Yahoo Finance My parents are entering their 70s with zero savings and $150,000 in debt. What can I do to help?
Even if a person's parents don't inflict an ounce of financial guilt on their offspring while raising them, many adult children may still feel an obligation to take care of them later in life.
So it was with a 30-year-old Reddit poster who claims their parents are entering their 70s with zero savings and close to $150,000 in debt. The couple lives in Alberta, Canada, so all currency figures have been converted to U.S. dollars.
Don't miss
Commercial real estate has beaten the stock market for 25 years — but only the super rich could buy in. Here's how even ordinary investors can become the landlord of Walmart, Whole Foods or Kroger
Cost-of-living in America is still out of control — use these 3 'real assets' to protect your wealth today, no matter what the US Fed does or says
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
The father works in a physically demanding job but the poster wonders: What if he suddenly can't work? How would this millennial support his folks on a modest income of roughly $40,000 a year working in wildlife ecology and biology? How would their mortgage get paid?
"I am an only child so I am their main safety net," the poster wrote. "I am also very scared of messing up my financial future."
It's a scenario to which any adult child can relate: building a responsible financial life when your parents haven't quite done the same, meaning their financial burdens could soon become yours.
If you find yourself in a similar situation in the U.S., here are five ways to get a grip on the combined finances.
Know your mortgage assistance options
While fears of foreclosure are understandable, the reality is that "Your mortgage company does not want your home, they want to explore all options to avoid foreclosure." So says Freddie Mac, the U.S. government-sponsored home loan mortgage corporation. Instead, a lender may agree to forbearance, which means they will suspend or reduce monthly mortgage payments for a specified time. Freddie Mac also suggests options such as refinancing to lower mortgage payments or working with Balance, an affiliated non-profit that provides borrowers with foreclosure prevention and loan modification services.
Examine the Social Security picture
Seniors who haven’t filed for Social Security because they’re waiting for increased benefits may want to reconsider in the face of financial woes. While pulling benefits at the earliest age of eligibility, which is 62, would reduce payments up to 30% compared to doing so at full retirement age (67 if you were born in 1960 or later), the smaller check could tip the balance in favor of keeping up with expenses. If you’re unsure how much you’d be entitled to receive, the Social Security Administration provides a benefits calculator to check the numbers.
Read more: Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)
Reduce high-interest debt drag
Not all debt is created equal, and credit card debt ranks among the worst seniors can carry in terms of interest rates. In 2022, 46% of American households held credit card debt, and by 2023 they were paying $126 per month in interest alone, according to the Federal Reserve Bank of St. Louis. That’s money thrown away. Meanwhile, the Consumer Finance Protection Bureau, citing Fed data, reports that credit card interest rates hit an all-time high in late 2023 at 22.8%. If you have cash tucked in a money market fund or bank account, consider using a chunk of that low-interest savings to pay off any high-interest debt.
Overhaul health care coverage
The ill prognosis is that 65 year olds can expect to spend $157,500 toward health care and medical expenses throughout retirement, according to the Fidelity's 2023 Retiree Health Care Cost Estimate. That said, Medicare is your greatest ally. In this government program, Part A covers inpatient hospital care, skilled nursing facility, hospice, lab tests, surgery and home health care; Part B covers doctor and other health care providers' services and outpatient care, durable medical equipment, home health care and some preventive services.
Part A is usually premium-free if you’ve paid Medicare taxes for at least 10 years; you can also buy it at either $278 or $505 a month, depending on how long you or your spouse worked and paid Medicare taxes. Part B carries a minimum monthly premium of $175, depending on your income, and is subject to change. Beware, there is a window to sign up for Medicare when you turn 65, and if you miss it you could be subject to a lifetime penalty if you sign up at a later time.
What to read next
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
Stop crushing your retirement dreams with wealth-killing costs and headaches — here are 10 'must-haves' when choosing a trading platform (and 1 option that has them all)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
