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?

@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 a good point. It may be that they do not have much much to continue with their current lifestyle, which sounds like a bit of a luxury by the way you describe, so it could be they have enough money to survive on, just not to live how they want to.

I'm in a similar predicament with our parents. They haven't planned for their old age, didn't help us out financially at all when we could have done with help, so once we were sixteen we were sort of on our own. As a result, we simply can't afford to help them back, which is a shame, but I certainly wouldn't let them starve. It will be a huge pressure on us as a family as we have young kids though. Given that they have lived in a boom time with cheap housing and free education I think it is a bit unfair, but as I said, I will help if it is a crisis or take them out for treats, but I would not be able to afford an allowance.

Funnily enough my OH's parents are always saying they are struggling financially, but somehow manage many trips away each year and far more than we can afford....I think the term 'not much money left' is very subjective and you need to establish what they mean by this.

It's upto you though if you should help, but it shouldn't be at a detriment to your children. My parents have continued to work for as long as possible while they are healthy for this reason.

My dm has a very small pension. Her house needs a lot doing to it but she could never afford it.
I have her bank details and occasionally put money in without saying anything. The amounts vary depending how flush I feel or if she has mentioned a large expense coming up.
Sometimes she notices and I tell her it’s to help with travel to family or I heard she was meeting a friend and wanted her to have lunch etc.
Often she won’t notice.
It’s almost like a game we play to spare her pride but it also means if I couldn’t afford it I wouldn’t have to explain why I stopped.

@KrispyKale

You could definitely walk them through some money saving ideas on their utility bills and insurances or do they have that side covered?

This is a good point. Older people can sometimes be wedded to the same old providers when they could get a better deal somewhere else. Especially if they are not tech savvy. Plus check they don’t have individual insurance on all their appliances.

@PizzaCrust

I wouldn’t help because this is entirely self inflicted. Retiring early, holidays, taking out a mortgage etc. They need to live within their means which unfortunately means making some tough decisions.

If you start funding them now, they’ll just continue burn through money and you’ll just be pushing this scenario down the road by a few more years.

They need to wake up and get their shit together.

And yes, I might sound harsh but how many of us will likely end up working long beyond 70? You cannot work yourself into old age while they chill at home and you pay for them. I’m sorry, but no.

Jeez ^^ try and have a shred of kindness given what the OP has said about her parents and their general conduct. Massive generational chip.

I think OP if helping your parents actually makes you and them happy then do it. We come into this earth with nothing we leave with nothing….
BUT, I’d put the money into a ‘thing’ rather than just give to them. My own DF is good at investing. But after a spell of cancer he briefly took his eye off the ball - it was understandable, it happens. Good idea upthread about buying a chunk of the house equity.

However, if you do something, I think it’s reasonable to not expect anything at all from it. Your folks may require their house to fund residential care and you may end up out of pocket. Don’t give what you cannot reasonably afford. You yourself need to be paying the max into your ISA allowance etc if you’re a good earner before you start handing out.

It really doesn't sound to me as if they need your help at the moment. Their position sounds not dissimilar to my own - I thought we would be more financially secure in retirement than has turned out, but it's all ok. They have a decent house and will downsize when they are ready to do so. You don't have to be responsible for them and I'm sure they wouldn't want that - they are only warning you to be careful for your own future. There's nothing to stop you treating them every so often, for example, I'm sure they'd love a family holiday or similar

I love my parents and they have done a huge amount to support me but I would not enter into an open ended commitment. I’d need to understand exactly what their assets were and then together we’d make a plan which might involve spending cuts on their part. Tbh just funding whatever they want feels like more patronizing than presuming they can own up to finances turning out differently than expected and making a plan together. I know people don’t like to talk about money, but truly no good comes of that and as your parents are in their early 70s, without a good plan they could have literally 100s of thousands of very expensive care ahead of them.

DH’s dad looks at all the money as “family money”, not in the sense that he’d expect anyone to give him money but in the sense that the family will work together to make sure everyone stays solvent.

@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.

No, they have spent their money. It's not your inheritance and they've died and left it to you in a will.

So what if they've enjoyed their life? We've only got one life and they've spent the last decade travelling. Good on them

But I don’t want them to not do anything now or in the next 10 years due to worrying about money. As now is the only time they have to ‘do something’.

This is insane. You are working yourself very hard in a job that is likely to burn you out. From your description of your finances, you can't afford to support them.

But you would rather give them money (that you can't afford) than see them unable to do something?! We all have things we'd like to do, but can't afford it. Your parents aren't special or unique, they just need to cut their cloth, and if that means they take fewer trips away or lunches out, then that's what needs to happen.

First things first, are they genuinely hard up? If they are - how can they economise in the first instance. Subsidising them is a last resort, not the first.

I agree that many older people do seem to get a bit “near” as Dickens put it. Becoming very worried about lack of money (unnecessarily) whilst simultaneously planning for the very long term.

A friend did financial advice for a bank, and had to visit homes on the Isle of Wight. She would turn up at very shabby bungalows, be offered a value rich tea biscuit, and then often find that they had in excess of £100k lounging in their current accounts, let alone the rest.

The Pil were always complaining about being hard up. Everyone believed them and they were treated and given generous presents (no reciprocation!). When fil had dementia bil was flabbergasted to find that they had £400k in cash. This all disappeared into the coffers of Sunset Homes. They could have helped their dc/gc, but instead hoarded it whilst pleading poverty.

This hits home for me as I'm in my early 60's, would love to retire soon but am worried about having enough saved for the long term.

NRTFT, so apologies if this has already been suggested. Before you decide to help them financially, offer to pay to have a financial planner evaluate their whole situation and financial outlook. As someone up-thread mentioned, they may be fine and simply concerned about the unknowns.

My DH is very savvy financially, but he paid a financial planner to do a retirement projection for us. It just confirmed that we're in good shape, but it's really comforting to have an unbiased expert confirm what we thought.

a lot of people in the US, UK and similar economies in retirement have got into trouble because the portion of their retirement money that they kept in easy access cash no longer earns interest according to the original predicted calculations after the sharp declines in interest rates since 2008, so if you made your plans pre that, many are suffering. It's about to get even worse if inflation hits as bad as is predicted.

Sounds like your parents have had a lovely life and you'd be better off having honest conversations with them around supporting them with the changes they may need to make rather than trying to step in and rescue them financially. Would they even want that? They must be aware that your future is far more insecure, what if you get a period of ill health in your 50s for instance, what happens to you then?
The equity release market is much more favorable than it used to be. One can get a lifetime mortgage for instance where you pay the interest so it doesn't roll up into an enormous debt. However, this might encourage people to stay in houses longer than they can manage them. Many leave it too late to downsize and end up rattling around in houses they can't afford to keep, heat or even get up and down the stairs.

Unless your parents are suffering from dementia, they sound young enough to me to be taking responsibility for their own finances, still, @LifeAdvice, not looking for handouts from their children. Tbh, I don’t see how you can lend them money at this stage without making them feel like prize pillocks. They need to seek financial advice, not handouts from their children.

Sorry OP, just seen that you don't have kids. I do agree with what people are saying though. They did choose to retire in their 50's and while things may have looked affordable then there are always risks. If you want to help, then do so, but I think they have made a mistake by retiring early and they need to get themselves out of it and shouldn't be leaning on you. If you took ten years out of working and fell on financial difficulty would they have given you money and not expect it back? It sounds like it would have been a loan from what you have said before.

I think you need to offer help with their finances, finding the best deals for utilities and exploring their options to free up more money. Downsizing isn't nice, but it is a reality for people in retirement if they need the money. I think as you say, paying bills for them wouldn't be a bit embarrassing for them, so if you could help them live within their means with what they have, but then buy the treats/holidays that they are used to now and again it might work better for them.

You also need to consider what they would do if you weren't around or hit on hard times yourself. It is much better to help them to learn to live more frugally than come to rely on you in the long term.

whatever you do dont let them do equity release as my PIL did this and borrowed £100k and flew through it on cruises etc 10 years on it has more than doubled to well over £200k and will probably double again before they pass on .

I currently pay for their heating oil as we have found them camping in one room to keep warm

I wish they had downsized years ago

When I got to part where you said they paid for your education I realised they must have been more financially secure than the average couple.

At the end of the day, it’s up to you whether to help them and no one knows how much/little they have, but I suspect you’re in a more privileged position than the average person, so what someone else would/wouldn’t do, wouldn’t necessarily reflect what you should do.

I their situation, where they don't seem to be able to manage their retirement income, I'd encourage them to buy an annuity with whatever they have left. If what they have left can't stump to much in the way of annuity income, I would encourage them to downsize their home to release equity to afford a better annuity. Then their income for the rest of their life is taken care of and you don't have that responsibility. Yes, that might come with a significant adjustment to their standard of living, but you can help them with holidays and meals out etc, so that is not such a culture shock. What I wouldn't do is fund their basic living expenses yourself, as where does that end? So you pay their bills for example, and they burn through their savings on non-essentials, and your left to fund the essentials for the rest of their life. Ultimately their situation IS down to some poor life choices, and as adults they do need to take responsibility for that. I don't think it's fair that they should live off you. Yes you can make their life more enjoyable and comfortable with treats and discretionary spending, but the essentials are up to them.

What I did was to gradually pick up bills for my DF eg let me help you find a better utilities supplier and then set it up to pay it by DD; let me help you find the security/alarm system then pay for it.

If you are considering a substantial investment then I'd consider either purchasing bonds for them or establishing a savings account that you know you have earmarked for them. You wouldn't need to tell them about it until it matured or when you felt they needed it.

Another option (depending again on how much 'spare' income you have) would be to invest in a business or property, and let them have the monthly income from it. Obviously check with an accountant first regarding taxes and impact on both you and their pensions/benefits/tax situation - whether it should be a limited company, etc. With a property, you would still have the increasing equity so would still benefit financially from owning the property but your parents would benefit from the monthly income. You could ask your DF for some financial advice before setting it up and then say the income is payment for his advice (if that would make it easier for them to accept it).

Ultimately they are adults and they sound like they have been fortunate financially. You shouldn’t make sacrifices to keep them in a better lifestyle than yourself. If you feel able to, I’d ask your parents to do a general run-down of finances so you can support with admin if need to (ie death, illness etc) and sorting financial power of attorney while they are well is sensible . Don’t forget that they will still have state pensions and both of them together are likely to be getting a reasonable income as a couple. If the bank allowed them a mortgage, it would have been on the basis that they could pay it. I suspect their ‘a bit short’ is much more comfortable than you are thinking.

I think, before planning to help them financially, you would need to find out what is actually their situation.
Like many other PPs have said my FIL always scrimped and saved, did without and said he was worried about running out of retirement savings. When he died at 80 years he left over million pounds to Charity!

You don't know how much help they may or may not need yet though.

Perhaps they aren't broke but it's more that they realise that there may not be much inheritance for you in the end, and your dad was preparing you for that (NOT that you are looking for inheritance! It's clear that you are looking to help not gain! But your dad may be thinking along inheritance (or lack of) lines.

Sounds like it's a convo for you and your dad without your mum there initially, seeing as it was your dad who first highlighted it. You could say "you mentioned there wasn't much left, I've been thinking about that..." and see how the conversation progresses.

It might mean that you can help best by getting them some good independent financial advice to restructure or offer options on what they have, rather than giving them money (for now).

Don't act alone, you have siblings. They may be more realistic about harsh practicality, don't be too generous to your own detrement, speak to your dad, what are his plans

I think the difficulty with giving them money is that one couldn’t help being put out to say the least if you saw them “frittering” money on meals out/holidays when you had thought you were helping with the utilities bills or council/property tax.

There was a thread recently in which OP had given a friend in a tight spot some money to help them out, then discovered that the friend had sent a mammoth bouquet to someone else. Obviously this was a friend and not family, but still it would stick in your craw if you were depriving yourself (even if in the future) so someone could live beyond their means.

I've just re-read your OP and noticed this

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.

They have had 2 medium inheritances and used them for house improvements and paying off (most of the mortgage).

This doesn't make sense tbh. A small mortgage, one that might be reasonable for a retired couple to take out, will surely be

And if the answer is that they still have a mortgage because they spent the money on extensive home improvements - they have been reckless.

I’m 65 with a “small” mortgage. My investment group recommended the mortgage over pulling invested money.