When your parents live longer than they thought they would and end up outliving their retirement savings – what do you do? What can they do?
It’s something not many older adults and family caregivers plan for but if you have elderly parents, I urge you to take the time to talk to them about this issue.
So what can you do with aging parents who have no money? – Know what they have and what they owe. Raise funds by selling, moving and/or working. Look into and use the many federal, state, and local resources available for low-income seniors.
The average retirement age in the United States is 65. While some older adults are able to continue working well into their 60s and 70s, others may find themselves unable to work due to health problems or other issues.
This can leave their adult children in the difficult position of having to support them financially.
The bottom line is that it will most likely take a team effort to help you and your parents get through this type of financial situation.
If your parents did not invest in long-term care insurance, or if their insurance policy does not cover the full cost of care, there are still good options available.
Medicaid and Medicare are two government programs that can help to cover the costs of long-term care.
Most government programs are designed to help those who demonstrate financial need, so if you’re considering helping your parents out, make sure you’re not hurting their chances for aid — agencies will look at your parents’ income and assets to determine eligibility.Northwestern Mutual
You may also be able to find financial assistance from your state or from private charities.
Do not be afraid to ask for help – there are many people and organizations who are willing and able to assist you in paying for your parent’s care.
If they are unable to care for themselves, you may need to make arrangements for their care. This can be a difficult and emotional process.
There are a few things that you should keep in mind when making decisions about your parent’s care.
- First, you should make sure that you are making the best decision for your parent’s health and well-being.
- Second, you should be aware of the costs of various care options and make sure that you can afford the care that your parent needs.
- Finally, you should be prepared to ask for help when it comes to paying for and arranging care for your parent.
The sooner you and other family members can make these decisions, the better it will be for everyone in the event that your parent(s) require help as they grow older.
My Elderly Parents Are Broke
As our parents age, many of us find ourselves in the position of primary caregiver. This can be a difficult role to take on, especially if our parents are not able to financially support themselves.
I’m sorry that you are having to go through that.
Two very good and old friends of mine are in this type of mess right now with their parents and we (all their friends and family) are working together to brainstorm what can be done for them and their elderly parents.
Here are their stories:
My friends Sarah and Zachary and their parents live in Georgia. Sarah has a father who is 93 and a mother who is 89.
The father has severe Parkinson’s and is living in an assisted living home. Their mother is living in a house in a 55+ community.
They have a slew of medical expenses, household expenses, and more.
The parents are living on social security and an annuity that ends next year. No other savings accounts.
Once the annuity ends – their father will have to leave the assisted living home because they cannot afford it any longer and he will be moved to a nursing home.
Their mother will have to sell their home to pay for the nursing home and move in with her daughter who lives on Long Island.
That means not only moving but leaving all her friends and family here in Georgia.
My friends Angela and Steven and their parents live in South Florida. Angela has a father who is 91 and a mother who is 88. The parents both continue to live in the same home that they have lived in for the last 35 years.
Angela’s father is showing signs of dementia and her mother has severe arthritis which makes it very difficult for her to walk without assistance.
They have no savings and live strictly on their social security.
Their home and cars are in constant need of repair and their children are currently sending money to their parents monthly to help them pay for utilities and food.
In the past 2 years, the children have had to pay for a new roof on the house, a new television, engine repair on both cars, various plumbing and electrical repairs in the home, and smaller miscellaneous other charges.
The majority of caregivers (78%) say they incur out-of-pocket expenses as a result of caregiving and, on average, are spending one quarter of their income on caregiving activities. This kind of spending can have a significant impact on your long-term financial security.morganstanley.com
The main problem with Angela’s mother is that she has an addiction to online shopping.
Her spending habits keep her and her husband in poverty and the children resent sending money they feel will be spent frivolously. It’s a difficult situation.
When your parents have no money – and the situation may be due to no fault of their own – it’s much easier to help them out.
But, when they contribute to their own financial problems due to poor judgment or an issue such as a shopping addiction – it’s easy to see how regrets and anger can become part of the daily conversation.
One of the most difficult conversations you can have with your aging parents is about their estate planning. It can be a very sensitive topic, particularly if your parents are struggling financially.
But make no mistake it’s extremely important.
With our parents living longer and longer, the prospect of outliving your savings gets very real.
In 1950, 8.4% of the U.S. population was over 65, and 1.2% was aged 80 or above. In 2000, the 65+ share of the population went from 8.4% in 1950 to 12.3% in 2000.Forbes.com
It may be useful to approach the topic with a financial planner first to see if there is anything that he or she can do to help.
How Dementia Can Cause Your Parent(s) To Go Broke
Dementia can cause significant financial consequences for both the individual living with the condition and their family. Here’s how dementia can cause your parent(s) to go broke:
- Medical Expenses: The cost of medical care for someone with dementia can be staggering. This includes doctors’ visits, medications, medical equipment, and home health care. As the disease progresses, the level of medical care required tends to increase, leading to higher costs.
- Long-Term Care: Many people with dementia eventually need long-term care, either in a nursing home or through an assisted living facility. These services can be incredibly expensive, and many insurance plans do not cover them. In the U.S., the average cost of nursing homes and assisted living facilities can range from $4,000 to $8,000 per month or more. Over several years, this can deplete savings rapidly.
- Loss of Income: If your parent(s) are still working when they are diagnosed with dementia, they may need to retire early, leading to a loss of income. Similarly, a family member who is a primary caregiver may also need to reduce their work hours or leave their job entirely to provide care, leading to additional financial strain.
- Poor Financial Decisions: As dementia progresses, it affects cognitive abilities including judgment and decision-making skills. This can result in poor financial decisions. Your parent(s) may forget to pay bills, resulting in late fees, or they may become victims of fraud or scams targeted at older adults. They might also make large, unnecessary purchases or give away money.
- Legal Costs: Setting up legal protections, like power of attorney, guardianships, and living wills, can also be expensive but necessary.
- Insurance Limitations: Even if your parent(s) have health insurance, it may not cover all the expenses related to dementia care. Many insurance policies do not cover home care services or long-term care.
For these reasons, it’s critical to start financial planning as soon as a diagnosis of dementia is made.
This might involve meeting with a financial planner or elder law attorney, reviewing insurance policies, and investigating other potential sources of assistance like Medicaid, Veterans benefits, or local non-profit organizations.
It can also be helpful to have conversations about this topic early, before dementia progresses. This allows your parent(s) to be part of the decision-making process and express their preferences for their care.
I can’t express enough how important it is to establish a power of attorney as soon as possible.
How Do You Financially Help Aging Parents?
There are multiple unforeseen expenses that can come up during the golden years. Healthcare issues and costs can come up.
New housing situations may be needed. Home care services might be required for personal care and much more.
I tell my friends that “It takes a lot of money to grow old.“
If the situation has gotten to the point where you will need to help your elderly parents financially, then there are going to have to be some difficult decisions and tasks ahead for you and your parents.
Here are some tips on what you can do:
- Have a serious conversation with your parent(s) about their situation. Sometimes, the best way to begin this conversation is to bring in a 3rd party such as a financial advisor to help. Of course, discuss this with your parent(s) first.
- Before any actions are taken – sit down with your siblings and/or family members for a family meeting. I would recommend including your parent(s) in this conversation but that will depend on the cognitive level and willingness of your parents to work with you.
- A very important thing to remember is that you do NOT want to jeopardize your own retirement. So be careful of overspending your own money to care for your parents.
- Make a detailed list of how much money may already be saved in bank accounts, investments such as stocks, mutual funds, etc. as well as any debts owed. It’s a very good idea to have an accurate account of your parents’ personal finances.
- Make a detailed list of any steady income such as social security, pensions, annuity funds, etc.
- Decisions will have to be made on what assets can and should be sold to raise cash. Also, what lifestyle changes will need to be made? This could include:
- if your parents are living in a home they own, selling the home may be necessary
- downsizing to a smaller new home or assisted living facility
- moving to a rental vs. purchasing another house
- moving in with a family member, roommate, etc.
- selling unnecessary furniture, clothing, and any other items to raise cash
- if your parents are capable – working part-time is an option. In my community, I see quite a few retirees working at fast food restaurants, retail shops, the library, and grocery stores. For some seniors, this is not ideal – but it may be a necessity.
- You may also have to raise some extra cash to help your parent(s). Again, selling some of your possessions, possibly downsizing your own home, etc. So, please do not discount this as a possibility, if it’s needed.
- Consider a Life Settlement. If your parents have a life insurance policy, it may make sense for them to sell it to a third party (instead of back to the company they purchased it from) for a lump sum. Read more about life settlements here.
- Create two separate budgets. One for your own family and one for your aging parents. This helps you and your family keep track of and allocate the monies going in and out of their “account”.
- Cutting down housing costs. If your parents are living in an assisted living community that they can no longer afford, it may be beneficial to help them move to another type of housing that can fit their budget.
- List all the monthly payments your parents are making. You may find that they are paying for magazine subscriptions or services that they are no longer using.
- Consult with your accountant or financial expert. Hopefully, you have an accountant who may be able to provide some financial help with budgeting, possible tax breaks, etc. They may be able to help you negotiate with creditors to bring down monthly payments and other debts.
- Check their health insurance. You want to make sure they are getting all the possible benefits they are eligible for.
- Rally the troops. All siblings and other family members (and sometimes friends) could all help to contribute either with money or a service. An example would be that cousin John could mow the lawn and care for the yard so that your parents don’t have to pay for a lawn service.
- Take advantage of the resources available for low-income seniors.
- Of course, Medicare is the most popular resource for seniors – if you’re not familiar with Medicare – here’s a great primer to help you out.
- Medicaid is a program run by your state and each state is different. Here is a list of contact information for the Medicaid office in each state.
- State Pharmaceutical Assistance Programs (SPAPs) assist low-income seniors with their prescription drugs. Here is a list of the states that do offer this type of help.
- There are many pharmaceutical companies that offer Patient Assistant Programs (PAPs). “Patient Assistance Programs (PAPs are programs created by pharmaceutical and medical supply manufacturers to help financially needy patients purchase necessary medications and supplies. Via these programs, prescription medications may be made available at no cost or at a minimal fee for individuals who do not have insurance or are underinsured. ” – payingforseniorcare.com
- The Supplemental Nutrition Assistance Program (SNAP) helps low-income individuals buy food. Along with SNAP are multiple other programs across the USA that may be able to help. You can find what programs are in your area by visiting the BenefitsCheckUp.org website.
- Veterans Benefits should be taken advantage of if you are a veteran or a dependent or a spouse of a veteran. Check with your local VA office for information on what you may be eligible for.
- Begin looking into home care options just in case there comes a time when that service is needed. There are many affordable home care services that can help with basic needs such as bathing, dressing, and grooming.
- Multiple other programs are available and what you are able to get depends on what you are eligible for and where you live. BenefitsCheckUp.org created a little questionnaire that you can fill out (no need to sign up) and it will give you lists of resources depending on what you are seeking help with. Check it out by clicking here.
- Grow your own food – if you have a green thumb and the space and physical capability to do so – growing your own food can certainly help to trim the grocery budget. If your parents are in good health, they can certainly tend to their own garden as well.
- Shop at the discount stores such as Aldi’s and if you shop at other stores, make sure to find out if they offer a senior discount.
- Check with your utility company to find out if and what types of discounts they can provide to your elderly parent. You may be surprised to find out that you can save some money by doing this. The same would be true for phone companies, cable companies, trash companies, etc.
- Check into the multiple services (hopefully in your area) that provide very low-cost or free transportation for seniors. For all the information on this check out our article Can Senior Citizens Get Free Rides?
- To save on senior care costs use the resources within your own private community. That means siblings, family members, a close friend, your church, clubs, etc. Most people want to help but don’t know how so don’t be shy to ask. If your elderly parent requires someone to be with them 24/7, you could use someone to be with them 1 or 2 days a week – saving you the cost of the caregiver. It’s difficult to ask, I know but now is the time when YOU need the help. You can pay it forward in the future.
Read our article, Does Social Security Pay For Caregivers?
There are a variety of government programs available to help low-income adults care for aging parents. The National Council on Aging is one such resource.
Others include local government initiatives and community-based organizations. These programs can provide financial assistance, respite care, and other forms of support.
Government programs like Social Security and Medicare can help to cover some of the costs associated with aging, but they may not be enough.
A reverse mortgage is one option that could provide additional income, but it’s important to understand how they work before making a decision.
There are a few different things that can be done for an older parent who has no money for medical expenses. One option is to look into free or low-cost clinics in the area. Another option is to see if there are any government assistance programs that can help with the cost of medical care.
Finally, it is also possible to set up a fundraiser to help cover the costs of medical care. No matter what option is chosen, it is important to make sure that the aging parent(s) are getting the care they need.
Speak with a financial advisor to learn more about whether a reverse mortgage is right for you.
Are Children Financially Responsible For Their Parents?
I do want you to be aware that in some US states and some countries, there are Filial Responsibility Laws.
If you live in Puerto Rico or any of the states listed below, you may be responsible for your parent’s care.
Although these laws are not often enforced – they still are the law so legally – you could be made to pay.
Filial responsibility laws (filial support laws,filial piety laws) are laws in theUnited States that impose a duty, usually upon adult children, for the support of their impoverished parents or other relatives. In some cases the duty is extended to other relatives.Wikipedia.org
There are currently 29 states, plus Puerto Rico, that have filial responsibility laws.
- New Hampshire
- New Jersey
- North Carolina
- North Dakota
- Puerto Rico
- Rhode Island
- South Dakota
- West Virginia
Other countries such as Germany, France, Taiwan, and Singapore have their own versions of a Filial Responsibility Law as well.
These Filial Support Laws also may “…require adult children to pay for a deceased parent’s unpaid medical debts, such as those to hospitals or nursing homes, when the estate cannot.”Money.cnn.com
Am I Responsible For My Parents’ Debt When They Die?
Well, there may be some unique circumstances in certain cases but generally, you would only be responsible for someone’s debt if your name is also on the account.
The way it goes is that the estate is responsible for paying off any debt after someone dies.
If there aren’t enough monies in the estate to cover debts, then other assets are tapped.
This could include monies left to their heirs so if you were to inherit some money, it may be that you end up inheriting less or none at all – depending on how much debt needed to be left to pay.
Now, having said that I will tell you that when my father passed away – he had no estate and about $60,000 of debt mostly in credit card bills.
Although he was the only person on those credit card accounts – bill collectors kept contacting my family for months after he passed away trying to collect those funds.
So, yes we were not legally responsible but that didn’t stop them from trying.
I do recommend that you contact an elder law attorney about this issue and I would say to do it before your parents pass away. It will put your mind at ease and if any legal documents need to be prepared, you and your parent can work together to make that happen.
What happens to the elderly with no family or money? – If an elderly person with no family or money is of diminished capacity and unable to make decisions and/or care for themselves then they are often made a ward of the state or county they are in.
All matters concerning their care will be made by the state or county.
Otherwise, elder orphans who can still care for themselves may go on welfare and receive aid from their local government.
We define elder orphans as aged, community-dwelling individuals who are socially and/or physically isolated, without an available known family member or designated surrogate or caregiver.U.S. National Library of Medicine
The National Council on Aging is a resource to help low-income adults.
What are some alternatives to long-term care? –
In-home care, adult day care, and assisted living communities are all possible alternatives to long-term care for aging parents who have no money.
Each option has its own set of pros and cons that should be considered before making a decision. In-home care is generally the most affordable option, but it can be difficult to find quality caregivers.
Adult daycare can provide social and recreational activities, but it may be too expensive for some families.
Assisted living communities offer a more comprehensive range of services, but they can be very costly. Ultimately, the best option for an aging parent will depend on their individual needs and preferences.
Putting someone in a nursing home without any financial resources can be challenging, but there are options to explore.
Firstly, you can reach out to local social services or government agencies that provide assistance for individuals with limited income.
They may offer programs or benefits to help cover the costs of nursing home care.
Additionally, consider researching nonprofit organizations or charitable foundations that specialize in eldercare or offer financial aid for seniors in need.