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?

@fallfallfall both in early 70s

Maybe they should economise a bit, they are not hard up. Review in a year or two. None would want them to struggle but protect yourself. Consider what your siblings would say

Are they still paying a mortgage?

If so perhaps they need to downsize & get rid of that?

Could they work?

Rent out room/s?

Gwenhwyfar I was expressing my experience, I know no rich retirees, and speaking to the op who wishes to help her parents and it clearly earning very well at the moment. It's an obvious time to shift that family habit.

I like the idea of just talking casually to your Dad. It will help him unburden himself if he shares it with you. You might be able to come up with some solutions together.

I would tell him you don’t like the idea of anyone taking equity out of their home. Perhaps offer to buy a place but have them invest what they earn from the sale of the house and then pay reasonable rent to you. This could help you both because it will reduce their outgoing and in the end, you will own a second piece of property. That might make the idea very agreeable to them.

Do they have any fixed income? You said they are not in the UK. Is there social security?

You just need to chat and find out the lay of the land.
My mothers income is low but so are her outgoings.
Little things like changing her tv package and equal monthly billing for her heat were a big help.

I agree, that actually you know very little at the moment. All of these suggestions are meaningless until you gather some further info.

So you need to tell your Dad that you'd like to chat to him about finances, as something he said worried you a bit....and then you need to have an honest conversation to ascertain what the situation is. Try to do this WITHOUT offering suggestions and solutions (if needed) at first and just listen.

Try to understand how much debt they have, what regular income they have and if it's guaranteed, what their outgoings are, how much out aside they have and how secure that is. Find out if they have had any financial advice. Ask them how they feel their financial position is for the next 2 years, 5 years, 10 years and whatever else might seem appropriate.

Gather the facts.

It could well be that things are not bad. Or they might be. You just don't know.

Only once you know can you consider if some advice is needed and what steps might be needed to help. You are running ahead of yourself to be thinking about if you need to financially support them. You have nowhere near enough info to even start thinking about this yet.

And by the way, I would absolutely help if needed and they would accept. The next 10 years are going to go by very quickly.

You are taking on this responsibility when you really shouldn't be. They are still mentally and physically alert and this isn't your problem. You live alone and as you say you're responsible for your own life and your own retirement. Why are you even thinking of giving them money now when you have to look after yourself?

It would be a good idea to save some money for yourself, long-term, but it's for you, not for them. What happens if you have a heart attack? If you have a breakdown? What happens then if you've given them money and they still expect it? For instance you might buy a flat and have them live in it, then find you need to sell that flat in order to live.

Look after yourself, OP. Perhaps talk to your parents, but try to do that with another sibling. Don't shoulder all of the responsibility yourself.

My parents were never well off but they owned a house and paid off the mortgage. By the time they both retired with small pensions mid 60s they had a small amount of savings which soon depleted on home maintenance.
DF was all set to get an equity release loan and asked DH to look into it. DH thought they were a huge rip off so we agreed to fund them money if necessary. Downsizing wasn't really an option unless they sold to rent.
Actually it never came to it as they always lived frugally and died without needing our help.
If you can afford it OP I'd loan them a lump sum. Get it in writing in case of care fees.

No. They made choices that put them in this situation. They must have known for a while their situation but have been frivolously spending, they retired early, they took on debt. Would you become resentful when they're spending your money frivolously? I'd step in if they ended up with nothing because I wouldn't see them homeless. But I wouldn't start giving them an allowance.

Also, if it turns out that they do/will need some financial assistance, I wouldn't take on the entire burden yourself. My BIL (by marriage) and his two siblings have helped their parents - I think my BIL has paid more as he doesn't have children to support, but they've all chipped in.

If my PIL ever need assistance, I certainly wouldn't expect DH to shoulder it all himself, his siblings can contribute something too, be it money or practical assistance like gardening and DIY.

@Pixxie7 it ‘always gets me’ when people don’t RTFT and then insult the OP.

I never said they had ‘spent my inheritance’.

The only time I referred to a potential inheritance I might receive was in my post at 14:55:33 where I made a comment that with no partner or children my financial security was up to me, and I as posters had been asking about the inheritances my parents received, I made a light hearted aside that I had just realised I couldn’t count on an inheritance for my financial security - ‘no inheritance either, now that I think about it!’

It was another poster that commented on her parents spending her inheritance, and other posters commented back to her. If something is going to ‘get to you’ so much, good to know the source of it, and attribute blame to the right person.

Lifeadvice@ apologise I didn’t mean to offend.

No, you shouldn't help them out. They are not destitute - I'm sure if they were, you and other members of the family would rally round to help - but this isn't the situation here. Surely they have some equity in the house and could downsize and cut spending if needed.

I say this as an older person facing my pension years, I will have nothing but the state pension to live off, I rent as I have no property of my own etc. Despite this, I do not expect my own adult children to be helping me out. I have cut my own cloth according to my means, I have lived life as I wanted and it isn't the responsibility of my children to pick up any slack. They have their own lives to lead. So do you.

No I wouldn’t help them just now.
Your dad said they were feeling tighter and there wasn’t that much money left. Nit that they were struggling and on the bread line. Or that they had to sell their house right now to be able to fund their retirement.

On that basis, I’d stay quiet but tell them that if anything is worrying them, they should let you know (which they are unlikely to do if they are like my parents but hey Ho).
If you want to be able to support them, then I’d create a fund just in case (and wo telling them). Then if they need help, you can do that. If they don’t, you still have been carrying on building a nest for yourself.
You could also give them some gifts that are more practical than befire, like a replacement for the stuff now broken

No way would I help them out financially unless there was something in if for me. Parents are supposed to look after their children, not the other way around. By the sounds of it they've taken chances with their retirement and it hasn't pulled off.

There's no point throwing your money at them unless it would be to your benefit. For example, if they want to release equity in their home it might be in your interest for them to come to you instead. If you have the money they need it could be worth your while - the key is to make sure your stake in it is a bigger percentage than what you'll be giving them. Obviously make sure it's legal and watertight and that they can't then release equity behind your back. If you had the money the best solution would be for them to work out how much equity they'd need to release, then you buy their home outright for that value (letting them remain living their obviously).

They sound like my parents a little bit. I’m not convinced they are set up well financially for retirement but for some reason both have retired early and taken lump sums from their pensions which have been frittered away. Occasionally there is the off grumble about not being able to afford certain things. I worry for a moment but then remind myself that there is no way I would ever subsidise them without a noticeable shift in their lifestyle. They buy all the best food and wine, each have a car, big house that they don’t need with the heating on full blast all year round, holidays, subscriptions to every tv package going and are forever buying all sorts of crap. I don’t live that way and there’s no way I would be subsidising a more lavish lifestyle than the one I have for myself.

They retired and then took out a mortgage, probably at a time when interest rates were at an all-time low and a couple of extra years working would have made a significant dent. They could have gone back to work to bolster their income and pay the mortgage at any time but they didn't. They've had inheritances. And the Stock Market has averaged an 8% return, despite ups and downs (which there always will be) — yet still they have run out of money. If you have a drawdown pension account you can't always rely on it paying out the same money year after year and you should really have a year or two's savings available to plug the gaps in down years.

It sounds to me as if they're not good with money, sadly, OP. Either that or naive. Unless they'll do something like sell you their house and then you have an agreement that they'll rent it back from you for an amount each month that will cover the mortgage I wouldn't just give them money. Frankly if they're in their 70s they will have done well in terms of property value gain (if they lived in the UK), your mum would have received her state pension at 60 and any work pensions may well be more generous than anything people get now.

Retirement flats aren't necessarily very cheap to live in. Those on sale in a local development have annual service charges of anything from £5-13k and then there are all the usual costs (council tax, utilities) on top.

OP

Full disclosure: I haven't read the entire thread, just the beginning, but I wanted to offer some thoughts based on my experience.

Where are your parents with the reality of ageing and becoming more dependent? It sounds as though there was a shift in the relationship with your Dad there, and maybe this is part of him accepting things don't feel so much in control any more. (I know that's a bit out of the left field...just a thought)

In my experience, one child financially helping or supporting parents can be a difficult thing to manage. I find myself wondering about partners and siblings across the family. My DH being a key source of financial support for his parents has been a huge source of tension in my marriage and in the wider family.

I realise that might all seem a bit deep and also might not fit your circumstances, but thought I'd offer it in case it's helpful for thinking about the overall situation.

Thank you everyone for your frank and diverse advice. I especially appreciate those who gave a considered, measured response. I agree, I have jumped straight to ‘help’ prematurely, and I need more information first.

Once I find out, and if there is a problem, I agree there are several solutions - perhaps helping to reduce current outgoings or subsidising little treats. Perhaps it is more systemic and I need to get them financial help from an advisor or something. Or perhaps I do need to think about financial support at a later date, but in a way that might give me an asset /protect my future too - eg buying a flat for them or buying into their home, rather than giving them an allowance.

I am grateful to posters who have validated my concern for myself and my financial future, especially those that pointed out I will be working longer than they will have. It’s a bit of a sore point to me, but it seemed unkind and undaughterly to be saying it out loud.

I’ll proceed slowly, starting with more information and also trying to increase the amount I save and make my financial position as stable as possible, in the event I may need to do something.

Thank you, I appreciate (almost) all views to help me work out a way forward.

@Pixxie7

Lifeadvice@ apologise I didn’t mean to offend.

Thank you. I appreciate that.

You sound as if you've got a handle on this, OP, and the fact that they may end up spending every penny makes it even more important that you look after yourself. Good luck.

I'm glad you got some more measured advice later on, I was fairly baffled by the first page.

Ultimately they are adults and need to look after themselves. If it was a reverse and you were expecting money to replace money you had wasted from your parents you'd have your arse handed to you on a plate.

None of us would want close relatives destitute/ homeless and would step in if we could, but other than that they need to sort themselves out.

At least you know you are going to assume you aren't getting much inheritance, which will help with your own financial planning.

It depends on the age of your parents. If they are on the younger end of retirement then you would be better off paying for things here and there like coffees/groceries but keeping the main bulk of your money invested as you may have to pay for both of your parents care one day.

If on the other hand they are already very elderly but health has been reasonable and are expected to keep living independently then yes use your money to keep your parents standard of living in their old age. (This is all of you can afford to do so in the long term)

Even if you didn’t have money to help out with things like helping with house cleaning, regularly visits, cooking/making tea can all help, tidying the garden can all help them feel a sense of security.