When Your Aging Parent Is Running Out of Money

Q. My mother, Rosie, is 97 years old. She is still mentally sharp and she pays her bills on time. She does need some help physically, ever since she broke her hip from a fall a few years ago. Besides the broken hip, she has survived a heart attack and pneumonia. We are fortunate that she made it through these health ordeals.

I love my mother with all my heart and I’m thrilled that she is still around. In all of her wildest dreams, she never expected to live until she was 97 and to meet her great grandchildren.

The only thing is, she can barely afford her living expenses anymore. The survivor pension my dad left for her, calculated 40 years ago, seemed like enough at the time, but in today’s dollars it’s barely enough to scrape by. And, right now, that meager pension and Social Security are all she has — all of her savings were used up years ago. She has just enough income to cover her rent, food, and health care. What I fear is one catastrophic event, and I don’t know what we would do.

Things are tight for me now too, since I am recently retired myself. However, I do have three brothers and a sister who I may need to bring in to help with my mother’s situation. I too fear this happening to me someday. What do you recommend to people whose parents are living longer and running out of money?

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A. Seniors are living longer these days and money saved for retirement can only stretch so far. Running out of money has become a common occurrence for many in this age of increased life expectancy brought on in large part by better health care options.

Running out of money usually means that you have used up all of your retirement savings and your home equity and are left with whatever income stream you might have — which usually includes means Social Security and, for some, an additional pension.

Money runs out for a number of reasons and common among them are longevity, increased cost of living, increased costs in senior health care services, lack of planning, and a need for more assistance with activities of daily living (ADL) as we get older. Less proactive saving, higher costs, stagnant wages and fewer people with traditional defined benefit pension plans are some of the other reasons that more of us are at risk of outliving our assets.

Most people who run out of money in retirement continue to scrimp by — living on Social Security income and dramatically cutting costs. Luckily, there are things you can do to help your mother maintain her quality of life and to help yourself so going broke in retirement is less likely to happen to you.

Running Out of Money is the Biggest Retirement Concern

Studies show that running out of money is the thing that scares people about retirement the most. In fact, research from Allianz Life suggests that 60% of baby boomers are more afraid of running out of money than dying. Among people aged 44-49, it is 77% (and a whopping 82% if they are married with dependents). Similarly, a study released by the American Institute of CPAs (AICPA), reported that 57% of financial planners said that running out of money was the top retirement concern for their clients.

Having enough savings for retirement is not the only fear. The Transamerica Center for Retirement Studies found that declining health that requires long-term care, a reduction in or elimination of Social Security, and losing their independence are also top fears of retirees.

What Should You Do if a Parent’s Money is Running Out?

Many boomers are supporting their aging parents, in whole or in part, out of necessity. If your parent is running out of money, here are some strategies and support options involving you and your siblings:

• Step in with your siblings: It may come down to you and your siblings to help pick up the broken financial pieces and to step in to help with caregiving. To gauge how everyone can step in and help, get together with just the siblings in person or on a call. All the adult children should be clear about what they can or can’t do to assist and put any sibling rivalry issues that may exist aside.

• Present a united front: This is the time for siblings to lean on one another. Perhaps someone will be able to cover a utility bill. Maybe someone would even be willing to take in your mother if others helped out.

• Research subsidized senior living options if no one is able to have her move in.

• Once you’ve got a plan, set up the meeting. Pick a non-stressful time to have a family meeting including your mother. Be honest and upfront about what you can offer.

• Budget for the help you can afford: If you’ve been helping out with money for your mother and are concerned about your own retirement, budget for the help you can realistically afford to give.

It would be wise for your mother to plan for long-term care in a nursing home setting for the future. For those who qualify (typically with the assistance of a highly experienced elder law firm, such as the Farr Law Firm), Medicaid will pay for a nursing home, but will not pay for a caregiver at home or in an assisted living community to keep an aging parent out of a nursing home.

Plan Ahead for Yourself So You Don’t Run the Risk of Going Broke Too!

To plan ahead for your financial future, you should work with a trusted financial advisor and implement your own long-term care strategies. Besides being a Certified Elder Law Attorney, I am also an experienced retirement planning advisor and long-term care financial advisor through my financial services company, Lifecare Financial Services, LLC, which has been in business since 2006. Lifecare Financial Services works often in connection with other top retirement and long-term care financial advisors around the country. As a Certified Elder Law Attorney and as a retirement planner, my goal is first and foremost to help you secure your financial future and well-being. A secondary goal for some of my clients is to also leave an inheritance for their children and/or grandchildren.

To ensure that you are never in the same situation as your mom, it is important to protect your hard work and your golden years with effective retirement planning and long-term care financial planning. Learn more here.

Plan in Advance for Retirement and Long-Term Care

If you or your mother don’t have financial planning, estate planning, and/or long-term care planning in place, we are here to help! We here at the Farr Law Firm have strategies in place to help all types of people at all ages to plan for themselves and their loved ones. By planning in advance, each person can retain the assets it has taken a lifetime to accumulate and the peace of mind that their family’s needs will be adequately and properly addressed.

Long-term care Planning Fairfax: 703-691-1888
Long-term care Planning Fredericksburg: 540-479-1435
Long-term care Planning Rockville: 301-519-8041
Long-term care Planning DC: 202-587-2797