How to Help Your Parents Financially and Still Save for Retirement
12 MIN READ | JUN 10, 2024
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There’s nothing quite like the sense of security and accomplishment when you know you’re on the path to a comfortable retirement. But that feeling can quickly dissolve into stress—even guilt—when you discover your parents are lagging dangerously behind on their own retirement journey.
"My husband and I are in a good place for retirement," Cerissa H. told us. "Our parents, however, are not—and for different reasons." Cerissa’s parents had careers in full-time ministry and never had a large income. On the other hand, her in-laws are drowning in debt thanks to several rental properties.
"We are concerned about their quality of life, the lack of long-term care insurance, and the debt," she said. "How do we prepare for a life where we will probably inherit adult dependents and debt? How do we encourage my parents to maintain hope for their financial future? And how do we respectfully talk to my in-laws about their debt?"
A Lot of Us Are Worried About Our Parents’ Retirement
It may not be much consolation, but many children of unprepared retirees are searching for answers to the same questions. The Employee Benefit Research Institute (EBRI) recently published a report on retirement and their research found the following:
- Only 50% of workers 55 and up have tried to calculate how much money they’ll need every month during retirement.1
- About 1 out of 5 seniors over 55 (20%) have less than $10,000 in retirement savings.2
- Approximately 31% of seniors aren’t sure if they will have enough to cover their medical expenses during retirement. 3
- Less than half (46%) of seniors have planned for how they would cover an emergency or big expense in retirement.4
- Of retirees working for pay during retirement, 37% need the paycheck to make ends meet.5
Many adults 65 and up also have limited assets to rely on when they retire, with 21% of elderly married couples and 45% of singles depending on Social Security for 90% or more of their household income.6
Gary Shaw, an investing professional, said all of this adds up to a difficult outlook both for retirees and their children.
"I think what we’ve discovered is that parents really didn’t plan on not being able to live on Social Security," he said. "They didn’t realize their expenses, especially their health care expenses, were going to be as high as they are. Or they didn’t get their house paid off as soon as they planned, so they still have to make a house payment."
Jessica G.’s mother is almost 60 years old and has little retirement savings. Like many other seniors, she sees no other option but to keep working as long as she can. She’ll draw on Social Security to fill in the gaps of her income.
Katy C. can relate! Her mother-in-law doesn’t see herself ever retiring—often joking that her coworkers are going to have to "pry her cold, dead hands off her keyboard."
According to EBRI, Katy’s mother-in-law isn’t alone—nearly 74% of Americans plan to keep working past retirement age.7
The retirement savings crisis isn’t some problem we’re going to face many years from now—it’s already here. According to Pew Research, 10,000 baby boomers reach age 65, traditional retirement age, every day.8 But nearly half of them, 49%, have less than $10,000 saved for retirement.9 That’s not okay!
How to Start the Retirement Conversation With Your Parents
What you and your parents may have to face in the future might seem overwhelming. But don’t give up hope. It is possible to make it through this tough time with your parents’ dignity and your own retirement plans intact.
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