When Helping Mom and Dad Hurts Your Wallet

A young woman helps her aging father with his finances on a laptop at the kitchen table.

(Image credit: Getty Images)

If you’re among the nearly one in four Americans who are providing financial support to an aging parent, chances are you’re feeling the squeeze — emotionally as well as financially.

That’s the conclusion of two recent surveys, which found that the cost of lending parents a hand is making it tough for many adult children to reach their own money goals and leaves some of them feeling conflicted about the help they’re giving.

About three-fourths of those helping out parents, a partner’s parents or both with expenses such as groceries, housing and medical bills said that doing so prevents them from paying off debt, building an emergency fund and achieving other key financial goals, according to a survey this summer from LendingTree, an online lending marketplace.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

In addition, 38% of the respondents providing support or who expect to in the future said that either they or someone in their family had to quit a job or reduce work hours because of their caregiving responsibilities.

“In my family, my wife has had to dial back some of her hours to help her father,” says Matt Schulz, LendingTree’s chief consumer finance analyst. When you find yourself helping your parents, Schulz says, “it just takes a huge toll, both financially and emotionally.”

The pinch can be especially painful for those who are helping aging parents while raising children, according to a September survey from Allianz Life, a financial services provider.

In the survey, roughly six in 10 of the caregivers with children younger than age 18 said they had reduced or stopped contributing to their retirement plans as a result of the assistance they’re providing.

That could backfire. “Stopping contributions to your retirement can magnify problems for your kids [when they grow up] because they may then need to help you in the future,” says Kelly LaVigne, vice president of consumer insights at Allianz Life.

Adult children who are helping their parents, or plan to, are of two minds about it, LendingTree learned. Eighty-four percent believe providing financial support is their responsibility, but nearly half admitted feeling resentment about the financial burden.

“This shows the tug-of-war going on,” Schulz says. “When you’re in the trenches managing an elderly parent, there’s a side of you that is grateful you have the opportunity and financial wherewithal, but there’s also the side that’s like, 'Man, this is really hard, and I wish I weren’t in this position.'”

If caring for a parent is putting a strain on your finances, experts suggest taking these steps:

Get a grip on debt. Nearly six in 10 adult children helping aging parents have gone into debt as a result, LendingTree found. More than half borrowed at least $5,000; 13% have taken on $25,000 or more in debt.

It’s imperative to whittle down your debt, especially if you borrowed via a credit card (average rate: 22%), experts say. A smart first step: Ask your issuer for a lower rate — a strategy that LendingTree found is successful 83% of the time.

Let others help. Talk to your siblings to see whether they can chip in. It’s also a good idea to talk with a financial adviser. Even a one-time session with a fee-only planner can help you review spending, manage debt and identify sources of additional funds for caregiving costs. Find one at NAPFA.org.

Tap community resources. The National Council on Aging’s free online Benefits Checkup tool lets you type in a ZIP code to find local programs that could help your parents (or you) better afford food, housing, health care and more.

If you’re not helping out parents now but think you might need to provide assistance in the future, talk with them about their financial situation soon.

Says Schulz, “It’s not an easy thing to do, but it’s so important, because the more you know, the better able you are to start thinking through what you may need to do going forward.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

Richard Eisenberg is an "unretired" personal finance writer, editor and podcaster. He writes a column for Dow Jones' MarketWatch; freelances for outlets including Kiplinger, AARP The Magazine, PBS' Next Avenue, The Stanford Center on Longevity Magazine and People magazine; and is co-host of the Friends Talk Money podcast for people over 50.

Previously, he was managing editor at Next Avenue, executive editor at Money magazine, special projects director/money editor at Good Housekeeping and director of NYU Summer Publishing Institute's Digital Media Strategies Program. He is the author of "How to Avoid a Midlife Financial Crisis" and "The Money Book of Personal Finance." Eisenberg graduated from Northwestern University's Medill School of Journalism and lives in New Jersey.