My parents failed to prepare for retirement and are now 70 – what can I do to help them?

Narrator
00:00:02

Welcome to the Ask Ralph Podcast where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

Ralph
00:00:30

Tonight's show, let's start with a very simple question. Are you lying awake at night worrying about your aging parents' financial situation? Just think about it. Does the thought of their retirement years fill you with anxiety because they frankly didn't prepare adequately? Well today, I'm going to explore some practical ways to help your parents navigate those golden years, even if they're starting from behind. So stay tuned as we address this heartfelt question, "My parents failed to prepare for retirement and are now 70. What can I do to help them?" Well, thank you for joining me. This is your weekly opportunity to get your questions answered. You can feel free to ask your questions in the chat.

Just put a Q colon so your questions are seen. Feel free to comment. And I want to encourage you to do something special tonight. I want you to take our show survey. I'm going to be giving away a $250 Amazon gift card. And trust me, this will only take about five minutes. Now the deadline for entry is December 10th.

We'll actually draw the winner on December 11th. You get to the survey by going to askralphpodcast.com/survey. Again, that's askralphpodcast.com/survey. We'd love to hear what you think about the show, because that's going to impact how we move forward. And I just want to remind you that we are showing on YouTube and Rumble.

So you can catch our daily show on each of those things and stick around because someone is going to get a hundred-dollar gift card later in the show. Well, let's get to our first topic. We've got this listener question. And the listener question says this. Says, "Dear Ralph, I'm really concerned about my parents.

They're both 70 years old and have virtually no retirement savings. Dad worked in sales all his life but never participated in a 401(k), and mom was a homemaker. They're currently living on social security alone, and I can see them struggling. As their son, it breaks my heart to watch them penny pinching during what should be their golden years.

What can I do to help them without jeopardizing my own financial future?" And listen, this is a great point. It's a question I'm going to answer tonight and it's a tough situation. It's a tough situation emotionally and financially. If you've got a question, like I said, put it right in the chat because your questions are going to fuel the show.

Well, now let's move to our Bible verse for tonight. You know I always like to start off with something from the Bible. And I found this in 1 Timothy chapter 5, verse 8. And it tells us, "Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than even an unbeliever."

Well, that one kind of cuts you pretty sharp, doesn't it? Well, let me start with some statistics and these statistics are kind of sobering. Kind of sad when I was preparing for tonight's show. Right now, well, back in 2022, I should say that's the latest data I could find. The senior poverty rate is at 8.9%

Let's break that down by age. Now to get this breakdown by age, I had to go back to 2021. And let me tell you about what the census data said then. This is the percentage of seniors who were in poverty. Age 65 to 74, that percentage was 7.8%. Once we go to age 75 to 84, It jumps to 9.2%. And then once you go 85 and older, that poverty rate is now 12 and a half percent.

But again, that overall poverty rate of those people, 65 and older is 8.9%. Now I found out something interesting. There's also this thing called the Supplemental Poverty Measure. It's an SPM. And that often paints a different picture. Now that particular metric considers a broader range of factors like medical expenses, geographic cost of living, and often results in higher poverty rates, especially for seniors.

And in 2021, The SPM poverty rate for those 65 and older was a whopping 10.1%. So think about that. One in 10 people over 65 are currently living in poverty. So you might ask, how does that break down? Well, here's the thing. Older women have a higher poverty rate as compared to men. It's just facts. Black and Hispanic have a higher rate than white and non-Hispanic.

And seniors living alone, especially women, have a higher rate in poverty. So I thought I'd share a story with you. I want to tell you about a couple I met a few years ago, and they're facing the same situation as you, Greg. That was your question we put tonight. And this particular client, he shared his story.

He was seeking help. He told me, he said, Ralph, I'm not sure what to do. He told me his mom had called, and she was embarrassed to admit it, but she said to her son, she said, I can't afford the property taxes on our house. And this client said to me, he said, Ralph, I was heartbroken. I had no idea my parents were struggling, and he shared with me, he said, I was emotionally devastated.

He was looking for guidance. I'm going to share this with you now. Let me start by saying this. If you find yourself in this situation, the pain you're feeling is real. You have to acknowledge that. The truth is many of us have had to deal with these issues, watching our parents struggle financially is emotionally devastating. It just is. If you've been through it or you know somebody had been through it, it is tough. So what's causing this? You know, let's start by answering the question of what is causing this poverty, that 10.1 percent of those over 65. Well, the first thing is fixed incomes. The truth is many seniors rely on fixed incomes from social security and pensions.

And those things can be difficult to stretch as the cost of living rises. And if the last few years or any, you can look at that and say, wow, the cost of living has been going up, but their pensions and social security haven't been rising at the same rate. So that leads to poverty. The next thing is health care costs.

As you get older, and I've done shows on this, the cost of health care is going to be greater. The out-of-pocket health care expenses, that includes prescription drugs, long term care. And listen, these are significant burdens for seniors. The Kaiser Family Foundation provided data Medicare beneficiary spending and said this was the major cost for seniors.

Another thing is housing costs. Listen, rising housing costs, including rent and property taxes, can make it difficult for seniors to afford safe and stable housing. That came from Harvard's Joint Center for Housing Studies. Looked at the affordability for older adults. Think about that. And last but not least, caregiving responsibilities.

Truth is, some seniors may be providing care for a spouse or a grandchild, which can add to their financial strain. So you might be asking, Ralph, okay, that sounds terrible. These are terrible things. Well, what does that poverty lead to? And this is the truly terrible things. The things that we got to work to avoid.

The first one's food insecurity. You hear about this. Some seniors experiencing poverty are more likely to experience food insecurity. They may have to skip meals. They may have to miss eating beneficial food or eating whole good foods that are good for them. They got to go to the dollar store and buy stuff that's not good for them.

Another thing this poverty leads to is healthcare access. Poverty can limit access to necessary health care, including leading to poor health outcomes. I've had clients say to me, Ralph, I've had to make the decision of whether to eat or get my medication. That's terrible, but that's the world we're living in.

And the last thing, this one is truly sad, and that's social isolation. Financial hardship can lead to social isolation and loneliness. They don't have time, they don't have the money to go out and do things, they don't have the ability to go and travel, they don't have the ability to go and interact with others.

And this is like a spiral of negativity because it can impact their mental and physical health. And listen, I know I've painted a sad picture, but here's some things you can do before we even get started. You've got to accept this. Your parents come to you or your mom or your dad comes to you and they're asking for help.

You've got to accept that you can't change the past. It's so easy to get hung up on that. It's so easy to want to blame them and how could you let this happen and you didn't plan, and you can just make a list of those things. But you're never going to get anywhere if you continue to rehash that past. So this is the time to move forward.

It's not the time to daily rehash of the situation. It's just going to drag everybody down. Yes, they made mistakes. They didn't plan. That's a reality. But now we've got to do something about it. It's like I said, it's time to move forward. So you might be asking Ralph, how do you do that? Well, the first thing you've got to do when I work with anybody, I don't care about your age.

The first thing we need to do is we need to make an immediate assessment. I want you to do the same thing with your parents. Help your parents create a detailed budget listing all of their income sources and their expenses. You got to start with some facts. These are realities. They're not emotional.

There's no emotion in this. List those income sources, whether it's social security, pensions, whatever those things are, and then list out those expenses. And be honest and truthful about them. If you don't put it all pen to paper, you're not going to get anywhere. The next thing I'm going to encourage you to do is review their social security benefits to ensure they're maximizing their payments.

Make sure that their social security is correct. Maybe you go to the social security website. Look at their benefit statement, make sure that they've gotten all the value of the quarters that they work while they were working. You want to do the same thing in the pension area. Make sure they're collecting all the pensions they have or all the retirement accounts that they have.

I've had situations where clients had forgotten about, oh yeah, I had that job 20 years ago. I totally forgot about it. Well, this isn't a time to forget about those things. This is the time to be engaged. So like I said, first thing, non-emotional, number one, immediate assessment of where they stand. The next thing you've got to look at is housing because housing generally is the biggest cost.

And this is going to be one of those uncomfortable conversations. Maybe you got to consider downsizing. You got to look and see if that makes sense or not. I had a client not too long ago, we looked at downsizing, but to be honest with you, it wouldn't have really saved them much because the cost of rent was about the same what they were paying on their mortgage, which leads me to the other idea under housing solutions, and that's you can explore reverse mortgage options.

Especially if they own their home outright. I've done a few shows on that. I encourage you to go check those out, but that is a viable option. Just look at the details and make sure it's the right fit for them. And then the other thing you want to look at is senior living communities. See if that fits into their budget.

Maybe that's an option for them. Maybe that'd be a better option to break down that social isolation. Maybe they'll have better care. They'll get better meals. So that's number two, housing solutions. The third is healthcare planning. Again, another big cost for those who are in retirement. You got to make sure they're enrolled in Medicare and understand your benefits.

Maybe they don't have that supplemental insurance policy and that's why they're out of pockets are costing so much. This is when you look at that, look at the viable options out there and talk about supplemental insurance. Also look at prescription drug programs. There's a ton of those out there for seniors.

So that's a big piece of that. Like I said, start with that assessment, move into housing and talk about health care. The next thing you've got to consider is the legal side of this. I call this area legal protection. A lot of people don't have these things in place. Help them establish a basic estate plan. Have a meeting with an attorney, set up a will if they don't have one. If they've got a little asset and you're worried about protecting them, talk to the attorney about a trust to protect those assets. It amazed me. I think the statistic I heard the other day was somewhere near 80 percent of people don't even have a will or a basic estate plan.

They're not that cost prohibitive. You can go find some legal aid societies and all that will do them for free. But this is the thing you've got to do. You got to help them establish that basic estate plan. And last but not least on my things to do, number five is maybe you've got to think about finding additional income sources.

And again, this may not be a very positive conversation, but you got to explore those part time work opportunities that are suitable for seniors. You know, like I hate to say, it's kind of a, you know, a funny thing, but that Walmart greeter job. There's other jobs in that, but they may have to consider doing some sort of side business. You know, look at government assistance programs.

There's a lot of those out there. You got to do some due diligence, do some homework and see if any of those things would work. And then last but not least on this thing, you might have to consider selling some unnecessary assets. Maybe they've got a second home or they've got a timeshare that they're spending money on.

Maybe they've got a car and they don't drive anymore. You know, maybe it's the time to have those hard discussions. Listen, they're coming to you for help. They're asking for you to give them a path forward. Again, start with not judging them. We're already past that point. We've already gotten past the point of knowing that they made a mistake.

They didn't plan accordingly. And that's unfortunate but you can't sit there and rehash that every day and make that the central part of your conversation. So you might be asking, Ralph, what did your clients end up doing? And I'm glad you answered that. That's why I'm talking about it tonight. Well, the first thing they did was they focused on creating multiple income streams.

That was what would work for them. They didn't look for one big solution because they knew there wasn't some big thing that they had forgotten. There wasn't some amazing retirement plan that they forgot to take or that they weren't collecting social security or anything like that. They focused on little items.

One of the things he shared with me, he said, his mom started pet sitting for the neighbors. She loved being around pets. So this was something she could earn some extra money. In fact what he shared with me, he said, she earned an extra $300 month. Hey, that's going to help if you're really struggling. That $300 a month can be a lifesaver. He said, my dad was in sales for a long time, so he started working part-time at a local hardware store, got him out of the house, helped his financial health, helped his physical health, and guess what?

It added another $600 a month to their budget. Again, these are not huge amounts but add them together. Think about that. $300 from pet sitting, another $600 from that part-time hardware store job, that's $900 extra a month. Almost a thousand dollars. And that made a significant difference. He shared with me their quality of life improved and listen, the transformation didn't happen overnight. And you can't expect it to happen overnight either.

It may take some time. They didn't get themselves in this position overnight. It's not going to be solved overnight. But let me tell you what he said in 18 months, he said, my parents went from constantly being stressed out about money to having a workable plan. He said to me, he said, Ralph, the key in all of this was taking small, consistent steps.

He said the key wasn't trying to solve everything at once. I always try to give you some actionable steps so I'm going to give you some right now. And like I said, these are not going to be easy things. These are going to be emotionally tough things, but they're very important that you do them. Number one. Schedule a family meeting this week to openly discuss finances.

Bring all the related parties into discussion, make sure that everybody's involved. If there's multiple siblings involved, you got to bring them in and make sure everybody's on the same page. That's where it starts with that family meeting to be honest with each other. Like I said, this is not the time for judgment.

This isn't the time to go back and try to figure out who struck John. It is what it is. This is the reality we're dealing with. So the second actionable step I'm going to move to is help them create a detailed budget using basic spreadsheet software. It doesn't have to be complicated. Maybe they're not computer people.

I'm cool with that. Write it out pen to paper. Just make sure they have some intentional spending plan. Here's what's coming in. Here's what's going out. Here's what you're going to be able to pay for and then keep track of that. The next thing, like I mentioned earlier, number three, review those social security statements online.

Make sure that they've got the correct benefits. Make sure they've got all those things in order. Make sure that their payment history or their earning history is all reflected in their balance. I've seen situations we're clients didn't realize that they had gaps in their earning record.

They went and corrected it and it made them get more monthly income. This is also time. Number four on my list here. Schedule appointments with financial and legal professionals. Go do those estate plans. Do that basic will, that power of attorney, that advanced medical directive. You want to make sure you do those things now before it's too late. And sit down, if they've got a broker, if they've got an accountant or somebody like me, you can always make an appointment with me as well. Just go to askralph.com and you can click on book a call, but this is a time to sit down and build that team around you to help you. Number five on my list here is research senior assistance programs in the area.

Do a Google search, ask around, ask your church community, do they have any senior assistance programs in the area? And if your parents are healthy and they're able to it, you know, this is a time to look at part time work opportunities. Maybe they've got a passion for something or they've got a skill. Like I said, my client said his father was a sales guy.

He went to work for a local hardware store and he loves it. He actually looks forward to going to work. He doesn't make a lot of money, but it gets him up. It gets him moving, gets the mind going. It's all beneficial things. And last but not least, number seven, consider consulting with a financial advisor.

I'm going to leave a caveat here that specializes in retirement planning. You want somebody that really understands this. This isn't somebody you want to go see if they can sell you an annuity or sell you CDs or sell you bonds or that's not what you're looking for here. You're looking for someone who specializes in retirement planning. And that is the key to all of this.

Now I'm going to have my what I call in the trade here, my call to action. I appreciate those of you who have joined us tonight. I see that there are no questions in the chat, so I'm going to go ahead and move on here, but I'm going to ask you for a favor. I'm really trying to grow the show and reach more people.

That's my goal here. And one of the best ways I can do that is if I ask you to share the show with others who will benefit from the information I present, not only here on Tuesday nights live, but daily. And I'm not asking for a lot. It's really simple. All you got to do is send them an email with a link.

And in that link to say, askralph.com and tell them how it's impacted your financial and your faith life. Just send them a quick email and say, listen, I met this guy, Ralph online. He gives me the straight and narrow. He tells me what I can do to improve my finances and blends that with faith. You can find him in askralph.com. Because the truth is this. Word of mouth is the key and your sharing with your friends and family will help us grow. You might be asking, Ralph, why do you want to grow? I want to be able to reach more people. I want to give people that hope, give people that ability to make a direct impact in their lives.

That's what we're trying to accomplish. Well I thank you for joining me tonight. And remember, every Tuesday evening at 7 PM Eastern, share the show with friends and family. And remember my passion is to help you achieve financial success. That's why I do what I do. That's why I spend time doing these shows.

I want to see you live out your dreams. I want you to grow in your faith. Cause I know working together, we can master your finances from that Christian perspective. So again, thanks for joining me tonight. I'm going to encourage you to stay financially savvy and may God bless you.

Narrator
00:20:53

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