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What should the financial planning look like when you have a parent who has no retirement saved up and won’t be working much longer due to health issues? My mother-in-law rents in a bad part of town, works at temp jobs, is turning 64 this year, and is coming out of a bankruptcy. We want to help her but do not want to be the end-all solution.
This is becoming an all-too-common scenario for many Gen Xers and Millennials. We are part of the sandwich generation, caught between helping to support our aging parents while simultaneously building our own financial lives, raising our own families, and/or helping out our siblings.
I have a number of clients in this situation, and what I do is help them work the cost of supporting a parent into their budget. While it’s important for many people (and common in many cultures) to support your parents, my goal is to help people accomplish this without compromising their own financial security.
The reason for this is that once you jeopardize your own security, it becomes a lose-lose situation. Not only do you become unable to help your aging parent(s), but before you know it, you begin to lose financial stability in your life and are unable to achieve your own goals and objectives.
No parent wants that for their child, especially those that have had to face that very situation themselves when they were younger.
How to Help Your Mother-in-Law
Given your specific situation and stated intentions, if you want to help your mother in-law out, one idea is to offer to have her to move in with you while she works to get back on her feet.
Obviously this isn’t the right solution for everyone because it depends on how well you all get along, but if moving in with you is an option for her, here are some tips to help make it work:
Specify to her that this is temporary, and that you would like her to financially assist you in whatever way she can (paying toward mortgage/rent, groceries, etc.) so that it doesn’t jeopardize your own financial situation.
Make sure that she is saving and has a plan in place to move out in a few months or years (whatever you decide).
Save her money for her. What I want you to do, without telling her, is take some or all of the money she is paying you, and stick it in a high-yield savings account or in a company like CNote, which yields 2.5% and helps to support female and minority small business owners across America. That way, when your mother-in-law is getting ready to move out, you can surprise her with these extra funds, which will not only help her move out more quickly, but will make her incredibly grateful at the same time. Or, if you want to boost her retirement savings you could help her start a Roth IRA and make an initial contribution.
Help her get a new job. Since she’s temping, she’s likely not eligible for a retirement plan through her employer. It sounds like a more permanent position could be what she needs to get on her feet, start saving in a 401(k), and have more robust company benefits. Take a look at her resume and offer to help make updates as well as create a LinkedIn profile her.
How to Secure Your Own Future
You’re seeing the effects that lack of preparation can have on the next generation. Do not let the same thing happen to you. Younger people have the gift of time to start saving for retirement and let those savings grow.
When was the last time you increased your 401(k) contributions? Time to bump them up at least 1% now. If you aren’t already saving for retirement, I highly recommend you start now. If your job provides a plan like a 401(k) or 403(b), contribute enough to get the employer match.
You can also save on your own in a traditional or Roth IRA, even if you’re already saving in an employer-sponsored account (as long as your income is under the limits).
If you’re self-employed or a full-time freelancer, there are a number of retirement savings accounts available to you as well.
Compound interest is an amazing thing, and it’s important to build a solid financial foundation so that you can continue to help your family and secure your own retirement.
