work, all is good–but the day will come when that won’t be possible and they have no plan and no money. Attempts at conversations and confrontations over the past few years have resulted in nothing but a straining of the relationship.

Good luck to the writer–I would love to hear a follow-up on this post!!

4 larry macdonald

Acutally, Canadians are legally liable to support their parents.

In most jurisdictions in Canada, adult children are legally liable for caring for their parents. Generally, adult children are liable to pay parental support if their parent supported them financially when they were minors.
As quoted from page 300 of the book, Wealth Planning Strategies for Canadians 2010, written by tax and estate lawyer Christine Van Cauwenberghe.

If you foresee financial problems in the future for your parents, Ms. Van Cauwenberghe advises speaking to them about planning for their retirement. You might also talk to them about long-term care insurance and even pay the premiums yourself, she says, in order to avoid large lump-sum payments in the future.

http://blog.canadianbusiness.com/adult-children-liable-for-parental-support/comment-page-1/

5 Mr. Cheap

Larry: Thanks for the info! That’s amazing to me…

6 Shanna

Well, we tried talking to our parents. They never in their lives saved a dime preferring the “live for today and to hell with tomorrow” motto.

They now are in their seventies, completely broke and wanting us to help them keep their large home AND their lifestyle. I also read that
piece from Wealthy Planning Strategies. How is the heck can we be made to support two people who refuse to discuss their spending and refuse to change the way they live? I have no problem having the in laws live with me if it comes to that. But who is going to pay for a bigger house to accomodate them? And should I quit my job to be their live in nurse? We can’t afford this; we save our money, have RRSP’s and go without things we would like to have, just so that our kids won’t have to take care of us.

Just a week ago my in laws told me that since they don’t have that many years left, they should be able to do what ever they like regardless of the cost. So while my husband and I budget, go without vacations, newer cars, etc. they are planning a vacation even though their roof is caving in!

7 Mr. Cheap

Shanna: Just because that’s what they want / expect doesn’t mean you and your husband have to play along. I certainly wouldn’t be giving money to ANYONE who wasn’t willing to discuss finances with me (if they want to keep their finances private, that’s their business, but they can’t then ask for help!).

8 Melanie Reformed Spender

I empathize, as I’m in a similar situation. We’re just starting to get in a good financial place, but I’m stressed at the train wreck waiting to happen that is my parents’ situation. I’m starting to go the pragmatic route and just let them dig their own hole. I’ll help out in little bits as I can.

9 Sarah

I’m so lost about my parents. I am one of SEVEN children, THREE of whom are still in my parents house, under the age of 18. My parents adopted a beautiful girl from China, (God, please don’t ask me how China allows people over 60 years of age to adopt, it kills me) in 2010 and is a now fluent speaker of English and member of the house. FINE. But, pray tell, where does that leave the older four children? We are successful, and happy, and all older than 30 and married.. and we would be okay swallowing having to take care of our VERY irresponsible parents, but also our three younger siblings? One (from China) who has an incontinence problem? I can’t deal with the pressure of this!!! I have my own children and family to think about! Please, is there any hope or encouragement? I feel so screwed. I know all my other older siblings feel the same way but they feel too guilty/loyal to say anything because you know, our parents took care of us growing up. Whatever. They planned to have us, hopefully. Just like we have our children. I wish they were more RESPONSIBLE.

10 L

I have a similar problem with my huband’s parents. They are in their mid 70′s. Almost 20 years ago they purchased a house for $65000. But they keep taking out line of credit mortgage…and now owe close to $140000 on their mortgage. They saved $0 for retirement, but do receive Canadian a pension. If they accepted their limited income, they could have been fine. Instead, they’ve spend ridiculous amounts of money on bailing out their other children, and buying crap at garage sales and flea markets. They still have one kid living at home…and he’s 50!

What’s worse, is the mother in law constantly comes to our place in a state of high anxiety because she doesn’t know what’s going to happen to her house when she dies. She wants her 50 year old son to be able to stay in it (he has no credit and refuses to work in the winter), and she keeps hinting that me and my husband should co-sign on a mortgage to make that happen!

My husband is disabled and seriously ill with a very rare and incurable disease (he is hospitalized about 10 times a year). Because his disability income is limited, we aren’t permitted to take out second mortgates (it’s a condition of our own mortgage). And…co-signing on a mortgage for someone that refuses to work wouldn’t be too bright on our part either.

The stress this causes my very sick husband absolutely breaks my heart. I wish my in-laws would stop laying all their financial woes on my husband….they have 5 other kids they could whine to.

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