How to factor aging parents into your financial plans?

[diapasoun]

How do you factor in aging parents to your FIRE plans?

Background:

Mom: 62 (almost 62), disabled since her 30s due to diabetic neuropathy and generally not in great health. If it's a complication of diabetes, she's got it. Works very part-time as a clerk in our town hall.

Dad: 64, not in great health either (Type II diabetes, including increasing neuropathy, overweight, and long-term, low-grade, untreated depression). Works full-time in a hospital lab, very experienced and good at what he does.

Me: The only child, 31 (almost 32). Behind on retirement savings due to six years spent making diddlysquat as a PhD student, but am working to make it up. My only dependent is a cat. I live across the country from them, unfortunately (came here for grad school and didn't leave).

Their financial situation: They live in a very rural area, house on 40 wooded acres. Mortgage is under 10 years to go. My mom already receives disability, and my dad will receive Social Security when he retires. They have a small amount in 401k savings, and my grandmother left my dad part of a trust when she died (I don't have numbers). The other half of the trust supports my uncle, who is non-employable and not smart with money -- he gets an allowance. My parents are frugal but not Mustachian; they've typically lived just within their means -- no big debt, but no big personal savings, either. As far as I can tell, their retirement planning has generally been a bit vague.

My dad's neuropathy is getting increasingly bad, and it makes me worry about whether he'll be able to stay employed much longer. I don't want them to be blindsided by his retirement (and I don't want to be blindsided by it, either). I want their ducks to be in the best row possible, and I want to know how I can best be a support for them. They are amazing people and wonderful parents, and I can't imagine not helping them if/when they need it. That being said, I'm not FI and my financial flexibility is limited; if I know some of what's going on with them financially, it's going to be a lot easier for me to be a bolster in times of need.

As you can guess from how little I know about their retirement plans, I've never been involved in their finances, and so getting any sort of information out of them makes me feel like I'm getting involved. I don't want to make them pressured or harassed or like I'm prying, and I don't want to be in charge of their retirement, either. And I don't want them to feel small, like I don't think they can take care of themselves or anything like that. I just want to know enough so that I can adjust my own plans if I need to. I want this to be about building a safety net for them, so that when my dad retires it can be freedom for them, and not a source of worry that the money's gonna run out in ten years and they're gonna be left in the county home.

I would really love to hear other people's stories about this, because I'm not at all sure how best to go about any of this. How did you check in on them without crossing lines or making them feel pressured? How did you go about these conversations with grace and caring, and make it about them being stronger as opposed to being "taken care of"? Did you even have those conversations, or just assume that your FIRE plans were going to include assisting parents? What kind of externalities need to be taken into effect, both in their planning and in your planning? What externalities do you WISH you'd taken into effect but didn't?

[Heroes821]

There are several paths to this. Diapasoun.

The first is have a frank conversation with your parents.  Explain your concerns and your desire to make sure they are able to maintain their independence for as long as their lives can sustain it. Ask what plans they have in place and if they know how SS and Medicare will continue to cover them.  Explain your feelings on the house and find out what they desire to give you in inheritance.  Some parents are very worried and concerned about passing their legacy onto their children.  If you don't care about the house, let them know that they can draw on it's equity to maintain their standard of living as long as they are as healthy as they can be.


The second is if you have a less pleasant relationship or if your parents are extremely stubborn.  They may refuse to talk about finances with you and you need to be ok with that.  If they don't want your help that is their choice.  Don't let that be a burden on your FIRE plans. 


The third and last that I can think of is that if you are close with them and both of you want to remain close, you may not be able to focus on early retirement if you choose to assist them fulltime.  It could be a large financial burden on you to take them in, but it might be something you and your parents feel is the best solution. 

[former player]

It sounds to me as though you have good relationships with your parents and that you keep in touch with each other.  That is in itself probably the biggest and most valuable thing you can do for them, and you are already doing it.

In my experience elderly relatives in failing health probably still retain their intellectual capacities and their lifelong habits of thinking of their children as their children rather than fully autonomous adults.  I was lucky in that my elders all made modest but completely adequate financial provisions for old age.   But anything from me which approached giving orders about how they should live or even an unseemly curiosity about their finances would have been firmly stamped on, so any planning I did was largely a matter of catching the moment and remembering and following up on as appropriate occasional useful statements that arose in conversation.   

If the occasion arises, it might be worth your bringing up in conversation the difference in social security payments depending on the age at which they are started, as this already seems a relevant issue to your parents.

Longer term, I would have concerns about the rural house in 40 acres being suitable.  In particular, if the complications of diabetes involve damage to their eyesight there could be limitations on their future ability to drive.  (I would imagine that maintenance could already be an issue?)  So as Heroes821 suggests, a conversation about the house (eg you think it's wonderful but probably not compatible with your future life, and how do your parents feel about being able to stay in it in old age?) could be a good thing.

Apart from that, I would say: glean what you can from them in case you need the information later, but let them take the lead.

[Lady SA]

ptf. My DH and I are planning for the eventuality of supporting his parents, though we don't know exactly in what capacity or how intensive this will be. We aren't involved in many financial discussions with them, but we do know that they weren't able to save much for retirement and mobility-wise, things are going downhill.

For us, this means general preparation in the form of planning for worst case and being flexible with working a few extra years to support them. This could look like building in a monthly budget line-item to help cover their utilities, or paying for medical needs/surgeries, helping them move/afford a more suitable home, paying for longer-term care or nursing, etc. All of this means significant money, so we are just saving as we would normally to cover ourselves (and not put our own future children in the same position we are in now) and then anything over that is "earmarked" for eventual assistance.

For DH and I, I'm not too worried about it. Right now, we are on track for our own assets to build to $1 million by the time we are about 38, but DH wants to keep working indefinitely, so anything he brings in (and he is a software dev so makes plenty) would be padding our stash and going toward this assistance without impacting us whatsoever. But I'm only ok with it because *I* can retire when I want, and this plan only works because of DH's willingness/eagerness to keep working. If both of us wanted to be FIRE, we would be in a much tighter spot.