Your Parents Have NO Retirement Savings – What’s Your Responsibility?

by Kevin Mercadante

We all know what a bad situation it is to have no retirement savings. But what if it’s not you, but your parents, who have no retirement savings – what’s your responsibility?

On first thought, it might be tempting to dismiss the entire scenario. You can simply assume that your parents have some kind of retirement savings set aside. Or, you can rationalize that if they don’t, it’s not your responsibility anyway.

no retirement savingsBut your parents are the people who raised you, who used their financial resources to provide for you in your childhood and early adult life, when you couldn’t do so for yourself. Clearly there’s some form of responsibility on your part, if only a moral one.

The reality today is that many people who are approaching their retirement years don’t have much in the way of retirement savings. True, in many cases it’s because they didn’t have any plan or motivation to make it happen. But other times, it’s because a job loss occurred at a bad time in life, or a rash of significant expenses, such as medical bills, providing for elderly parents, or college education for their kids, that left them with an empty bank account.

Whatever the reason, if your parents have no retirement savings, what can you do to help?

Encourage them to save as much as they are able

Your first best strategy in dealing with your parents is to encourage them to save as much is possible. Even if they’ve never saved before, you can stress that the absence of dependent children should free up more of their income to direct into savings. You might even consider creating a budget for them, particularly if this has never been one of their motivations.

Many times people don’t save for retirement because they fear that they would be doing so too late in the game to make a difference. Maybe they won’t be able to save up enough money to have a comfortable retirement, but any money that they can save will have a positive effect on their later years.

For example, if they can save $50,000 over the next 10 years, it may not enable them to retire, but it will certainly give them a generous emergency fund to fall back on.

Encourage them to make frugal living choices

For a lot of people who have no retirement savings, it’s a matter of making the wrong spending choices. You might be able to help them with this. For example, if they’re still living in the same four-bedroom, 2 ½ bath, two car garage house that they raised you and your siblings in, recommend that they downsize. Sell the house, and move to smaller, less expensive living quarters.

Not only would such a move help them to accumulate money for retirement, but it will also result in lower living expenses, which will enable them to live better during their retirement years.

Encourage them to get out of debt

Some people live their entire lives in debt, and unfortunately, our culture tends to encourage that behavior. But when you’re approaching your retirement years, that kind of financial lifestyle has to change. It’s even more important if you have no retirement savings.

Paying off debt is generally the single best way to lower your living expenses. If your parents have car loans and credit card debt, encourage them to pay these off as soon as possible. Not only will they lower their living expenses, but once the debts are paid they’ll have more money to put into savings.

Encourage them to explore additional income ideas

People who don’t have sufficient retirement savings have to get serious about how they will earn income during their golden years. It’s not always possible to continue working a full-time job in your lifetime career much past age 65. They may have to consider creating entirely new and different post-retirement careers.

Fortunately, there a lot of options here, especially with the Internet. Encourage them to explore business opportunities, particularly those that can easily be marketed over the web. They may also want to consider downshifting from full-time, career type positions, into part-time work in a more enjoyable field or atmosphere.

It’s generally not possible for people to survive on Social Security alone. But if a couple are each receiving Social Security, and each supplementing that income with a part-time job or business, they may do just fine. That’s the arrangement you may need to prepare them for, and since it may take advanced planning, now is the time.

Encourage them the delay retirement, if even for a few years

While most people don’t want to delay retirement, it may be in your parents’ best interest to do so, even if it is only by a few years. Delaying retirement gives them a fighting chance to implement all of the above ideas – saving more, learning to live on less, getting out of debt, and even transitioning to part time employment. Another important thing this allows them to do is delay taking Social Security Benefits. You can earn between 20 and 30% more in Social Security Benefits by delaying your benefits start date. (See Social Security Age Reduction Chart for more info).

Worst case: Prepare yourself for your parents retirement

It may well be that all of the late stage efforts by your parents will be insufficient to enable them to comfortably survive in retirement. If that’s the case, you may need to be prepared to step in with some direct help. That doesn’t mean providing your parents with a monthly income, but there are ways that you can help in a less direct manner.

For example, if you have your own business, you can consider hiring one or both of your parents on a part-time basis. You might also consider bringing them on to work on a contract basis, where they handle a specific part of your business.

Alternatively, you might help them start a business in a more direct way. You can, for example, connect them with other people who can help them start the business. Or you might have contacts with businesses who may be able to employ them on a part-time basis.

In a more direct way, you might offer to take over one or more of their debts when they turn 65. This will lower their living expenses and give them a fighting chance of surviving on a reduced income. If you go this route, you will of course need to get a solid assurance that they won’t take on additional debt to replace the one you’re covering.

As an extreme measure – and particularly if your parents are completely unprepared for retirement – you might consider taking them in to live with you. This could mean creating an extra living space somewhere in your home, so that they can live with you peaceably. By removing housing expense from their budget, you’ll be taking away what is probably be the biggest single expense they have.

It’s tough enough to provide for your own retirement, let alone someone else’s. But if you have to step in and help your parents in any way, it’s best to begin working on it as soon as possible. That will give you time to prepare and to position yourself to be able to help them with the least amount of disruption in your own life.

While you’re working to plan and prepare for your own retirement, are you ever concerned at how your parents will survive in retirement?

Published or updated August 25, 2014.
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{ 21 comments… read them below or add one }

1 Lutz

Most Boomers were so selfish and irresponsible (and continue to be) that they left the next generation without a pot to pee in, so to speak. Now they expect their penniless offspring to provide a safety net for them? LMAO! They’d best prepare to sleep in the beds they’ve made.


2 Kate @ Money Propeller

When my father died last 7 years ago, we really faced a very difficult time, especially my father didn’t have any insurance at all! And we were a single income family, currently, I’m saving for my mom and I also pay all the bills and do the groceries.


3 Hanna @ Soulful Ceramics

Sad to say that I’m in the worst case scenario.
No amount of encouragement has worked, ton of debt, no job, no savings, absolutely nothing.
And it’s a constant worry. So much so that it’s affecting my life.
I certainly don’t wish this upon anyone else.


4 Kevin Mercadante

Hi Lutz – I don’t know if I’d generalize to that degree, but some people in every generation lived life with reckless abandon – even in the World War 2 generation. But a lot of others just didn’t have the opportunity to accumulate much money, or lost it during difficult circumstances.

Kate – Bless you for what you’re doing for your mom, but is there a way to get her involved in saving and providing for herself?

Hanna – All you can do is all you can do. Just do what you can in small steps and see where it leads you.


5 Marvin

This is a very sensitive topic because I believe it is going to plague a lot of families in the coming decades. I have already started to feel some of the fear/anxiety of worrying about my parents as they enter into retirement. Another aspect that I find frustrating with parents is in their eyes you are always their child and are sometimes stubborn in regards to taking your advice.


6 Kevin Mercadante

Hi Marvin – Unfortunately, what you’re describing is all too true. Kids are often the least respected voices in their parents lives, because they can’t get over seeing you as the small child they once raised. Role reversals can be emotionally painful. It might be best to convey your thoughts to an influential friend of your parents, and to let them try to do the convincing. Your ideas may have more credibility coming from someone else.

There’s a bible verse, “Only in his hometown is a prophet without honor.” I think that applies here as well. A child – even one fully grown – if often without credibility to his or her parents.


7 Jon @ Money Smart Guides

I guess I am lucky in that my parents were good with money. Neither went to college, they had blue collar jobs (no pensions) and raised 3 kids. We lived modestly and they saved a lot. They both retired a few years ago and don’t have anything to worry about money-wise right now.

I don’t know what I would say to my parents if they didn’t save or had no money. It would certainly be a tough conversation to have for both parties – me telling them what to do and then them getting advice from their kid.


8 Kevin Mercadante

Hi Jon – That’s the difficult part, reversing roles with your parents. Most of them will resist it with every fiber of their being. It’s kind of the teacher-learning-from-the-student thing that all human beings consider to be somehow unnatural.

The description of your parents and how they ended up describes my parents – blue collar, no pensions, but lived beneath their means and always saved a seemingly impossible amount of money. I think that when you don’t have a college education, you might live more conservatively and rely more heavily on sound money management than on a perpetually rising income. That’s where most of us could certainly take a lesson from our parents, if that describes them.


9 Bridget

I made peace with the fact that I will need to supplement my parents’ retirements a long, long, long time ago.

They don’t have substantial savings, and up until a few years ago, my dad’s plan was simply to “work until he dies” — he’s a general contractor, so this is ridiculous. Building houses is not a viable vocation for the elderly!

Outside of very small government pensions, they essentially have nothing, so I thought I’d be on the hook for the whole bill. However, a few years ago my dad started a small antique/general store that’s started to bring in some good, steady extra income for him. It’s not a lot, but most importantly it’s more viable long term — so much more reasonable for him to stand behind a cash register than hammer nails into a roof!! It makes me really happy because it’s made their retirement infinitely more secure. The store is a great hobby they enjoy AND it supplements their income, it’s awesome.

That said, I know I will still pay for them to visit (I live in Canada, they’re in the US) and send them on other trips or give them somewhat elaborate gifts (things I know they would never spend money but would enjoy on like a big screen TV). And I will do this very willingly. My parents are awesome and I look forward to paying them back!


10 Mark

Reminds me of the book, The Millionaire Next Door, where Thomas Stanley calls it “Economic Outpatient Care”– when parents spend a lot of their savings and retirement on their adult children. I have had this discussion with my parents and family so many times. Definitely something to plan for. Great article. Thanks


11 Kevin Mercadante

Hi Bridget – You have a very accommodating attitude toward your parents and that’s fairly unusual these days. Good for you! I guess your dad is making good on his strategy of working until he dies! I’ve known people who did/do that, and it’s usually not as bad as it seems. Of course, the type of work you do matters a lot, and I think an antique store is an outstanding idea especially if he has a serious interest in it. It might even keep him around longer than if he outright retired.

Hi Mark – What you’re pointing out is a common occurrence these days. Parents over-indulge their kids, especially with college, weddings and help buying a new house, and end up in the poor house themselves by the time they reach retirement age. I think that anyone who’s gotten that much help from their parents has an obligation to help them in retirement.


12 V.C.

My parents, I would do anything for. We lived so frugal as children which taught us so many life lessons. My mom raised 3 kids and my dad worked. They divorced in our teens and my mom remarried a incredibly sensible and amazing man. My dad will be fine as he has a small pension; however, this man saved and saved and invested and invested only to have made the wrong investment and lost every dime in the 2008 stock crash. They have nothing. They are both in insurance and are able to work, and they do. They still live with frugality and don’t make rash monetary decisions, are not in debt (except their simple home) leaving them to save just a small amount. However, they are slowing down and they need a physical break; they deserve to retire. I am in no position to financially help (as a homemaker myself) and am dubbed the caretaker by my sister and brother. I know I will be the one to physically care for them and I am so OK with that, it is the least I can do. Any one know of any resources out there that will take pity or give the gift of a small retirement to people who desperately need it and completely deserve it? Like when Oprah was on, I could see her giving a person a gift like this. Any help would be great.


13 mike

My parents had good jobs but were terrible with money. My mother was a habitual money waster and my father lives life with his head in the sand with regards to such realities. Tried to encourage them to get a smaller house. Nope. Tried to encourage them to stop buying Christmas and birthday gifts. Nope. Tried to encourage them to even just sell the junk in the basement. Nope. They have piles of debt. The continually need to “borrow” money. I have kids of my own and a retirement of my own to worry about and my entire budget is earmarked, so when they do this, it’s money coming out of my retirement and increasing the odds of my putting a similar burden on MY children. I feel obliged to some extent given that they paid for much of my college, but at the same time, their financial ineptitude was unknown to me and I certainly would have told them to save that money.

Sadly this is effecting my perception of my parents and my relationship with them. When I was single, I could tolerate something like this, but now it’s having a direct impact on the financial well being of my own household…individuals other than myself. I am doing my best to save so I don’t do this to my own children, but my parents are putting a drag on that effort.

Part of me feels sorry for them and wants to help. The other part of me is enraged at their lack of discipline. And I feel as if this is going to be a rapidly growing problem for the children of baby boomers and their general fiscal irresponsibility.


14 Kevin Mercadante

Hi Mike – You can’t give good advice to someone who won’t take it. You may have to wait for them to have a financial crash before you can have any influence at all. And if they do crash, be ready to help them with advice and help them find income sources and cheaper housing. If you go the direct assistance route – giving them cash support or paying their bills – it’s likely that they’ll continue on their old habits. You’ll be financially drained, and their situation won’t improve.

Wait for when the time is right, then intervene. Meanwhile let their example stand as a good example why you don’t want to go down the same path.


15 gyozaboi

I’m in kind of the same situation. Dad never had any skills. Was unemployed since he was 47 and since I was 16. My mom worked minimum wage-ish job until now. They in their early 60s. Mom has a retirement plan. But that’s only got ~20K+ inside. Taken mortgage, utilities, food + gas into consideration, and assuming we’re VERY frugal, monthly expenses will be at least 1.5 – 2K. Mom wants to retire early, or may be let go from job soon. That 20K and whatever SS they get would just barely be enough. My income is ~60K as of now pre tax, after tax it’s ~45K. I’m already 30 and an only child. I’d wanted to go back to school for a masters or move out of CA (which taxes you like a bunch of bank robbers). I just don’t see us getting out of our income level in my life time. My parents will be completely dependent on me once mom retires. With only a 45K income to go in between 3 grown adults in southern california. It’s bad.


16 Kevin Mercadante

Hi gyozaboi – Can you move out of California? My wife and I moved out of New Jersey and down to Georgia many years ago to escape the high cost of living there. A few months ago we moved from Georgia to New Hampshire, which has no income tax or sales tax. To our surprise, except for housing, the cost of living in NH is even lower than Georgia. It may be worth a try for you and your parents. There are certainly a lot of cheaper places to live than California. Just getting away from that punitive state income tax system seems worth the move to me.

You also mention a mortgage – is there enough equity in the house that it might be worth selling to raise assets for retirement? That sale could work in combination with an out-of-state move. Just a thought, and certainly give it careful consideration before doing it.


17 leilani

My parents are amazing people, but are technically my grandparents which puts me and my brother at age 30 with young families, and them in their 70’s. My dad was just forced into retirement and mom has been medically unable to work for decades. They have a rapidly depleting savings account and smaller by the month. I will do anything for them, as we lived modestly most of my childhood through a layoff and slow commission in dads sales. They got very comfortable in recent years, when business got very very good, they spent thousands on better vehicles and remodels for the kitchen. Now they are suddenly in a very bad place. I think we will need to convince them to sell the house. Which is just very sad. Makes me sick to my stomach to think about!


18 Nicole T

My father-in-law is a lovely person, but financially he’s made a mess of things. He is 68, has no assets (aside from a BMW that is constantly requiring expensive repairs), he never really paid into social security since he had his own business most of his adult life, no savings/retirement accounts, he now works for himself very part-time doing light IT work for people, and he makes just enough money to pay his rent and basic expenses each month. His car is once again needing repairs and I’ve told my husband that when we give his dad money every now and then, it is enabling his father, and allowing his dad to pretend there isn’t a long-term financial concern. My husband’s side of the family is very long-lived, and my very healthy FIL has nothing set aside for old age. We have two young children, and both work fulltime, and are saving for college and retirement ourselves, but I am seriously concerned that we will have to pay for my FIL’s financial missteps. Moving out of the SF Bay Area isn’t really an option for us career-wise (the jobs are all here for our skill sets), and my FIL doesn’t want to discuss the future at all, let alone move.


19 Isa

Just had this difficult conversation with my mom… She’s 64, would like to retire, but can’t. She would like us (hubby and I) to buy her almost-paid-for house and then rent it to her But we are not interested taking that extra responsibility! And she doesn’t want to move to an apartment because of noise and neighbors…. Self-employed all her life so no pension. Single mom and not so good with money management, so not much money in savings, she would receive about 15000$/year from the government, which is not enough. So I feel guilty and angry at the same time, guilty for not helping (not wanting to buy her house or ask her to move in with us – that would be hell!) and angry at her bad money management skills and asking me to fix it for her. I am the only child who will take care of her, she has no one else, it will all fall on my back. We don’t have the closest relationship either, which doesn’t help.


20 Ryan Guina

This is a tough situation, Isa. I can see why you are hesitant to buy her home from her then rent it to her. There are a lot of reasons why this could be a bad idea. The cost, for one. But also, as a landlord, you would be responsible for all repair and maintenance costs, property taxes, insurance, etc. This is a lot to take on, especially if you are already reluctant to do so. It could cause a lot of heartache and resentment. I don’t see this being a good option for you. I hope your mother will be able to find an alternate arrangement.


21 Tammy

My mother was married several times. Her recent husband worked for Smith Barney, was a financial planner, some sort of world speaker, and was also a college professor. He held about 3 jobs most of his life. He made around 300K a year. They took trips all around the world and blew cash like crazy. My mother was 39 when she quit working. Her husband in his later years blew everything on furthering his education and almost finished his doctorate. He ended up with Alzheimer’s and everything went down hill from there. He was laid off from his jobs due to his inability to function.

They had about $4500 a month to live on for retirement together. My mother thought she could care for him and live comfortably but 5 years of Alzheimer’s she just could not physically care for him anymore as she has her own health problems. Now that she is 76 years old and we had to place her husband in a home she is only left with $1000 a month. The assisted living unit took pretty much everything so any left over is to pay for life insurance policies(about $500 a month and medical expenses). My mother moved in with me so and I held estate sales to try to sale all her stuff, every weekend for 8 weeks as they had a accumulated a ton items. After she moved in my husband moved out because he could not deal with all the stuff and disorder it brought. I had not had time to get everything sold or into another storage unit for her. I work 50 plus hours a week myself. I was the only one helping her. I ended up paying all the bills on my own as well as trying to get my mothers bills taken care of. What a mess with a lot of heartbreak. My partner bailed on me.

I did get my husband to come back home after several months but he wants her out of our house. She refuses to go to an assisted living place at this time so I’ve been trying to find a place for mom that is close by and that will not cost me $500 a month to let her live there. I’m constantly caught in the middle of two people I love very much that can’t stand each other. My husband is very smart with money and can be very cheap. He also likes to keep things simple by not have a ton of material items. They are both complete opposites. I’m just happy that I did not lose the love of my life. Pray that things will just work out for all of us. I’m a giver with a huge heart so I tend to get into trouble in these areas. Thankful for a guiding husband but there has to be a line, as I will not allow her to go homeless even if he feels this is her fault. She was never involved in her husband’s finances till he got sick. By that time it was too late.


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