Funding Our Parents’ Retirement

by Kristina on July 15, 2010 · 12 comments

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My friend Rosemary is a lawyer, and up until very recently she was a DINK. Rosemary is now happily married with a one year old son.  One day we were discussing our parent’s retirement, since we are both at the age where the baby boomers that are our parents start to retire.

My father retired last June, and he couldn’t be happier.  Rosemary told me that her parents did not have any retirement savings and that she will be funding her parent’s retirement. Both of Rosemary’s parents are still currently working, they are both self employed. She does not have to worry about funding her parent’s retirement quite yet, but she may in the near future.

This conversation made me start thinking about my parents and their retirement.  Both of my parents will receive pensions from their employers, and starting at the age of sixty they will eligible for our Federal Pension Plan.  But, I thought to myself…Will that be enough?

Our parents come from a generation where kids and family were the priority.  They did not focus on saving money, and especially not saving for retirement.  We, on the other hand, have been taught from a very young age to start saving for retirement as early as possible.

Even $10 a week is a great start, every little bit counts and it will add up over time.  With the magic of compound interest over 25 to 35 years we will accumulate a nice retirement nest egg for ourselves.  But, if our parents have never contributed into their 401K and they don’t have any personal private savings, will an employer pension and government pension plan be enough to fund their retirement?

The concept of working to fund my parent’s retirement and not my own is a concept that I never really grasped until I spoke with my friend Rosemary.  As of right now my father is financially stable in his retirement but, what if he outlives his money.  The tables will be turned, and the child will now become the feeding hand to the former provider.  Some parents may feel that our financial contribution to their retirement is owed to them. They took care of us for the first forty years, so now it’s time for us to take care of them for the next forty.  I am not exactly sure how I feel about that.

My questions to you DINKS are… As young (and successful) professionals are we expected to pay for our parent’s retirement if they are not financially independent?

Does your retirement savings strategy include saving your parent’s retirement?

(Photo by angela7dreams)

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{ 10 comments… read them below or add one }

1 Martin July 15, 2010 at 4:30 pm

“They took care of us for the first forty years?” No way! My parents took care of me for my first 20, or 25 years.

2 Amber July 15, 2010 at 10:23 pm

Both my husband and my parents have very little saved for retirement and do not expect large pensions. I think it is inevitable that we will be taking care of them in old age and we will, of course, meet our obligation as their children. We joke that we’ll be like Charlie Bucket with George and Georgina and the other couple in one bed with a big pot of soup for everyone’s dinner. Only it’s not a joke and will likely be close to the truth – neither of our parents will have an appropriate place to live should they lose their income (one set rents and the other has – I would guess – 20% equity in their house, in a previously very overpriced market).

Have we started planning for this yet? No, naturally, we are refusing to think about it until necessary.

3 Scott July 16, 2010 at 9:59 am

This couldn’t be more timely. I am about to have the conversation with my dad next week on how we can help my parents out as they are both blue collar workers who were have faced some difficulty putting aside much for retirement (I’m sure my brother and I had something to do with that). It is going to be a hard conversation as my dad has a lot of pride and will not take the help lightly.

4 Imelda July 16, 2010 at 11:47 am

My husband and I have been supporting my retired mother for the last 4 years, sending a set amount quarterly to cover her living expenses. This is her only source of income aside from a very small pension. I do sometimes think how much heftier our own retirement savings would be without this added expense, but you gotta do what you gotta do. It’s very important that you and your spouse be on the same page when taking on a big financial decision like this.

5 Khaleef @ KNS Financial July 16, 2010 at 1:13 pm

I feel that everybody needs to incorporate caring for their parents into their own financial plans. I think that if we derived more of our happiness from our relationships and less from our “stuff”, we wouldn’t have a problem with this. Of course that is a general statement and does not apply to everyone – but a good number of people will read your post and automatically think about all of the stuff they won’t be able to buy if they help their parents out.

6 Kristina July 17, 2010 at 9:17 pm

I agree. Too often we do focus too much on “stuff”. Our lives and our finances may be better off if we didn’t “want” so much.

My father is also very “proud” and very very old school. He doesn’t like to take handouts or help from anyone. What I have started doing is disguising my financial assistance through gifts. As an example for Fathers Day, I bought him a complete lawn care package for the entire summer. He couldn’t refuse because it wasn’t a hand out…it was a fathers day gift :-)

7 Sam July 18, 2010 at 5:54 am

I see it this way: I wouldn’t be alive if it weren’t for my parents, and they paid until I was able to finish school. 20 years is still 20 years, and it doesn’t bother me if I have to help them out during retirement. I’m sure they wouldn’t ask if they are still able to work and if there are companies who hire seniors. :)

8 Brian July 19, 2010 at 12:07 pm

My dilemma is that my parents were not good stewards of their money and passed that along to me. Now that I have dug out of it I don’t know if I want to enable that type of behavior.

9 Jan July 20, 2010 at 11:48 am

We are now the DINKS at the other end. We raised our two (26&28) and still help them out. they can certainly make it on their own- but why not help?
We have no intension of them helping us with retirement. I would HOPE that they would want to help IF something drastic happened in the future and our retirement disappeared.They don’t owe me- but they are our family.
I have a feeling one of them is much more likely to move back to and take over the family home then us move with them in another place. It is paid for and the taxes are reasonable. They will be close to retirement age themselves- I suspect. I just want a tiny house (literally- the company called tinyhouse) and someone to be within a hoot so we can play cards together when I am 90 ( even if I still had my abundant nest egg at 90).

10 KM October 22, 2011 at 11:21 pm

There is no question in my mind: I will absolutely to support my parents. I expect to do so, and have been saving part of my salary specifically for this purpose since I started my career after graduating from college. A lot of comments hit it on the nose: my parents made my siblings and me their top priority. They made countless sacrifices so we could pursue our dreams, and I know their savings suffered. There is no material good or luxury item I want more than I want their comfort in retirement.

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