In some cultures, there is an unspoken familial contract: Parents are charged with caring for their children, and in return for their parents’ emotional, developmental and financial support, children are then responsible for taking care of their aging parents. While this is not common in modern American, middle-class life, it wouldn’t be unsurprising to see three, four, even five generations of one family living together under one roof in different parts of the world or in other time periods.
This type of arrangement is generally due to financial necessity, as relatively few families throughout history have had the luxury of saving money for the future. Although financial institutions have existed for centuries, helping families store wealth for the future, this philosophy of multi-generational living didn’t penetrate the majority of the American public until recently.
Middle-class banking, government policies, pensions and 401(k) retirement plans have changed the way the majority of the public in an advanced culture plan for the future. With the ability to save significant wealth for the future and the trust in the system that provides theses services, older Americans need to rely on their progeny much less than in the past or in other cultures, where features like these are not available to the majority.
Building wealth over time presents the opportunity to cease hard work many years before death and the possibility to spend more time for enjoyment rather than earning a living.
How Parents Are Losing Their Homes
In some cases, however, these advantages can break down. Anyone who watched their 401(k) invested in the stock market during the recent recession can understand how this might happen. The banking industry we trust has said that stocks provide the best returns over long periods of time, but that’s little solace to someone looking to draw on their retirement funds after losing 50 percent of what they had saved. In an economy like this, parents in retirement might have no choice but to rely on their children.
This puts the adult children in a difficult position; they were counting on their parents’ retirement funds as well, and rather than preparing to take care of their elderly relatives, they have been focusing on their own future and the financial proficiency of their own children. For many, the economy has arrested the ability for the elderly to pay for their own housing. Without help from their children, they would be homeless.
Helping Homeless Parents
Are you prepared to handle your homeless parents? While the above covenant might be considered old-fashioned or extra-cultural, don’t forget that your parents helped you become who you are. Your success is at least partially attributed to your upbringing. In a way, you owe them.
If someday supporting parents in addition to your spouse and/or children hasn’t been in your budget, you might be in trouble. The solution is accepting compromise and sacrifice.
Take a two-pronged approach to caring for your parents. The first is dealing with the expenses. What are your options for elderly care? If even with the best compromise you won’t be able to afford to house your parents separately, you may need to think about taking them into your home. Beyond the logistics and emotional strain of adding people to a house that may already be crowded, consider the increased expenses for food and health care.
With the expenses in mind, you’ll be prepared to find compromises in your other expenses — the second step. Devoting more money than you originally anticipated to caring for your parents might mean these adjustments:
- You’ll need to consider taking fewer vacations.
- In return for your parents’ comfort, you may need to delay your own retirement.
- You’ll certainly want to put away the credit card and buy only what you can afford to avoid interest fees.
- You may ask your own children to contribute more to the household.
- A second job of your own can help to bridge the gap between your income and your new, higher expenses.
Caring for the elderly is one of those expenses several generations of middle-class Americans have not had to consider, but the effects of a recession change the family financial dynamic. Rather than let your parents lose their home, it may be up to you to step up and use your success to the benefit of your family.