Discovering My Parents Went Broke in Secret—Five Years Too Late

One of the worst things any child can hear is that their parents are not financially stable. The hope is always that parents have saved and left enough money after the expense of raising a family to retire and live the good life comfortably as empty nesters. 

Unfortunately, for one Redditor, this isn’t going to happen. According to a post in r/BoomersBeingFools, his parents ran out of money five years ago and didn’t tell anyone or ask for help until right before they became homeless. 

A Sad Situation 

Based on the Redditor’s post, we know that around five years ago, his dad came to him and told him that his parents were on the “verge of homelessness.” Unsurprisingly, the dad found it difficult to swallow his pride and ask for help, which caught the original poster and his partner off guard. There is no 401(k) account or any other savings, as the parents didn’t think they would live as long as they had. 

Now, the son had a choice to either take control of their finances or leave his parents destitute, so he did the first thing. He helped them sell their home and pay off the second mortgage, leaving some money for savings. Even after they asked their son to start paying the mortgage, the Redditor put his foot down and said that it would be his way of doing things, with a budget or not at all. 

Of course, the result here is that the original poster is now working two jobs to help take on his existing responsibilities with his partner and the costs of helping out his parents. The good news is that he can still keep up on his 401(k) and still put some money away to ensure his son doesn’t need to take care of his parents like he is right now. 

The other good news is that he was able to sell his parents’ property to pay off their debts. Sadly, setting them up with a rental wasn’t going to change taking on a second job, so at least with buying them a home, he’s likely to see a return on his investment after his parents are gone. 

Given everything happening here, what else should the Redditor be doing? 

How Much Should You Help Out? 

According to the TransAmerican Center for Retirement Studies, the median retirement savings of $194,000 for baby boomers is hardly enough to live on. When you consider that 26% of baby boomers have less than $50,000 for retirement, there is no question that they are likely to turn to family for help. 

Regardless of why baby boomers are in this situation, it begs the question of how much help families should give. First and foremost, you have to decide exactly how much you can help, just as this Redditor did. 

At the start of any conversation with family, like this Redditor, you must be clear about how much you can help. Following this Redditor’s strategy of breaking down their income and savings, including Social Security, is a great way to get a baseline of everything. 

After that, you must look at your financial security and ensure that any help won’t compromise your future. Once you have your baseline, you should begin to help by looking at different government assistance programs, such as Medicaid for healthcare, veterans’ benefits, low-income housing for seniors, or beyond. 

As far as financially, it’s a good reminder to know that you can give each parent up to $19,000 per year without any tax implications. If this Redditor is married to his partner, he can give $38,000, doubling the tax-free “gift” amount. Beyond this, you need to consider making the parents’ payments and not just depositing money in an account. Instead, pay doctors, mortgages, and credit cards directly so there is 100% confidence that everything is getting paid. 

Establish A Budget

Lastly, it’s critically important to give baby boomer parents a budget and tell them that this is the maximum amount they can spend monthly. As the Redditor suggests for his father, this might mean that someone might have to go back to work, even if it’s just part-time, to help out. Ultimately, having a budget and knowing the contribution amount necessary from the parents will help keep everyone in check. 

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