New York Estate Planning & Elder Law Blog
There are many reasons, all quite valid, that people enter retirement with little to no savings. Prolonged medical illness, catastrophic life events, poor job prospects, or modest means, are just some of the many reasons that contribute to little to no retirement savings for many seniors. As children of such parents, there are steps you can take now that can lessen the economic impact of little retirement savings on your parent’s lives.
For starters, many seniors live with a child. The Harvard Health Letter analyzed data from the U.S. Census and concluded that close to 3.4 million people over the age of 65 were living with an adult child. Housing, for many people, regardless of age, is a big chunk of a person’s household budget. Living with an adult child can help seniors reduce and even eliminate such an expenditure. Solving housing issues is just one consideration.
Approach the issue of little to no retirement savings holistically. Begin the process with the goal of getting all of your parents’ financial affairs in order. Here are some tips you and your siblings can implement.
- Gather your siblings.
Every family has a cat herder, the person that gathers all members and communicates important family business. Informal talks to understand what your siblings can do to help your parents is a good place to start. If you or your sibling are struggling financially, you may not be able to provide monetary support, but perhaps you can provide other support, like monthly meals.
- Talk to your parents about their finances.
People are sensitive about talking about their finances, even if they are your parents. Start the conversation with your parents about financial wellbeing and work with them to develop a snapshot of the state of their finances and areas that can be improved.
- Get down into the nitty gritty.
A successful plan involves real numbers that can be identified and evaluated with the goal of reducing the expense, if necessary. A high-level review of your parents’ finances is not sufficient. Every expense or liability should be weighed against every income stream.
- Tackle debt and high expenses first.
Zero in on high debt and expenses. Identify, evaluate, and cut where possible. The goal is to free up income so that it can be applied to your parents’ monthly living expenses, like housing, transportation, and food.
- Downsize where possible.
Emptying the nest is the final frontier in most circumstances because of the memories associated with the family home. Moving into smaller housing accommodations that anticipate conditions that may arise in the future, like mobility, will set the stage for any future housing accommodations. Look at your parents’ housing options, including living with you or your siblings, and their cars – do they need more than one car?
- Part-time work in retirement may be beneficial.
Part-time work in retirement, may help pay for living expenses, until you parent is no longer able to work. Many people find fulfillment in work, even in old age, because it helps them stay active and social. A part-time job is a good way to pay-off debt, or get extra income for other activities, including savings.