What To Do When Elderly Parents Run Out of Money

The most bitter pill to swallow is discovering that your parents have depleted their retirement savings. But as the primary caregiver, you must figure out how to help without risking your financial situation. What should you do?

When elderly parents run out of money, you should empathetically have an open conversation with them to have a clear understanding of their financial situation. Next, you should explore options to support their living, including a part-time job.

What Happens When the Elderly Run Out of Money?

No one plans to outlive their retirement savings, but retirement is expensive, and most people underestimate their retirement expenses. They also fail to consider the steadily growing inflation that diminishes the value of money, and as a result, 83% of retirees in the lowest income bracket and 13% in the highest income bracket run out of money.

Running Out Of Money In Assisted Living Or Retirement Communities

Assisted living and retirement community facilities are for-profit organizations and require residents to pay privately for the room, bed, food, and personal care services. These communities usually evict residents who run out of money because Medicaid and Medicare don't cover such expenses. But, they have to give a 30 days notice to the resident or the primary caretaker.

Going Broke In a Nursing Home

Nursing homes are more costly than assisted living and retirement communities. When a resident runs out of money in a nursing home, there are three payment options:

• Medicare: Medicare only covers a specific number of days, usually 100. After that, the resident takes over and pays out of pocket.
• Medicaid: It's the best solution for seniors who run out of money because it covers long-term nursing care. However, to be eligible, you must meet the state asset and income requirements.
• Veterans' Affairs (VA) benefits: These benefits are available for seniors with service-connected disabilities or with no assets or income.

11 Things To Do When Your Parent Run Out Of Money

1. Understand the Severity Of Their Financial Situation

Before taking action to help your parent, you first must understand the financial situation you're dealing with, which calls for having a genuine and open conversation with them. Your goal should be to:

• Have a look at their financial records, such as bank statements.
• Know whether they have credit card debts, mortgages, or pending utility bills.
• Understand the status of their retirement benefits.
• Know if they have insurance coverage and if they have been paying monthly premiums.

2. Involve Your Family Members

Supporting your parents should be teamwork, and if you have siblings, you should bring them on board.

3. Get an Affordable Financial Advisor

A financial advisor has the experience and expertise to recommend the best short-term and long-term options. They can also help you assess the situation in terms of numbers.

4. Encourage Your Parent To Boost Their Income With a Part-Time Job

Instead of entirely quitting work in retirement, you can encourage your parents to work part-time. Some good options include consultancy, tutoring, event organizing, and translating.

5. Sell Some Assets To Raise Funds

If your parents own several cars or have a large home with a mortgage, disposing of some assets can help raise quick cash and reduce expenses.

6. Move In With Your Parents

Moving in with your parents is an overwhelming commitment. But if they have no money or need assistance with daily living activities, living alone can be very difficult for them.

7. Consider a Life Settlement

A life settlement involves selling an insurance policy to a third party for a lump sum, usually higher than the policy's cash value.

8. Cut Out Excessive Spending

Review your parent's spending habits and identify areas where they can cut back. Focus on essentials and eliminate unnecessary subscriptions or services.

9. Apply for Government Assistance

There are numerous government programs designed to help seniors, including Supplemental Security Income (SSI), SNAP benefits, and Low-Income Home Energy Assistance Program (LIHEAP).

10. Look Into Reverse Mortgages

If your parents own their home, a reverse mortgage can provide them with income while allowing them to stay in their home.

11. Consult an Elder Law Attorney

An elder law attorney can help navigate complex financial situations and ensure your parents' assets are protected.

About Chip Mitchell

Chip Mitchell is the founder of Growing Gray USA. With over a decade of experience owning a home care company, he has helped hundreds of families navigate the complexities of caring for aging parents.