Should You Help Your Parents Financially?

Lifestyle

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Should you help your parents financially? This is a tough question that will affect more and more of us every day. Today, pensions are rare and many retirees have very little personal savings. Luckily, Social Security still works, but that may change in the future. The Social Security trust fund is projected to be depleted in 2033. That’s not far off. If the problem isn’t fixed, the Social Security benefits will be reduced to 76% of estimates. Also, people are living longer these days. With so little savings, it’s hard to maintain the same lifestyle over a long retirement. Many older retirees will need help financially. Unfortunately, my parents are two of those retirees without a lot of savings. Today, I’ll share why we help out financially and how much.

*This post was originally written 2013 and updated in 2021. A lot of things changed in 8 years.

2021 update – My dad is 76 years old and my mom is 73. They had some retirement savings, but it’s gone now. In 2018, my mom developed dementia and moved back to Thailand. By 2020, she needed full-time care and my dad provided it. My dad used to work a few side gigs, but he can’t anymore. These days, they rely on financial support from their kids and a little rental income.

Some background

Should you help your aging parents financially? Of course, you should help out if you can. For me, the question really is – how much? Our culture expects the kids to support their parents when they’re old. I saw this with my maternal grandmother. She was my only grandparent who lived longer that my other grandparents. She had 9 kids and they all chipped in to support her when she retired. This is normal in many Asian cultures.

should you help your parents financially?

When I first wrote this post in 2013, my parents didn’t need help financially. My dad lived in Thailand and he made money from various side hustles. He rented out his condos in Chiang Mai, managed other people’s condos, day traded, sold buddha amulets, drove tourists around, and lent money. He had income and was doing okay financially.

My mom lived with us and we paid all her expenses. It really wasn’t much. She was frugal and didn’t use any money. We only spent a bit more on food and clothing when she was here. The only big issue was healthcare. We’ll talk about that a bit later. My mom helped us raise RB40Jr when she lived with us.

In 2013, I was just thinking about this problem. At the time, they didn’t need help financially. By 2021, they needed a lot more help. They don’t have any pension and they don’t qualify for Social Security benefits because they didn’t earn 40 credits. They worked in the US for many years, but just didn’t accumulate enough points to qualify. Things were fine as long as my dad was earning some income. When Covid hit, all of his side hustles disappeared. By then, my mom needed more help too. Once they had no income, their savings depleted very quickly. It was time for the kids to step up.

My dad is a unique case. He was orphaned at 5 years old and he always fought for everything he got. He never asked anyone for anything. However, life changed and we all had to adapt. He doesn’t like accepting money from us, but he has to. We tell him the money is to help care for mom.

Healthcare

When my mom lived in the US, the big problem was healthcare. At the time, she couldn’t get health insurance due to pre-existing conditions: glaucoma and cataracts. These problems needed to be monitor on a regular basis. Luckily, Portland had some healthcare assistance for low-income people. She was able to see an optometrist and pay minimally because she didn’t have any income. It’s not an ideal situation to not have health insurance, but we made it work.

Later on, we found out about the Oregon Health Plan. This is a health coverage program for low income people. She could visit doctors and specialists at minimum cost. In 2018, her dementia problem was getting worse and we decided to move her back to Thailand. I couldn’t take care of her and a kid at the same time. If she stayed here, we’d have to put her in a nursing home, and the language barrier would have been an issue.

In Thailand, they have a similar program to Medicare that she qualifies for. My parents can go to a public hospital and get okay healthcare with minimal cost.

Help out financially

My mom moved back to Thailand in 2018. Since then, I helped out quite a bit.

2018 – They didn’t need money at that time. My dad worked side gigs and they had some savings.
2019 – I sent them $10,500 that year.
2020 – $4,800. I asked my brothers to help out and we shared the responsibility. We each sent about $500 per month. This was a tough year because Covid shut down a lot of side gigs. My mom became totally dependent on my dad. He couldn’t work much with these conditions.
2021 – about $5,500.

Make a plan

Back in 2013, I wanted my parents to move into a condo we purchased in Portland. However, my dad didn’t want to live in the US. Life is more comfortable in Thailand for him. He stayed in Thailand and my mom moved in with us. My plan didn’t work out so well. Fortunately, we were able to rent the condo out and generate passive income. Next year, I’ll put it on the market because I want to travel more. I don’t want to be a landlord anymore. These days, I invest in real estate crowdfunding instead. It is so much easier than being a landlord.

Here are some points that I learned

It’s probably better for the parents to spend all their money first. That way they will qualify for many services like Medicaid and food assistance programs for low income/asset folks.
Keep the condo in our name so we can deduct tax.
Combining households is a great way to cut expenses.
We’d better treat our parents right so RB40Jr sees a good example and treats us well when he is a billionaire.
My parents live comfortably on about $15,000 per year. Thailand is a lot more affordable than the US. I don’t think a couple can survive on $15,000 per year here. Oh, I own the condo they live in so the housing cost is minimal. They just have to pay the HOA fee.
Make plans, but don’t stick to them religiously. Life happens and things change. You have to be flexible and adapt.

How about you? Would you be willing to help out your parents financially? Assuming they are not extravagant, I think we are obligated to help out. My parents sacrificed a lot to help us become successful. We need to help them when they need it.

Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.