Raising Your Parents: Helping Aging Parents Cope Financially

Family Finances, Planning & Saving
on October 15, 2014
Helping Aging Parents Financially

The Great Recession broke down a lot of emotional and mental barriers people had in place where money was concerned. Not since the Great Depression have retired and elderly parents seen their net worth decimated at such numbers. As a result, no longer are parents moving in with their adult children just for medical care reasons, but for financial ones as well—and all the while, the American cultural stigma against “boomerang children” or now “boomerang parents” is steadily retreating because of these economic pressures.

The existence of multi-generational households, where parents moved in with their adult children and grandchildren, has increased at record numbers since 2008. In fact, an AARP study shows a whopping 13.7 percent more parents living with their adult children after the recession than before. Even if it seems like a no-brainer to save money on mortgage, rent or fees at assisted living communities, there are many issues that both the parent and the adult child need to consider—and be prepared for—when Mom and Dad move in.

Emotional Issues

The initial conversation about moving in is vital to how the rest of the process will go. The two sides of the conversation usually don’t view the status quo the same way. The younger generations and older Americans often have different expectations and viewpoints on what old age means and how they can care for themselves. The 2009 Pew Research study Growing Old in America says older adults reported experiencing far fewer negative benchmarks, like illness, memory loss and inability to drive, than the younger adults expected them to respond at their age.

Convincing Mom and Dad to move in because they’re getting older and can’t care for themselves can be challenging when only 35 percent of people aged 75 and older in the study actually report as considering themselves old.

Making the decision to actually move in for financial reasons will be just as emotionally challenging. Talking about other positive factors will help ease the stress of transition for all parties. “When Mom said at Christmas that we should move in together, we just thought it was funny,” said Lara Freeman, whose family, including two young children, moved in to her mother’s much larger home in Colorado. “We moved in because she had this huge empty house, and we hated our place. Mom was all alone in the house up here. She is always saying now that she loves having her grandkids around and would be very lonely without us here,” Freeman said.

The new roommates need to be proactive working with their siblings and their own kids, managing everyone’s expectations when Mom and Dad move in. “My kids always liked coming over here, so we asked them if they would like to live with Grandma full time,” Freeman said. “Our oldest was all over it. We let him spend the night with Grandma in advance of the move so it was an easier transition.” Freeman’s siblings are out of state and have told her they’re happy that their mom gets to be around her closest grandchildren, she said.

The San Francisco-based Family Caregiver Alliance publishes Caregiving with Your Siblings fact sheets about how to deal with family dynamics when parents move in with one child rather than another. “Because parents are living longer,” the FCA tells its caregivers, “their adult children are now caring for them for up to a decade or more. While some families are able to work out differences, many others struggle.”

Helping Aging Parents Cope Financially


Financial and Legal Issues

Who pays for what, and how those agreements impact everyone, make financial issues the biggest sources of stress for the new roommates. The Freeman family, for example. Even though their parent was secure financially and not yet needing significant medical assistance, the Freemans made sure they had the tough conversations about expense-sharing before making the move.

“It’s a much bigger house, and mom was financially set,” Freeman said. “We agreed to pay what we were paying for our previous house. You could fit three or four of our old home into this one. We also agreed that we would pay the same utilities amount. So that hasn’t negatively affected us and helps her.”

Some families are choosing to sell both the kids’ and parents’ previous homes and buy a new one together that meets everyone’s newfound needs. Realtor Lindsey Mote says someof her clients have had to work on how ownership is structured to be fair to everyone and protect the house from Medicaid and estate issues.

“You can have multiple people on the house deed and the mortgage,” Mote said. “They need to make sure the older parents’ own legal paperwork—like trusts and wills—are set up in conjunction with how the tenancy is structured on the house to make sure their interest in the house will transfer the way they want and how everyone agreed to. People need to be aware of the potential for the state coming after the parent’s ownership share in estate situations and if they have to spend down to Medicaid eligibility for long term care.”

Changes to Medicaid in 2006, and again with the Affordable Care Act, mean parents and adult children must carefully consider how each purchase, rent payment and gift is structured. Every transfer of money or property within five years of the parent needing Medicaid will be subject to review by the state. If the auditor decides a payment was made to keep assets protected from their medical expenses, they’ll insist the recipient give the money back. If the money was used to buy a new house or pay for a grandchild’s college, that could present a huge problem for both generations.

Setting clear and collaborative ground rules among siblings (using the FCA’s suggestions) will help avoid some of the situations Mote has seen with her clients. Real estate agents, bankers and financial advisors must have clear authority set to know who is able to speak on behalf of the parent. Cognitive and communications issues from strokes or dementia can throw a major wrench in the works with multiple siblings who have different plans for their parents, Mote said.

“If mom is not always lucid, you need a power of attorney for exactly one person drawn up, signed and notarized while she is lucid. If you wait too long, then agents and banks can’t let someone who isn’t mentally stable to do any contracts at all,” Mote said. “I understand when someone doesn’t want to choose one child over the other, but otherwise it makes everyone’s life very difficult.”

Mobility Issues

Often neither the parents nor the adult child’s homes are appropriate for caring for someone who will have mobility issues. Most floorplans are not conducive to the dignity and sense of independence for everyone in the house, Mote said. “There are very few homes that are designed with a ranch style floorplan and with two master suites. Mom doesn’t want to have to sleep in little Sallie’s room from before she went to college,” she said. “I’ve seen more renovations where a 1960s home had been renovated so there was a master suite in the main level and one in the basement. That gives everyone a true space of their own.”

The one piece of advice most agencies and professionals agreed on was that adult children of parents that need financial or medical care should reach out to the many community resources available before stress gets to them. Dallas Jamison, director of communications for the National Association of Area Agencies on Aging, said that adult children should use the federal www.eldercare.gov caregiver resources directory to find official and trusted resources in their area.

Related Article: Solving the Retirement Cash Flow Puzzle

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