Would you subsidise parents?

[LifeAdvice]

This might be a bit more of a WWYD, but posting here as I’m not sure if I am BU or not.

I have recently become aware that my parents might not be as financially secure in retirement as I (and my siblings) thought. They both retired quite early, with a paid for house, a full retirement fund and some spare savings. They then sold their house and moved to the place they had always intended to retire too, however in doing so, had to get a small mortgage. Then the stock market went down and their retirement fund took a hit, but there was still a large amount there, and I (and they) assumed they had many more years for it to correct itself. They also knew they had a lot of equity in the house.

Over the last decade they have lived reasonably. They have had 2 medium inheritances and used them for house improvements and paying off (most of the mortgage). They have had some holidays, but mainly prefer to travel to see family. They spend money on keeping their home and garden nice, treating their grandchildren and children (just small things, but on a regular basis) and lunches or coffees out. They buy a new TV when they want one or new furniture etc, so my siblings and I didn’t think about their situation.

Recently I was talking to my Dad about my retirement account. Straight out of Uni Dad was v helpful with basic financial advice, and I still occasionally ask him about things, or tell him how a decision I made x number of years ago has worked out (eg “I now have XX in my retirement account, thanks for telling me to put a bit extra in it each month all those years ago” Or “do you think I should consolidate this fund?” Etc) Sometimes my Dad would mention their own accounts as an example, but not often. In doing this recently, my Dad hesitated and then shared that they didn’t have a lot of money left. He then tried to cover it and said they would use the house equity, but it left me very worried.

I feel torn, as I am wondering if I should help them financially? If not now, then at least offer now for later so they don’t need to worry? They haven’t asked and they never would. They would just worry and fuss in private. I would never be able to ask what they had or where they spent it. On reflection, I think they don’t look around for good deals and waste a lot of money by going for the first option, rather than researching - but it’s never been my issue before, and I couldn’t start now.

They have been good parents. Annoying at times, lifesaving at others - average parents! They paid for our education and gave us a great upbringing. They paid half of uni, we paid the other half and after that we were all financially independent. No financial gifts to any of us after uni, but plenty of practical help and small gifts etc.

Financially right now I am ok, but as each year passes I get more solid. I can’t afford to subsidise a whole other household (who can?!?) but I could start to give them money, and the amounts could increase as I get more financially secure. Of course, doing so delays my own financial security.

WWYD? And how and when would you do it? Knowing they were unlikely to ask and would suffer in silence?

@LifeAdvice do you have children? You said helping financially would delay your own financial plans and you need to think about what will be left for them if something happens to you, if you do have children.

Imo if you wish to help substantially in their financial future (as you appear to be contemplating) you ought to be prepared to have some honest conversations with them.
Or you will be joining in the head in sand approach.

It's worth having that honest conversation with them about their finances. My dad is very organised about these things and when they wrote a will, they told us what would happen to them money depending on whether dad or mum passed first. If they live in another country, it might be worth discussing from that angle? For e.g. if dad passed first where and how does mum want to live and vice versa. It might seem like a morbid conversation to some but always practical to know what they want to do when they are still making rational decisions. The other thing about making a will is that an executor has to be appointed and they will need to be given a list of all the assets. Mum has also told me what she wants to do with her jewellery etc.
The conversation need not be approached from the angle of "I think you are running out of money, should I subsidise you". It could be, are your finances and arrangements in order, do you need some help organising things.
My FIL and MIL are somewhat like you, retired early and now don't have as much money as they think they should. MIL especially is fond of moaning but FIL is very proud and would never say anything. We gave them very generous birthday gifts for milestone birthdays for a few years as one off lump sums. There was no financial commitments beyond that and it worked perfectly because it boosted their savings to a level where they felt comfortable once again.

Are they open to having an honest talk with you and your siblings about their finances? My mother, who ran the money side of things when I was growing up, got increasingly confused about her money and while living in an expensive flat with high service charges would fret about the phone bill (she had plenty of money). She'd be very generous one day then say we were spending all her money the next.
They may be worrying unnecessarily or they may be looking at the abyss - either way it seems sensible to discuss how things are and make plans before you steamroll in there waving your chequebook. Are they fit and healthy? Even so they should consider giving someone the power of attorney should they fall ill. It may help to have a financially savvy third party there.
But yes if they have a shortfall that may see them having to sell or what have you, a contribution may be helpful. You could pay their utility bills if you are worried they will spend any extra money without care. Or if they wanted a week away but can't afford it you and your siblings could treat them. This limits your financial burden but helps them in more practical ways.
And please remember not to be patronising - they may be embarrassed about their situation and are used to being the ones giving advise, not receiving it, which can be quite humiliating.

@Technosaurus

My job is largely working with 70+ people, and without fail every single one doesn't think they have enough money, even if it's blatantly obvious that they do. It's a generational fear. Most of them also in denial about mortality, think they'll be going on foreign holidays for 30 years when in reality most people after 80 don't leave their own postcode through a mix of lack of energy, illness, fear, paranoia. The costs of living from the exuberance/freedom of initial retirement to actual old age will inevitably dip.

From what I can see your fears are based on your Dad saying "not much money left" which is a very broad statement and one which I have seen 75 year old millionaires say. As others say, an honest chat is all that's needed at this point before you worry about any bailouts. Their version of "not much money" might well be 25 years of comfortable living costs.

I think this is wise. We occasionally get my MIL panicking that she is running out of money - what will she do? She will have to get the council to give her a house! The reality is she is minted and still building up savings. This is the same women who 'doesn't understand' why anyone would buy appliances on HP.

I would not worry yet, your Dad may have just been having a self pitying moan that he is not as wealthy as he hoped, but could still be exceedingly comfortable.

We help DH’s parents, not significant amounts.

Ideally you want to tell them you don’t want the treats and gifts anymore as you know their investments haven’t behaved as expected. Then see if you can help with a one-off thing, eg repay mortgage, significant necessary house repair.

No. I wouldn't for my parents since they haven't been good parents (actively abusive, financially, as well as emotionally). You can't kick out a teenager to fend for themselves in the world and then come begging when you're elderly. but that's my situation.

However in your situation:

NO. i still wouldn't.

what you're describing is different, but there are 2 salient points:

1. They are not in poverty. Why should they (retired early) not have to shop around for deals, like you presumably need to as a working person? Laziness? Doesn't matter - you're talking about giving them a higher quality of life from taxed income than you yourself are living on. That's morally reprehsible that anyone would even accept it from you..

1. They have made their own decisions, financially. They haven't endured a hardship like ill health cutting down their earning potential very early in their working life, or an uninsured house disaster not of their making (like the fire cladding scandal or the defective breeze blocks in Ireland). This is wholly down to their poor decision making over many years --- choosing not to make hay while the sun shined. It's not your responsiblity to bail them out after literally years of making short sighted decisions (in an economy and housing market which was in the boom years, and their having benefitted from not 1 but 2 inheritances).

You'd be mad to work to pay their living expenses to any degree. They need to cut their cloth. Just like the rest of us.

@Fluffycloudland77

No it sounds like they’ve had a right old time of it.

I agree, tbh. I wouldn't be financially supporting my parents unless they had no choice but to live in a caravan. You said they'd also had a couple of inheritances as well? Did you see any of that, btw? Not that there's any obligation of them to give you any, but I know my parents would have given me some.

Also, how old were they when they retired?

A PP made the good point that older, retired people always seem to think they don't have enough money left to last them. My friend gave her up job to move in and look after her father who was in his late 80's, and apart from letting her live there rent free, never gave her a penny or would let her hire carers in because he was worried it would eat into savings. He also barely spent any money, and didn't shift from his armchair for the last 5 years of his life. When he died, his left a house all paid for, and a substantial estate of several hundred thousands.

@GingerFigs

Mmm not sure I would help. Which sounds callous but it sounds like they're having a rare old time spending inheritances and the like. Life costs money, it's not free just because you're retired. If you are going to retire early then it's a risk that your money will run out (it's a risk anyway) but it sounds like they're ignoring that and carrying on.

Personally I think if you start to fund them then nothing changes, including their spending behaviour. Your family, your choice. But can you afford it? At the expense of your own family? Have they materially helped you out in the past (house deposit etc)? If so then maybe 'pay it back' but into an investment.

When they were so adamant about retiring early, I tentatively inquired about their money and suggested maybe stay on for another year or two and get a really good buffer, but this was swept away. Probably correctly - I was only a few year out of uni and they had a paid for house, savings and the retirement account, plus financial advisors saying it was fine. Why would they have listened to me? Obviously well over a decade and a half later things have changed. Whilst I’d like to blame them for it, I can’t. I could easily make the same mistake about the markets.

My parents did help me out with one-third of my house deposit, but it was a loan, not a gift, and I repaid it all, plus interest to them. I assume they haven’t given any big cash gifts to my sisters, or if they did they would have to repay it too. I don’t think they would have, as they can’t afford too, without depleting their capital further.

@LifeAdvice, you’ve not mentioned their age.
I agree with @Technosaurus.
They may be of a very proud nature and not accept “money”.
My brother pays for my mothers cell phone and home security set up (an extension of his own plans). I upgrade her iPad regularly, and am generous with gifts, regular gift cards to her fave shops.
I make sure she accessed services via her insurance plans when appropriate etc.

op here's a thought. will you even be able to retire yourself? (ever, never mind decades of living a leisure life.)

They've had years of living like they have a blank cheque. but not the funds to pay for it.

They've been living the reasonably high life retiring early and buying what they want when they want it etc and are now facing the consequences of that. It's not like they're flat broke if they have options with house equity, I think you need to leave them to it, otherwise they'll keep wasting money it will just be your money. Save the subsidy for if they get to a point where they really need it.

In your circumstances, I wouldn't without actually seeing some hard figures. Like PP have said, 'not having much' varies widely from person to person. To one person that might mean having to buy a boat next week instead of this week. To another it is choosing between food or electricity.

It sounds like your parents have financial options and it is nothing other than pride/feeling sorry for them that is stopping them from pursuing these options. So no, I would not sacrifice my own financial security in these circumstances. Conversely , my own parents would (and have) encourage me to look at alternative solutions before throwing money at a problem to fix it.

If my parents had nowhere to live and not a penny to their name, of course I would help. But I wouldn't be subsidising their large retirement property.

@RosesAndHellebores

It sounds to me as though they haven’t cut their cloth, so no. I am well aware my mother and step have spent their capital—and my inheritance—. They have not acted wisely so no; they can sell up and buy a one bed flat. Obviously if all they had was a one bed flat, old furniture and hadn’t spent the last decade cruising and/or golfing in Florida I’d help faster than a heartbeat.

Your mother and stepfather are not spending your inheritance, they are spending their money,

When did it become the norm to count the assets of one's living family member's money as one's own? It reads like you are actively wishing for them to die

They are clearly considering equity release and I think you need to discuss this with them quickly.
I wondered that. I would ask them about that, just in case. It's their money, but that might not be a good option.
Also, downsizing often doesn't free up as much money as they might think.

Could you start saving the money you 'might' give to them - that way it's to hand if it's suddenly needed, without impinging on you as much as it might. And if it's not needed, or not as much of it, you'll have some savings?

Yes. But then I am not British and have different values. Not necessarily better, I might add. Just different.

I have friends in a similar situation to your DP OP.
After much discussion and soul searching, they opted for equity release.
They are currently burning their way through that cash but they are happy with their decision - for now.

I wouldn't expect them to leave me anything no. But nor would I provide for them at the expense of my own family.

I'd expect them to downsize their property and make the most of moving to a new property/living space.

My own grandmother had to do this (2 huge houses plus her business) in her 70s - but she wanted to get divorced (had been separated for years) and in theory could have kept 1 house and just dissolved the business - but decided to free up money and get divorced, dissolve business and sell the 2 houses. This did free up a huge chunk of money for her and her DH which enabled her to buy a flat which then became buying a retirement flat. She then had a lot of savings which she then lived off the interest (as you did, back when you could). It also meant she had money to go on holiday etc too though.

I really think your parents need to downsize and think carefully and see a financial adviser about their next steps and not rely on you and your sibling(s).

To answer some questions -

@girlmom21 no, I don’t have any children. I am the only one of my siblings not too, hence why I am feeling this responsibility (if it is one) falls to me, not them. However, I am very conscious that I, and I alone need to take care of my financial future as if I got sick, or had an accident I would have no income. I work in a high stress job and it’s important to me to build a cushion, just in case one day I do burnout or need a break or can’t work at this level anymore (all three are common in my profession).

I have mortgage payments, bills and a retirement of my own to fund, plus building this buffer/savings in. Every year gives me a little more room, which is a measurable load off my mind, but the realisation about my parents has frustrated me. That I might have to work longer and hard in a more stressful job (and heart attack) to fund their early retirement……but what can I do? I can’t not support them.

@kurtney they were both mid 50s when they retired. Almost all of their friends were still working, it was a real surprise to us when they were so adamant that they wanted to retire early. Grandchildren had just been born, so wanting to move to that next phase of life might have played a part.

In relation to the inheritances, no the first one was relatively small, whilst the second one was bigger, but I (and my siblings) received our own bequest from that one (I think we got 5% or 10% what they got. Ours was a fixed sum, theirs was % residue of the estate and came in a few payments as assets were sold, and I don’t think I ever asked how much it was in total. I think that money was used to fund a holiday and pay off the mortgage. I’m sure too, that my parents treated my sisters and I to small things naturally from that money too, like a plant for the garden or a book or little things they would see that someone would like or need.

From saying all this, it sounds like we aren’t a family that talks about money, and I guess that is right.

My own DM and DStepdad - I would help them if need be - but DM would never let herself get in this position. She has savings, pension etc and is able to stay in a large (for London) house and doesn't want to move.

If they downsized or is the property worth holding onto.
Speak to your siblings with your parents consent, remember many people survive on a state pension it isn't great but they'll be okay
They've had many opportunities to prepare too.

@LifeAdvice

To answer some questions -

@girlmom21 no, I don’t have any children. I am the only one of my siblings not too, hence why I am feeling this responsibility (if it is one) falls to me, not them. However, I am very conscious that I, and I alone need to take care of my financial future as if I got sick, or had an accident I would have no income. I work in a high stress job and it’s important to me to build a cushion, just in case one day I do burnout or need a break or can’t work at this level anymore (all three are common in my profession).

I have mortgage payments, bills and a retirement of my own to fund, plus building this buffer/savings in. Every year gives me a little more room, which is a measurable load off my mind, but the realisation about my parents has frustrated me. That I might have to work longer and hard in a more stressful job (and heart attack) to fund their early retirement……but what can I do? I can’t not support them.

@kurtney they were both mid 50s when they retired. Almost all of their friends were still working, it was a real surprise to us when they were so adamant that they wanted to retire early. Grandchildren had just been born, so wanting to move to that next phase of life might have played a part.

In relation to the inheritances, no the first one was relatively small, whilst the second one was bigger, but I (and my siblings) received our own bequest from that one (I think we got 5% or 10% what they got. Ours was a fixed sum, theirs was % residue of the estate and came in a few payments as assets were sold, and I don’t think I ever asked how much it was in total. I think that money was used to fund a holiday and pay off the mortgage. I’m sure too, that my parents treated my sisters and I to small things naturally from that money too, like a plant for the garden or a book or little things they would see that someone would like or need.

From saying all this, it sounds like we aren’t a family that talks about money, and I guess that is right.

Just from what you've said, even though you don't have DC you should feel beholden (in my opinion) to support your parents.

Mid 50s is very young to retire with no pension (I think that's what you said) - they were very lucky to have the option to do that and to be honest I think they were foolish to retire then.

What about you paying into stocks and shares in your own name which you could give to them if they were stuck when they were older? That way it stays in your possession until a later date?

Hollowtalk has a good idea here.

OP, no advice at all - but just wanted to say that you and your parents and siblings sound like the very loveliest of people, and you are all very lucky to have one another.