Will your parents' financial decisions leave you holding the bag?
Many boomers didn't save much for retirement, assuming they had a few years to catch up. According to Boston College researchers, 40% of baby boomers are at risk of not being able to afford their current lifestyles in retirement. Perhaps more worrisome, a 2006 survey of 2,500 boomers found that 59% of the respondents had done no formal retirement planning.
And the financial crisis and economic upheaval have pushed many parents into their children's laps.
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Just ask Anna Hartman. She and her husband -- both 31 -- recently moved her 67-year-old father from his home in the Washington, D.C., area to their 1,000-square-foot house in Oakland, Calif. Hartman's father had recently started a vitamin-supplement business, but it went bust last fall, largely due to the economy.
For years, Hartman had worried that her dad's lack of savings would one day become her burden. But she didn't realize it would be so soon. If she had, she would not have quit her job and started graduate school in September. Now she and her husband are living on credit cards and trying to find low-income housing for her father.
"On top of it all, our house has lost $200,000 in value, so now we're stuck," Hartman said.
"It's very frustrating that he doesn't have a pension and that he didn't have a plan," she said, adding that her long-term houseguest has put pressure on her marriage, despite her husband's openness to the situation.
"I feel like I'm 15 again with my father sleeping a few feet away. Yet I'm the one being the adult here."
Is it ever too early to meddle in your parents' financial affairs? Is it your responsibility to plan to care for people who are still working and able to save and invest on their own behalf? What if their financial needs compromise your lifestyle or your security? And what if your folks should have known better than to leave retirement to chance -- and yet have?
Barry Lubetkin, the director of the Institute for Behavioral Therapy in New York City, says it is appropriate for children to ask about their parents' finances as early as high school, when college financing first comes up.
"There is an unwritten contract that after all the years the parent supported the child, at some point the child takes on the responsibility of caring for the parent," Lubetkin says. "When that contract is not honored and respected, people lose out, and I've seen families fall apart over these issues. These conversations have to take place so these shifts in responsibility don't happen with too much rancor."