You are not alone if you're financially helping your parents. According to a recent study[i], one in five Americans are "Financial Supporters". Family matters, and if you find yourself in a situation where you need to help your parents with retirement, there are some important things to consider.
Your Parent's Finances
Offer to evaluate their finances and savings
For many parents, discussing their finances with their grown children may be a tough discussion. However, having an open and frank discussion can help you know what they're are working with, so you can plan accordingly.
If it's really difficult to have this discussion, you could consider getting an independent third party to mediate, like a financial advisor.
Review their insurance
You'll also want to discuss what medical and long-term coverage they have, as healthcare costs can quickly escalate. This is an important issue for you and your parents.
It is important that your parents feel secure and comfortable, are well cared for, and can maintain their independence. For many people, assisted living is a good option; for others they may choose to live with family members.
Sadly, retirees are prime targets for financial and investment scams. Make sure you have a pulse on their finances so they don't fall prey to a scam.
Your Personal Finances
Try not to tap into your retirement savings
Make sure you don't drain your finances while helping your parents, as this could create a cascading effect of financial instability that could impact you for years and into your retirement.
Re-consider paying for your children's college tuition
Student loans are not great, but neither is tapping into your savings to pay both for your parents’ retirement and children’s education. This could leave you financially unprepared for retirement. It's a good idea to evaluate your options for other sources to help with college tuition.
Don't take on debt
Make sure you don't run up your personal debt while trying to help your parents. High interest debt is hard to pay off, and can have a corrosive effect on your finances.