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?

I don’t have expectations from my children; just see it as a responsibility to make sure my parents are well taken care of as they get older. They absolutely do not expect any help and would never ask, but I can’t imagine knowing they could use help and consciously choosing not to help.

Not everyone has the same bond with their parents, though. Some parents aren’t particularly nice to their offspring tbh!

And some children are selfish or simply can’t help ( esp. financially) without crippling themselves.

@Mellowfruitfulnessy

In their position I would downsize. It seems mean to expect you to subsidise them.

👆

Fair enough but OP seems to have a good relationship with them from her description.

@Coffeepants l think there is a cultural aspect to it. When l bought my first property on my own, my work colleagues -90% of which were not from the UK asked if my parents were helping and they said no. They were blown away. They asked if my parents could afford it, l said yes but they were choosing not to. They were even more astonished.

Ironically at any hint of financial issues or concerns then my mum urges me to borrow in-laws . We never do

If the parents in this scenario sounded genuinely hard up, e.g. not putting the heating on, or skimping on food, I'd help without hesitation. When my mum was genuinely skint and needed help, I did so.

But the OP is not describing hardship. They have a sizeable property asset (which they have spent money improving). They go for regular lunches out, and buy new furniture etc. pretty often. All the OP has to go on is a brief comment that their pension isn't stretching quite as far as they thought.

I'm a working age adult and I wouldn't be going for regular lunches or buying new things for my home! I don't view it as a hardship, it's just sensible budgeting according to my income.

To me, it sounds as though they are probably fairly comfortable, but probably need to watch their spending a bit more than they have been doing. They may also be being over anxious, which is common in older people.

For the OP to assume that she should suddenly stretch herself financially to pay them an allowance or buy them a flat is a huge leap. The OP is positioning herself as a rescuer, but has no idea whether they need rescuing or not.

Just to clear up the financial position - @Otherpeoplesteens post at 14:30:23 described what I think the situation is. Also @fallfallfall ‘s post at 17:54:00, where the financial advisor recommended a small mortgage over pulling capital from the investments. The thought was that either the markets would recover, and they could take money out then, or they could continue to pay interest only, on the small mortgage for the next 20 years and just pay it off when sold. I think they were advised that the increase in equity from the property when sold would also be higher than any mortgage interest on the smaller amount they owe.

@CSJobseeker so it didn’t take them 15 years to pay off, it’s more that they followed that advice, but by the time the second inheritance came in, they realised the markets weren’t going to recover and that option didn’t exist anymore. They could have still stuck with the second idea of paying interest only, but I think they wanted the security of a paid for house and so paid it off then with that inheritance. The first inheritance would not have been enough paid it off entirely.

It never occurred to me that part of either inheritance should have come to help me out, nor does it now. Maybe it’s because they were clear financial help stopped after uni, or maybe it’s a different country thing, or maybe it is that they have always offered other types of help, but I don’t see any issue of ‘they didn’t help me then, so I shouldn’t help them now’.

But again - I’m confident that they made the best decisions at the time with the info they had. Yes, in hindsight some errors have become clear - not buying a house with a mortgage, however small, not retiring early just before a market crash, diversifying investments, consider annuities etc. But this is all with hindsight and their position looked very good at the time of retirement.

It’s a lesson I won’t forget that you need a big buffer, a paid for house and more money than you expect. I am sure even with this, I will make a mistakes that people say ‘she should have done this’.

I do accept that they are probably have a lot in the house, but it’s not entirely just an asset, as if they sell they still need to live somewhere else, and selling/buying comes with costs as well.

However, as I said up thread, I am going to talk to them this weekend. I will get Dad on his own and try and use a discussion about my retirement and ‘am I on track’, to lead to theirs.

If that doesn’t work, I will get my siblings involved for a discussion about their future generally - do they have wills and POA in place, when do they want to move/downsize, and say that a lot of their contemporaries are doing this, and we should talk about it whilst they are still able to make decisions, rather than leaving it too long.

We will say it more sensitively than that! But either way, I should come out with a better view of their position, and then I can think carefully about what (if anything) I should do to help, and when.

sounds like a good plan.

@LifeAdvice

However, as I said up thread, I am going to talk to them this weekend. I will get Dad on his own and try and use a discussion about my retirement and ‘am I on track’, to lead to theirs.

If that doesn’t work, I will get my siblings involved for a discussion about their future generally - do they have wills and POA in place, when do they want to move/downsize, and say that a lot of their contemporaries are doing this, and we should talk about it whilst they are still able to make decisions, rather than leaving it too long.

We will say it more sensitively than that! But either way, I should come out with a better view of their position, and then I can think carefully about what (if anything) I should do to help, and when.

I think this is the best approach. Weirdly I just had the same conversation with my mother, but ours was more abrupt. I was recently put in the position of temporarily having to take over her finances which included a possible house sale and finding out what her assets were for future living arrangements.

In her case I found out she does not have what I expected her to have. So yeah, that was a tough conversation. Realistically she won’t outlive her money, but it is going to have an impact on some end of life decisions as far as care and housing goes.

There’s not much I could have done if I’d known earlier, and there’s not much I can do now,. I would suggest having the discussion about the house and living arrangements, and retirement funds as soon as you can. Approach it as ‘you don’t have to decide today, but will be making these choices sooner than later and it’s best to have a plan before you need it so you don’t have your choices taken away due to finances.

In other words, they may love puttering around their garden now, but if staying in the house means their choices are limited later, then that’s something they need to consider now.

For your other question about helping them now… I’d wait until the discussion find out out what the situation really is before making any decisions.

@saltinesandcoffeecups yes, I guess I was hoping that by having the conversation now, I could stem the problems, and stop the situation getting worse. Meaning they might have a small drop in income/lifestyle now, (that I could subtly subsidise with big cash birthday gifts, paying for meals out and small bills in a subtle way (eg as I set them up, just put my card details in). But if we waited another 5 or 10 years, it would be a huge drop in lifestyle/income, and I either couldn’t afford to subsidise it or they wouldn’t let me, and it would be an unhappy final years for them. I don’t want that.

I’ll play it by ear. Hopefully the general chat will reveal that things aren’t urgent, and a few corrections now may keep things on the financial course they planned for years ago.

What is with the Subtle? Be honest and open, they aren't children

I regularly subsidise my father with treats, meals out and where possible holidays. He was really generous to me when I didn't have much so I feel it is my chance to say thank you with things he wouldn't get for himself. I did the same when my mum was alive.

My dad is on a state pension with a very small top up pension. I don’t give him money but I occasionally do a bit of shopping or treat him to food out etc.

I don’t earn a huge amount £25k bit save a little so I would give him money if needed but only could essential stuff or to replace a washer/fridge or for a bill etc as he was an over spender previously!

My very well off brother (Sunday Times rich list) paid our mum £500 a month for many years when she retired. Mum, being frugal and having her pension, didn't spend it. He also asked mum not to include him in the division of her estate when she died, This meant my other brother and I reaped the benefit of his generosity to mum.
He was a bit rueful when the will was read and a surprisingly large sum was revealed, all going to brother and me.

Nevertheless, he still left my sons a six figure sum each in his own will plus double that to me and my other brother. Much appreciated by my sons.

So in my 30"s my salary was six figures. We bought a house with a annex for my parents. They sold their modest house. Within 5 years that was spent. I paid all their bills accept for food and petrol. My mother promptly died and I inherited a bereft father whose wife had spent this money and his pension cash sum. My father was a lovely man and was embrassed he had little left. He became my Manny. I went back to work to pay for everything. It worked for us
However if you have siblings beware. I was accused of propping up my lifestyle with their pensions. Complete bollocks. Their care cost us close to£200k. I worked part time, paid their bills because I loved them. Be careful op.

You don't solve money problems with money. The solution is to let them do the planning on how to manage their money. They probably won't change at this late date but will count on the extra money to prop them up. Let them run out of money and decide on what to do. The pressure will curtail wasteful spending and decide to sell the house and plan for the future. Beware of offering them money because you will ruin your future.

@LifeAdvice If you’d need a mortgage to buy their next place, you’d need to get a BTL, and you’d need to get one which doesn’t have clauses against renting to your family members… it’s not as straightforward as it might seem. A lot of banks are cautious about family tenancies.

I would talk to them about downsizing, though. My in-laws are the same age as them; and have been “planning to move” for years, originally to another house in an area they like better; then to a flat that was easier for them to manage and had everything on one floor; etc. To be honest, I don’t think they’ll ever go - I don’t think you ever wake up and want to admit that your house is too much for you now - and as they get further into their 70s, we’ve been told that them moving would risk a deterioration of their mental health should either of them become unwell, as they wouldn’t have the same “memories” of the new place as they do of their house. They’re both well at the moment; and stubborn, so I haven’t looked into how true that is…

It irritates me that MiL and my parents refuse any financial help from me or my siblings. I will always help them financially where I can.

Hi op,
I wouldnt subsidise them, as they seem to be doing pretty well. But there are other ways to help out- you could ask about house maintenance/ repairs and offer to help with costs. Travel costs and always pay when going out together?
My eldest daughter went through a phase of worrying about me because I often said I couldn’t afford things. I do budget, but have actively sought to downsize both my outgoings and the number of hours I work per week. This means I don’t have a lot to spend but I’m not in debt and have enough to pay bills, eat etc…
Unless your parents say they are worried, in which case discuss downsizing with them, do not presume they want or need help. It’s lovely that you care about their well being and as I’ve said there are other ways to help. Once you start giving regular financial help it would be impossible or at least very difficult to stop should your circumstances change.

I think it is kind of you to think of helping them, and particularly if you are fairly comfortable now.

@HarrietsChariot

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).

Wow. I’ve read some monumentally selfish things here but this takes the biscuit.

HarrietsChariot
"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)."

Yep, quite up there in the disgusting scale. The advice is not only not to help them, but also take advantage of the situation...

I think you are a wonderful daughter and your parents would be really proud of the fact that you have real concerns for their future financially. Of course, they have no idea you are worrying and that in itself shows the kind of person you are.bif only all daughters were like you. If I get a text I know it's a short pleasantry followed by a request for money which is never repaid. They are all three in well paid jobs with gold plated pensions.
I realise that your parents problem is a delicate one but I really think that your siblings could and should make some contribution.
To be paying your parents Netflix and phone and iPad bills is OTT, IMO. They are living above their means and they must both be aware of it. The gifts they give to you, your siblings and their grandchildren plus the treats and lunches out etc is like you putting in one hand which they are giving out with the other. Do you see the silliness of that.
In essence, you are enabling them to keep what they have ie: their home and keep their spending on gifts etc plus holidays whilst you worry about YOUR future.
You have no partner to turn to. No children to look after YOU as you are looking after YOUR parents.
If you paid money into their house then on their passing it might be split between you and your siblings equally which would not be at all fair and proper. Equally, it would not be a good idea to purchase a flat for them, rent free, and have that mortgage on your shoulders along with your own mortgage and the Netflix and phone/ iPad payments, whilst your parents, lovely though they might be, live the highlife spending the money realised from the sake of their present house.
Do you understand the chances you are taking?
If you fell ill or mortgage repayments and bills went beyond what you could afford, what then?
The next few years are going to be difficult enough with all that's going on.
I'm going out on a limb here in saying that I think you feel guilty...of what or why I have no idea but for some reason, over and above the love for your parents, you feel obliged to walk a marathon on your knees carrying a loaded rucksack, whilst your parents sail past you in a Range Rover, completely in ignorance of your selfless acts. That is because you refuse to gently confront them with the truth and the solutions. You are wearing sackcloth and ashes when there is no need. Your parents are adults, make their own decisions and rise or fall accordingly.
I am 77 and have children your age and older.
I have had nothing and everything and now live somewhere in between quite comfortably.
If I can afford gifts I buy them and if I want a new TV, I save or take money out of my property.
Your parents seem to have no conception of cutting their coat according to their cloth, as the saying goes.
Love us not necessarily cushioning other adults from the realities of a situation they may find themselves in. You say they have savings or similar which are shrinking but they surely have work pensions plus state pensions. That would certainly be enough to live in comfort but not if they spend spend spend.
You need to think deeply about yourself, YOUR needs and desires.
You owe parents nothing but respect and hopefully, love. No guilt. You are a good woman but enough is enough.
You need to talk to your siblings and your parents about a way forward which does not place more of a burden on your shoulders for the next umpteen years.
I send my good wishes and hope you think long and hard before making a decision. 💐💐