Dear Mrs. Riches:
I'm a 45-year-old guy with a wife and three kids, a stable job, and a retirement account that is poised to allow us to retire comfortably someday. By contrast, my folks (now in their early 70s) have next to nothing saved for theirs. On the positive side, they collect a pension for my dad's career as a government employee and have good health care coverage, as well as having a lot of equity in their home. The trouble is that there's no money for home maintenance, no funds set aside for anything "extra" that may crop up, and no plan for what will happen to my mom if my dad passes away first. They are my parents and so I feel it's my duty to help them if need be, but I have to say that I feel resentful when I think of bailing them out from their lousy financial decisions. Is there any advice you can offer?
--Grumbling Son
Dear Grumbling Son:
I'm afraid that I can't tell you how much you should help your parents. When emotion crosses paths with money, it can be hard to sort out whom you "owe" from who owes you.
Figuring out your obligation to your mom and dad is a job left to you and your conscience, along with a consultation with your wife. Choosing not to help doesn't mean you're a bad person, nor does helping (but resenting it forever) make you good. Unfortunately, either choice -- helping or not helping -- has the possibility to take its toll on you. What I can say is that the tough times are your opportunity to show what kind of person you are, based on what drives your decision-making: revenge or duty, protectiveness of your wife and children or loyalty to your parents (all of whom are family), and the list of choices goes on.
Is it possible for you to set aside emotion to look at the situation more objectively? I'd start by having a frank discussion with your parents about their plans, provisions, hopes, and wishes. Find out the specifics with regard to your dad's pension. Are there any benefits for spouses once the beneficiary has passed on? You'll also want to make sure they have a will, find out about any life insurance and disability insurance policies they may have, and determine what kind of social security benefits they each receive. Given that the amount of equity in their home is substantial, you'll also want to explore the possibility of a reverse mortgage. These are just a few of the major questions you'll want answered.
If you can't make heads or tails of their financial situation, you should suggest meeting with a financial planner who can help get their estate in order. Having a neutral party involved could help eliminate some of the frustration you're sure to experience if you try to handle it yourself. Given that your parents are in their 70s, there's little time to waste.
Once you have a clearer picture of their financial situation, you'll have a better idea of the choices you'll confront. Can you afford to help, given their level of need? Will they be out on the street if you turn a blind eye? At this point, since both parents are alive and kicking, you have time to consider all of the possibilities and determine what will work best for you, your wife and kids, and your parents.
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Elizabeth Brokamp (a.k.a. Mrs. Riches) is a licensed professional counselor who regularly talks money with her honey, Robert Brokamp, editor of The Motley Fool's Rule Your Retirement newsletter. The Fool has a disclosure policy.
