Reddit Answers: What To Do When Your Parents Have No Retirement Savings
Consider this scenario: Your parents, the people who helped you get started in life, are now approaching retirement age (or have already reached it) and they have no retirement savings – and you feel forced into the position of returning the favor and caring for them financially.
A recent Reddit thread made clear this is a hard reality for many Americans, and it also suggested that adult children find out just how serious the problem is before putting their own savings at risk.
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In the thread, a 27-year-old woman said that her parents, ages 56 and 59, had emptied already emptied out their 401(k) accounts and other savings. Their debts total at least $150,000 and possibly more than $1 million, including business obligations. Her father has struggled to establish businesses since losing his job in 2019, and while neither parent has requested money, this Redditor wants to help.
Start With the Numbers, Not With Your Checkbook
Reddit user beergal621 suggested checking the parents’ Social Security estimates and comparing their monthly income with expenses. The Social Security Administration’s online calculator provides personalized estimates at different claiming ages. With their permission, review account statements, outstanding debts and housing costs to see what retirement might actually require.
Of course, a budget is only useful if your parents participate. If they’re unwilling to discuss their finances, you can also offer resources without volunteering to cover bills you don’t fully understand.
Get Professional Advice Before Selling the House
The subject of bankruptcy dominated the replies in the thread. Redditor Below-Average-528 argued that the father should close his unsuccessful business, seek new employment and consider bankruptcy rather than continue to accumulate debt. However, the original poster (OP) said that her parents intend to sell their California home and move somewhere cheaper instead, making the order of those decisions important.
Per the U.S. Court system, bankruptcy exemptions may protect certain property, depending on applicable law. Selling a home before filing could change how its proceeds are treated. A bankruptcy attorney should examine the parents’ home equity and debts before they sell or transfer assets. Bankruptcy also doesn’t automatically erase every kind of debt, and shouldn’t be seen as a Get Out Of Jail Free card.
Make Their Future Income the Priority
Several commenters urged both parents to seek steady jobs and reduce their living expenses. Reddit poster keepsaying suggested securing affordable housing alongside the search for employment. Neither step promises an easy recovery, especially for people approaching 60, but a reliable paycheck gives them something concrete to budget around.
Social Security deserves attention, too. The agency’s calculator would allow your parents to compare claiming at 62 versus full retirement age versus, say, at age 70. Waiting generally increases the monthly benefits, although immediate financial needs do impact that decision. Suggest to your parents that they compare the projected payments against a realistic housing budget before assuming retirement is affordable.
Protect Your Own Financial Future
The thread’s most unambiguous warning concerned co-signing loans or using personal savings to keep a failing business afloat. Commenter SamuelL421 described a relative whose adult child co-signed loans and ultimately became responsible for payments the parent couldn’t make. While that account is of course anecdotal, the contractual risk of co-signing is real.
If you have money to spare, paying directly for professional advice may be more productive than handing over restricted cash. You can also help organize documents or research affordable housing without merging finances.
The Bottom Line
You can love your parents and still insist that they make their own financial decisions – and endure some of the consequences. If you choose to agree to help, consider also including a clear limit to how much money you can help with. Your parents’ retirement may look very different from what they expected, but protecting your own golden years from your family’s financial crisis is just as important.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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