Retirement planning can be a scary topic, and for good reason: More than a quarter of non-retirees have nothing saved for retirement, and even many people who have some retirement savings don’t have nearly enough. For some, that means tightening their belts and figuring out how to survive on Social Security. But for many aging parents, not having anything saved for retirement means they’re relying on their adult children as their retirement plan.
My parents are broke! What should I do?
About a third of middle-aged adults are already supporting their parents financially, and most expect to continue doing so indefinitely. While most people love their parents and probably don’t want them to fall into poverty and sadness, there’s one obvious problem with serving as a retirement plan for your parents: It could leave you broke. If you know your parents will be counting on you to support them if they can no longer work, there are steps you can take to protect yourself.
First, you need to know what you’re dealing with, and that means you need to look into your parents’ financial situation and their total assets. Think about all these potential sources of income and potential financial needs.
Perform a Social Security audit. If your parents worked, they are likely eligible for Social Security benefits. If they haven’t already, have them set up Social Security accounts and review their benefit status. Keep in mind that the longer they can wait to receive their Social Security benefits, the larger the payouts. Social Security isn’t a huge amount, but depending on your parents’ work history, it could be a significant amount that will certainly help cover the cost of supporting them.
