Financial Help for Parents

If you are part of the ‘sandwich’ generation, you may be trying to financially and emotionally support both aging parents and struggling offspring on a recession reduced income.

We all know someone who was affected by the recession and often these folks continue to be affected, many times they include family members or close friends.

I wrote about someone I personally know who is struggling financially and in fact, is on the road to homelessness over at Prairie Eco Thrifter in 7 Steps to Homelessness and What To Do When You Get There.

It’s heartbreaking really, when you feel you should do something but aren’t sure if you can help more or what you should do to help.

If your parents need financial help, consider these possible options, to help you help them.

Do some research and investigation.

Parents sometimes are very protective of their independence, both financial and otherwise. It may be difficult to find out their true financial situation. If you start noticing that they are having problems managing their money – such things as making change incorrectly, not paying recurring bills on time, being flustered when filling out forms, then it may be time to gradually start inserting yourself in their world.

CNN Money article Help Your Aging Parents suggests several things. These include things such as starting by letting them know what you are doing with your own finances and asking their advice on occasion – what would they do, did they do? Let them know you are available to help – without demanding sensitive information from them. Invite them to sit down for coffee and donuts while you pay bills together and chat. If you find they are in trouble financially, then you can set out to find options for them to consider.

Find options to help them financially.

Do some digging on your own so that you can make suggestions (other than you providing the money directly to them – which most parents find unnatural).

Some possibilities to consider might include:

Assistance programs for which they may be eligible.

If your parents are classed as seniors, they may be eligible for money saving benefits – such as an extra tax deduction for those 65 and older, or a credit for county real estate taxes paid. In addition to tax savings, there are of course, many government and private food and housing assistance programs.

Part time paid activities, if they have an in demand talent and the health and energy to work.

Keep abreast of their current interests and past experience and skill levels. A simple internet search on jobs for seniors may bring up opportunities to explore.

Loans to tide them over.

If they are just in a temporary crunch, perhaps you could help them find one or more small loans to help tide them over.  Help them find the best terms for their needs!

Use of their built up home equity.

If your parents live in the family homestead, and want it left in the family, consider a sell-leaseback arrangement with one or more family members. Be careful to include all potential heirs in the process and decision making or you may trigger family feuds!

If no one really wants the old family home in which your parents live, consider other types of equity release. Options include some kind of reverse mortgage in the USA or the lifetime mortgages and home reversion plans in the UK (which are regulated by the Financial Services Authority).

Reverse mortgages (or equity release schemes) can provide much needed cash for seniors, however, they are complex instruments with risks of their own. Risks include, but aren’t limited to: high fees, the need to carry mortgage insurance, the possibility of losing your home before you think you will; and the possibility of the proceeds from the loan affecting other benefits (such as medicaid). Please talk to a professional if you or your parents or grandparents are thinking of taking out a reverse mortgage.

I often wonder if a reverse mortgage might be the answer to my friend’s situation (the one I discussed in 7 Steps to Homelessness). She has a home free and clear of any mortgage loans (at least as far as I know). She is 64 and cannot afford to even pay the county real estate tax on the home. Her credit is ruined, but a reverse mortgage usually doesn’t require good credit. She plans to stay in the home as long as possible. The only problems she might have are that currently the house is not insured and has not been well maintained – which sometimes causes the lending company to foreclose on the house. In addition, I’m afraid she would  mis-manage the loan income (meaning she would be tempted to spend it instead of using it to insure the home and pay the taxes).

Downsizing to a less expensive home.

Sometimes taxes, maintenance and upkeep send expenses over the top for seniors. If your parents live in a large home in a high end public school district and have a big yard, they may be forking out lots of money on home care, taxes and utility bills. Suggesting a move to a smaller, more efficient home may be just the ticket.

Help from family.

If no other option works, gather the family and discuss who can do what to help out the parents. Perhaps one of you has an in-law apartment in your home they could use as living quarters. Perhaps another can pitch in with a financial contribution each month. Maybe a third could provide transportation or pay utilities or help with food costs. It’s a hard choice, especially when things are tight, but hey, they are your parents!

Do your parents need financial help? What other solutions do you have to share?